Cheap Car Insurance With No Deposit? No Such Thing

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.

If you want legitimate car insurance, you’re going to have to make a down payment. Even so, there are things you can do to keep your car insurance costs down in general.

No-deposit car insurance doesn’t exist

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 aren’t. No real insurance company is going to give you coverage without getting paid first. It makes no sense from the provider's perspective, and customers should be very wary of any company claiming to offer such no-money-down car insurance.

How car insurance deposits work

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

Tip

A car insurance deposit isn’t like a deposit on a lease to rent an apartment. You won’t get it back because it’s built into the total cost of your car insurance premium. However, once you pay that cost upfront, the deposit reduces your monthly premium payments over the remaining months of the policy.

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.

How to get a cheaper car insurance down payment

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.

Warning

Avoid those insurers offering a car insurance policy for no money down. If it sounds too good to be true, it probably is.

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.

How to save on car 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 most 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.
Qualify for discounts. Always exhaust all discounts an insurance company offers. Every company is different, but common options include safe driver, good student, and bundling discounts.
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 often optional.
Raise your deductible. The higher the car insurance deductible you have, the lower the premiums an insurance company charges. Before choosing a deductible, I recommend evaluating your budget to determine how much you can afford to pay should you have an accident.

FAQs

Which company has the cheapest car insurance?

No two drivers will have the same insurance quotes, so there isn’t one insurance company with the lowest rates. It depends on many factors including your location, driving record, credit score, and type of car you drive.

How do you get cheap car insurance?

The best way to get cheap auto insurance is to shop around with different car insurance companies to find the best deal. Each insurance company offers various discounts that policyholders can take advantage of to lower their premiums. Another way to reduce car insurance costs is to pay your six-month premium in full rather than monthly.

What is the cheapest way to insure a car?

The cheapest way to insure a car is to get a bare-bones policy for the minimum liability insurance coverage required by your state laws. However, I only recommend this if you have an old car that is worth only a few thousand dollars and you don’t drive it a lot.

If you have a newer car that has a higher value, you may want to opt for more coverage on your car insurance policy and include collision and comprehensive coverages. You could opt for a higher deductible or lower limits to keep costs down.

Bottom line

If you are looking for cheap car insurance with no deposit, you probably aren’t going to find it — or you will, and ultimately get ripped off. 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 better (and less scammy) ways to get cheaper car insurance than avoiding the down payment.

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