Getting no down payment car insurance is a good way to receive coverage even without paying any extra fees up front. The only thing required to make your policy valid is paying the first month’s premium.
What Is No Down Payment, and How Can You Pay For No Down Payment Insurance?
There are two main ways in which you can pay your car insurance costs:
- Large payments once, twice, or four times per year
- Monthly payments
The “no down payment” part means that in order for you to be fully covered, you don’t have to pay anything more than the first month’s premium. However, the more money you can afford to pay in advance, the lower the total policy costs usually are. In other words, as MoneyUnder30 puts it, the only way to have valid car insurance is by paying some money in advance, with the main reason being that car insurance companies won’t take the risk of insuring someone who hasn’t yet made any payments.
Those who want insurance without paying upfront are usually those who only want to insure the car so they can drive it to the registration office, so they are at a greater risk of canceling the policy after only a short while. Finding a no down payment insurance policy can be difficult, as not all companies offer this option. Also, the only states that currently offer this option are Arizona, California, Florida, Georgia, New York, Oklahoma, and Washington.
Besides the fact that a lack of down payment automatically results in higher rates, the fact that companies typically prefer to avoid making no down payment policies can result in even higher rates, as insurers see customers who want no down payment policies as being a greater risk than those who pay a part of their policy upfront. Drivers with good credit scores and inexpensive cars have the biggest chances of getting no down payment insurance, with the situation being exactly the opposite for drivers with new and expensive cars.
What Are the Average Down Payment Costs?
According to ValuePenguin, the average required down payment amount based on the value of the monthly premium is:
- 0 percent down payment: $100 monthly premium
- 10 percent or $60 down payment: $90 monthly premium
- 20 percent or $120 down payment: $80 monthly premium
- 30 percent or $180 down payment: $70 monthly premium
Considering the fact that the more you pay in advance the lower your monthly insurance costs will be, your down payment shouldn’t be seen as an extra fee but as a way of lowering your future costs.
How to Reduce Car Insurance Costs
Consider these ways of lowering your costs with auto insurance:
- Find the company with the lowest prices for your situation. Although getting exact insurance quotes is difficult without having specific driver info, The Zebra ran a simulation using a general profile and discovered that USAA is the least pricey car insurance company, followed by GEICO.
- Know when to file claims. Your auto insurance policy tends to get gradually cheaper as time goes by, assuming you don’t use it. After estimating the car repair costs and finding out how much your insurance premium is expected to rise, you can make a decision on whether it is more cost-effective to use your insurance or pay out of pocket for minor repairs.
- Get the right coverage. Most cars tend to lose value as they get older, so you need to be careful not to overpay by having your car valued at a rate that was valid a few years ago. As a general rule, if your car’s worth is estimated to be less than $4000, you probably shouldn’t have any collision and comprehensive insurance coverage, as the repairs are likely to cost less than keeping your car insured.
- Find various discounts. Research all insurance companies and see if they have any discounts that may apply to you. The most often-encountered discounts are for good drivers, students, customers with multiple policies at the same insurance company, those who pay via bank account, those who pay in full, with multiple vehicles, and those with special vehicle safety devices.
- Get a higher deductible. If you have a history of incident-free driving, getting a higher deductible can significantly reduce your insurance costs, as long as you don’t use it.
- Work on your credit score. According to Equifax, insurance companies have better rates for customers with good credit, as they usually present a lower risk.
- Know what the insurance costs are before buying the vehicle. Some vehicle types, such as luxury and sports cars, have significantly higher insurance costs than SUVs, for example. Also, vehicles with modern driver aids like adaptive cruise control and lane-keeping assist sometimes have lower insurance costs.
What Car Insurance Companies Offer No Down Payment Insurance?
Consider these companies when shopping for no down payment car insurance:
- State Farm: According to MoneyGeek, they allow customers to bundle all their insurance policies on one bill, select personalized payment plans, and get discounts for safe driving.
- GEICO: They allow payment in two to six installments, have an excellent customer support service, and offer military discounts.
- Progressive: They allow customers to bundle their car insurance with their property insurance and have very flexible payment plans.
- Allstate: Although their qualification standards and insurance costs are calculated based on the driver’s credit score and accident history, they usually even cover drivers with low credit scores, at a higher rate.
- USAA: Although they have affordable and flexible rates, they are only available to active and former members of the military, along with their families.
Some insurance quote websites, such as Insurify, can help you find the right coverage based on your personal characteristics in a matter of minutes. Considering that having your vehicle insured is required by law, looking for available policies online is usually the fastest way to find a good deal in a short time.
Car insurance policies may be required by law, but the details behind them are usually under our control. Whenever you are in the market for an auto insurance policy, take all relevant factors ��� like your finances and the car’s value ��� into consideration, use websites that estimate your insurance costs, and make sure you find the optimum payment plan for you.
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