How to get cheap car insurance with no deposit

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UPDATED: 2022-09-01T04:45:22.340Z
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Are you looking for a cheap monthly payment on your car insurance? If you’re looking to avoid paying a lot of money upfront, you may be in the market for very cheap car insurance with no deposit.

No deposit car insurance may not save you as much money as you think, but we’ll explain what exactly no deposit car insurance is and if it even exists.

When you're ready to buy car insurance, make sure to check out our rankings of the best car insurance companies, and enter your ZIP code in the box below to see quotes for the cheapest rates in your area.

What is no deposit auto insurance?

No deposit auto insurance typically refers to car insurance that doesn't require you to pay a down-payment or deposit when you sign up for a policy. Now, it's important to know that car insurance companies don't actually use the phrase “no deposit car insurance.” The phrase is often used among insurance consumers.

When you sign up for an auto insurance policy, many car insurance companies require policyholders to pay a deposit or down payment in order to activate coverage. This means you'll be paying your first month's insurance premium as well as additional money for the deposit, but just in the first month. This deposit goes toward your policy premium, and your monthly premium is set after that if you choose to break it up into a monthly payment plan.

Typically, auto insurance companies that require a higher first month premium require a deposit of about 5 to 30 percent of your total premium for your car insurance policy. Your required deposit amount can vary by company and is also affected by many factors including your age and driving history, where you live and so on. If you're a high risk driver or you have a low credit score, insurance companies could impose restrictions including an extra deposit up front.

However, putting down a hefty deposit could send your finances over the edge. If you don't have extra money available for the down payment on your car insurance, you can look for cheap car insurance with no deposit. A cheap auto insurance company may offer discounts for an upfront payment, but monthly installments are generally reasonable. If you feel you're paying too much with your current insurance company, getting a few quotes could open more doors to get the right coverage for you.

How do I find cheap car insurance with no deposit?

Not every car insurance company allows people to purchase a policy without making an initial payment. Some only require it for policyholders in certain groups (such as those with a low credit score). So they're less likely to drop that requirement. In order to find one that does or one that requires a very low deposit, you'll need to shop around.

When purchasing car insurance, it's always best to get a few quotes. You can enter your zip code online and walk through the prompts on our site to get multiple quotes from providers in your area. You can specify how much coverage you want, and automatic calculators will also account for state minimums in the type of insurance plans available to you. Required deposit amounts can vary by person and by insurance company.

When choosing a no deposit car insurance policy, be sure to watch out for fees. Some companies may charge you more if you don't put a deposit down on your coverage. So you still pay a higher premium the first month. More importantly, your auto insurance coverage could be more expensive in general.

If you find an auto insurance company offering rates that seem too good to be true, make sure they're reputable. Do your research and read some consumer reviews. This way, you can make sure you aren't being scammed or misled. Not all auto insurance providers operate on a national level with commercials on radio and TV, but you should be able to find supporting data for a legitimate company.

Should I buy no deposit auto insurance?

If you need car insurance coverage right away but can't afford to put a deposit on a policy, no deposit auto insurance may be a good option for you. It allows drivers to still get car insurance coverage and remain on the road. Remember, it’s illegal to drive without car insurance in most states. So if you don't purchase the minimum coverage required, you can't drive your car. If you drive without car insurance, you could face penalties including fines and even jail time, depending on your state.

So what are the pros and cons of no deposit car insurance? Well the obvious pro is that you don't need to pay a large amount when you sign up for a policy. If you can find a policy without a deposit or with a very low deposit required, you'll just need to pay for the first month of car insurance coverage.

That may sound great, but keep in mind that if you don't pay an initial deposit, your monthly car insurance payments will likely be higher than if you did pay a deposit, since you are putting little-to-no money down.

If you're able to, you can pay a deposit upfront on your car insurance policy to lower your monthly auto insurance rates. Many car insurance companies actually offer a pay-in-full discount, which can significantly lower your premium over the policy period. But if you're unable to do that, no deposit auto insurance is available.

How much does car insurance cost?

To get an idea of how much car insurance costs, you can compare average car insurance rates for drivers in the United States. The cost of car insurance varies based on many factors including your age, driving history, credit history in most states, where you live, the car you drive and more.

In the table below you can see the average car insurance rates for a single adult driver for the top 10 largest companies in the United States.

Company Car insurance rate
USAA* $1,113
Geico $1,202
American Family $1,328
Nationwide $1,355
State Farm $1,418
Farmers $1,514
Progressive $1,549
Travelers $1,647
Allstate $1,789
Liberty Mutual $2,854

*USAA is only available to active and former military members and their families.

These rates are based on a 35-year-old single adult driver with no driving incidents in the past 3 years. The car used was a 2015 Toyota Highlander LE. Full coverage was used with 100/300/50 limits and a $500 collision and comprehensive deductible. The driver had a good credit score. The rates displayed should only be used for comparative purposes as individual rates will differ. Not all rates were available for each company in each state. Rate data is provided by Quadrant Information Services.

How else can I get low-cost car insurance?

Car insurance prices are complex and can vary based on many things including your age, driving history, the car you drive, your credit history, where you live, the company you choose and so on. Each insurance company has its own underwriting process to determine prices. That's why it's best to shop around and get quotes from multiple companies to see which one can offer you the best value. There are some things you can do to lower your rates.

When looking for low-cost car insurance, be sure to check on company reviews to see what kind of reputation it has. Make sure you aren't sacrificing a good claim service for a lower cost because that could end up costing you more money in the end. You can see the top-rated companies in your area by visiting Clearsurance’s car insurance company rankings page. From there, you can read the reviews of the companies.

There are other ways you can save money on car insurance other than looking for no deposit auto insurance. For example, using automatic payment auto insurance simplifies the collection process. So many insurance companies will offer you a small discount the same way they do if you go paperless.

Likewise, if you maintain a clean driving record, your rate will naturally get better over time. This is the simplest way to get competitive rates, but it requires building strong long-term habits. Finally, if you can afford the premium, paying the entire premium payment upfront instead of using payment options can significantly lower your overall costs. A few other examples include the following.

Switch car insurance companies

Many insurance companies offer loyalty discounts. If you're with them for a certain period, you pay less. Unfortunately, that's not always the case. Sometimes, they forget you can go somewhere else. Even if you think you're getting the best price, you may want to get free auto insurance quotes every once in a while. Did you know that car insurance shoppers save an average of $390 per year when they switch companies, according to a Clearsurance study?

When looking for a car insurance company, you can start by using our car insurance calculator. This tool can help you figure out how much you could end up paying for car insurance and which companies are the best options for you based on your needs and characteristics.

Ask about Car Insurance Discounts

You can score car insurance savings by inquiring about car insurance discounts you may be eligible for. You can get a discount for having a new car with safety features, owning a home, having a good student on the policy, having a good driving history and more. Many companies offer a multi-policy discount to those who purchase auto and homeowners insurance together. Safe driver discounts are available from almost every insurance company. There are so many discounts out there, but they vary by company. You may be eligible for discounts associated with club memberships, your job, and much more. Always consider your discount options when you're shopping around for cheaper rates, and read through the eligibility requirements carefully.

Be a safe driver

Safe drivers can save money on their car insurance. If you haven't had an accident, your car insurance rates will be lower. Not only is this important to keep you safe on the road, but it also earns you car insurance savings. Some insurance companies will give more affordable car insurance if you take a defensive driving course. Insurance companies are always looking for ways to lower their risk.

Try usage-based insurance

Many companies offer a usage-based insurance program, also called a telematics program, that allows drivers to earn more affordable rates by driving safely. You just sign up for the program and then install a mobile app on your phone or a device in your car that monitors your driving habits. If the app shows the insurance company that you're a safe driver, you could get around 10%-20% off the cost of your insurance.

Do you want more ways you can save on car insurance? Check out our blog 14 ways to get cheap car insurance.

What's the bottom line?

If you have been shopping around for car insurance, you should now have some idea of where you stand. It's easy to find great deals, but it takes work to get them. Use these tips as a starting point, and don't hesitate to shop around for the cheapest car insurance. A good rule of thumb is to get at least three quotes before choosing an auto policy.

You can start looking for affordable coverage now by entering your ZIP code into our free online quote tool below.

The content on this site is offered only as a public service to the web community and does not constitute solicitation or provision of legal advice. This site should not be used as a substitute for obtaining legal advice from an insurance company or an attorney licensed or authorized to practice in your jurisdiction. You should always consult a suitably qualified attorney regarding any specific legal problem or matter. The comments and opinions expressed on this site are of the individual author and may not reflect the opinions of the insurance company or any individual attorney.

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