Is there such a thing as car insurance with no down payment?

Whether or not car insurance with no down payment exists depends on how you define a down payment. Every auto insurance policy will require you to prepay, whether it is for a month, three months, six months, or a year of premiums. That would appear to be a down payment. Of course, by some definitions, a down payment is a different payment, separate from the premium, and by that definition, there are many companies that offer car insurance with no down payment.

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Even if you don’t have much cash in your pocket, there are still a few car companies that might help you get car insurance, depending on which state you’re in.

Sometimes a car company will offer you the opportunity to pay one month at a time and pay only one month in advance, although this is often more expensive in the long run. Some companies might even let you go without paying a few extra days by letting you pay your deposit with a post-dated check.

Car Insurance Payment Options

Most insurance companies will offer you multiple payment options. Often the payments can be made monthly, every three months, every six months, or even every year. There is usually a fee associated with paying every month or every three months as opposed to paying for the longer terms. The reason is that since insurance is paid in advance, a longer term means that the insurance company gets more money up front.

Insurance companies may also allow you to split a larger payment into two or more installments, for a fee.

How the premiums are paid is also usually a matter of choosing an option. While just about any insurance company will accept a check, most will also offer discounts for automatic payments, through either a credit card or a bank account.

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Car Insurance Discounts

There are always some kind of discounts available through an auto insurance company. For starters, your education could earn you some good car insurance discounts. According to an article from USA Today, a teen driver could save up to 15% on their car insurance by maintaining a B average or higher in school. You could also save up to 10% by taking a defensive driving or safe driving course.

If you don’t drive a lot, you might qualify for a low mileage discount on your auto insurance. If you have gone a number of years without an accident, you will probably qualify for an auto insurance discount. If you belong to a club or special organization, you might qualify for a discount on your auto insurance.

There are also discounts based on how long you have been with your insurance company and how much business they get from you. If you have multiple policies with the same insurer, like auto insurance and home insurance, you will almost certainly qualify for a discount.

If you have multiple cars insured with the same company, you might get a discount. Sometimes you can even get a discount or bonus just by referring a friend or family member to your insurance company.

The Effect of Car Types on Insurance

There are a few factors relating to your car itself that can affect your premium. The first is the value of car; the more expensive the car is to replace, the more expensive it will be to insure. Sometimes valuable cars also have a greater likelihood of being stolen, too, which can also raise insurance costs.

Safety has a huge impact on auto insurance costs. Cars with more safety features and better safety ratings are less likely to have serious accidents with serious injuries, so they are cheaper to insure. You can check on the safety of your car or a car you are thinking of buying by visiting the Insurance Institute for Highway Safety website.

New cars are generally more expensive to insure than used cars, again because they are more valuable and cost more to repair or replace. If a new or used car is financed, the finance company will require the car owner to insure it against just about every imaginable problem for a large enough amount to cover all repairs to the car. (For more information, read our “Do you need full coverage on a financed car?“).

Deductibles

One of the easiest ways to control insurance costs is by adjusting your deductible. The deductible is the amount you will pay out of pocket in the event of an accident before the insurance starts to pay. The higher the amount of your deductible is, the lower your insurance premiums will be. (For more information, read our “What is a car insurance deductible and how does it work?“).

Exactly how high your car insurance deductible should be is a matter of personal choice. An article in Businessweek advocates a higher deductible, perhaps even as high as $1,000 in order to save money on your premiums and to help you resist the temptation to file a claim for every ding and scratch, a practice that could result in higher premiums. To be safe, you would be wise to calculate how much you could afford to pay in an emergency and set your deductible right around that amount. Remember, a great insurance premium does you no good if you can’t afford to pay the deductible when an accident occurs.

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Demographics

Some of the cost of your insurance is not under your control at all. Your age, marital status and location are all major determining factors in insurance costs. If you are very young, statistics show that you are more likely to have an accident, so insurance companies will charge you higher premiums. This is logical, since younger drivers do not have as much driving experience. On the other hand, older drivers may have slower reaction times and other physical limitations that make them a bigger risk for accidents. (For more information, read our What is a Preferred Driver?“).

Being married can get you a reduction in insurance premiums, again because married people are a little less likely to have accidents. Where you live can also help determine how much you pay for auto insurance.

Some states have higher insurance rates because of a number of factors, including driving population, number of uninsured motorists, and the number of claims made within the state.

Keeping Your Car Insurance Rates Low

Getting the best deal on auto insurance isn’t the end of your relationship with your insurance agent; it’s just the beginning. If you want to continue to get the best possible rate on your car insurance, you need to stay involved in the management of your insurance and continue to drive safely.

The quickest way to drive up your insurance premiums is by driving recklessly. If you have a lot of accidents, speeding tickets, or even a single DUI, your rates could skyrocket. You can help to control these increases by making a conscious effort to drive more safely and by not filing unnecessary claims for minor damages to your vehicle. (For more information, read our “Car Insurance by Vehicle: How the Car You Drive Impacts Your Premiums“).

Your life changes every day and those changes can affect what insurance risk you present and what insurance you need. While most good agents will check in with you to make sure that you have the right coverage and are getting the best rate you can, it never hurts to check in with them regularly just to be sure. In particular, you will want to speak to your agent after any major life events like getting married or buying a house.

While you are checking with your agent, it would be a good idea to ask about discounts. Insurance companies are adding new discounts all the time and you never know if you qualify for one if you don’t ask. You might also qualify for discounts you hadn’t qualified before if you have changed jobs, driving habits, or club memberships.

Another thing to keep in mind is that you generally need less insurance as your car gets older and the cost of replacement drops. In some cases, you can drop some types of coverage altogether, as your car gets older. Of course, you still will need to keep liability insurance at a good level, but when your car is barely worth the cost of your deductible, there’s not much point in carrying collision or comprehensive coverage.

Finding a Reputable Insurance Company

In addition to looking for a good deal on auto insurance, you need to make sure that the company you are going with is trustworthy. You can try sticking with the big name insurance companies with well-established reputations, but just because a company is well-known doesn’t mean that it’s well-liked by its customers.

You can find out about complaints against a particular insurance company by checking with the National Association of Insurance Commissioners and searching for that company’s name and record.

You can also find out about complaints by checking with the Better Business Bureau (BBB). The BBB will also provide ratings for businesses so that you can see the ones with the best track record for customer service.

If you would like to find great insurance from a reputable company at a great rate, enter your ZIP code into the FREE search tool found here!

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