Cheap Car Insurance With No Deposit: A Scam You Should Avoid

If you’ve looked for cheap car insurance with no deposit, chances are you’ve come up empty-handed. That’s because it doesn’t exist with reputable car insurance companies. Auto insurance companies deal with risk, so they always require a down payment or deposit to mitigate some of it.

However, I’ve seen the deposit requirement done in several ways, depending on the insurance company. Some make the down payment the first month’s premium, but it's higher than the remaining five months’ payments while other companies charge a separate fee for the down payment plus the normal premium.

I’ve also seen some insurance companies try to entice new customers by claiming they offer cheap car insurance with no deposits required. This is never legit. If it’s not just a play on words, and they truly don’t require a deposit, chances are it’s not legit insurance.

Even though a down payment is likely, there are things you can do to keep your car insurance costs down.

Cheap car insurance with no deposit isn’t legit

Because all car insurance companies handle the down payment requirements differently, some people mistakenly assume there are car insurance policies with no deposit required.

There isn’t.

The so-called deposit is part of the premium you owe to have insurance coverage, and is often a percentage of your total premium.

Here are a few ways you may pay the deposit:

• Upfront separate from your first premium
• As a part of your first premium, which is higher than the other payments
• Spread out over the six monthly payments

Here’s an example of how Progressive does it:

A six-month car insurance policy with them costs $323. If you pay monthly on this policy, your payments should be around $53.83 per month. However, Progressive offers the option of paying less ($23.57) on the initial payment, so the remaining payments are slightly higher ($59.89). In the end, Either way, you still pay $323 for a six-month policy, which includes the deposit.

If it's important to you that your car insurance premiums have low down payments or no deposits or down payments, then you may need to shop around to find the best car insurance policy to fit your needs.

How to save money on car insurance deposits

Since you can’t get car insurance without paying a deposit, there are two ways to lower the required down payment.

• Keep your insurance rate down: Your deposit is often your first month’s insurance payment. The lower your insurance rate is, the lower the deposit you’ll need. You can keep your rate down by keeping good driving habits, inquiring about discounts, and boosting your credit score.
• Ask for options: Insurance companies, like the Progressive example, often provide options to make the deposit. If the required deposit seems too high, ask if there is a cheaper option. Just keep in mind that the less you pay upfront, the more you’ll pay monthly for the premiums.

How to save money on auto insurance

Remember, the car insurance deposit is a part of your auto insurance premium, so the lower you get your premium, the more money you’ll save overall, including on the deposit.

Here are a few ways you can save money on car insurance.

Get multiple quotes

I try to shop around for new car insurance annually. When I do, I get multiple quotes to see what different insurance companies will offer. Never accept the first offer you get, and always ensure you’re comparing apples-to-apples regarding coverage.

Boost your credit

In all but three states, insurance companies can use your credit score as a determining factor for the cost of car insurance. Insurance companies consider drivers with lower credit scores a higher risk, which means higher premiums.

Boosting your credit score can help you save money on car insurance. I always aim to have good-to-excellent credit scores, which according to most credit score ranges is between 700 - 750+.

Qualify for discounts

Always exhaust all discounts an insurance company offers. Every company is different, but some possible discounts include:

• Safe driver
• Good student
• Loyalty
• Multi-policy (bundling)
• Multi-vehicle
• Vehicle safety features
• Defensive driving course completion

Maintain a clean driving record

One of the best ways to save money on your car insurance is by maintaining a clean driving record. Many insurers offer considerable discounts to drivers who haven’t had any traffic violations or accidents within at least three years.

Some insurers, such as Progressive, GEICO, Allstate, and Liberty Mutual, offer accident forgiveness to policyholders with good driving records. This means the insurance company agrees to “forgive” an accident and, therefore, not to increase your insurance rates if you haven’t had an accident or violation within at least three years.

Adjust coverage

Don’t automatically assume you need full insurance coverage. While almost all U.S. states require drivers to carry some level of bodily injury liability and property damage liability insurance, anything beyond that is optional.

If you can afford the premiums, it’s a good idea to have full car insurance coverage, which includes collision and comprehensive insurance to help pay for repairs or replacement of your vehicle after an accident, regardless of fault.

However, if you drive an older car, the premiums for full coverage may not make sense. Do the math to see if paying for repairs out-of-pocket would be more affordable than paying higher premiums.

Consider not filing for small claims

Each claim you make on your auto insurance risks higher premiums. If you are in a minor accident, you may save some money by not filing a claim with your insurance, especially if you were at fault in the accident. An at-fault accident can increase your car insurance premiums by almost 50%.

You’d still be on the hook to pay for the repairs on the other driver’s vehicle, but not going through your insurance company eliminates the risk of higher premiums.

Raise your deductible

The higher the car insurance deductible you have, the lower the premiums an insurance company charges. The deductible is the amount you are responsible for if you cause an accident before the insurance company will cover the cost to fix or replace your car in a covered incident.

Before choosing a deductible, I recommend evaluating your budget to determine how much you can afford to pay should you have an accident. For example, I wouldn’t take a $1,000 deductible to get lower premiums if I knew I couldn’t afford to pay $1,000 if I were in an accident.

How car insurance payments work

Another way to save on car insurance premiums is managing how you pay your premiums. Most insurance companies offer two options:

• Monthly: Splitting your premium into six monthly payments spreads the cost out, but insurance companies usually charge a service fee for the convenience, increasing your cost.
• Lump sum: Paying your premium in full for a six-month period usually saves you a few dollars.

In the Progressive example above, you would save $33 on your car insurance by paying your semi-annual premium in full rather than monthly.

In another example, car insurance coverage from Geico could cost you $405.74 if you pay the six-month policy in full. But if you opt for a monthly payment plan, your total cost will be closer to $430. With this Geico quote, your first payment would be larger because it includes the deposit or down payment. Paying your car insurance in full may also be a good way to get cheaper insurance without much of a deposit.

FAQs

Bottom line

If you are looking for cheap car insurance with no deposit, you probably aren’t going to find it. Most of the best car insurance companies require you to make an upfront payment for auto insurance coverage. Any insurer that promises to provide a policy for zero money down likely isn’t legit.

Keep in mind, though, that a deposit on your car insurance isn’t really an additional fee. It’s built into your monthly rate, so you pay it one way or another, whether it is in a higher first-month payment or if it is spread out over your six-month policy.

There are plenty of other ways to save money on car insurance instead of avoiding the down payment. Some of my favorite ways for getting affordable car insurance include keeping your driving record clean, changing the types of insurance you have on your car, building your credit score up, and shopping around for the best car insurance rate that fits your needs.