No Down Payment Car Insurance
No Down Payment Car Insurance
If you need to get your vehicle insured but are short on money, then you should consider getting no down payment car insurance. This is an option that will allow you to secure auto insurance, but delay paying the monthly premium. The following month, you can make your first payment. This is a convenient and easy was to get insured for those low on funds.
Another option is to get coverage for one month free, then pay the total premium amount the second month. This could be for a 6 or 12-month policy. Since most people that need the lowest deposit auto insurance are likely strapped for cash, monthly premium payments are usually chosen.
Very Cheap Car Insurance for $20 Down
Some insurers require a small deposit as a sign of good faith, often as low as $20 to $30. In order to get very cheap car insurance for $20 down, it helps if you have good credit. You also want to have a history of consistent coverage. If you have had your policy canceled in the past, this raises a red flag.
Often, it means there was a serious violation that raised the level of risk substantially, causing the insurer to void the policy. There could be past reckless driving offenses or DUIs that caused the policy to be voided. Also, if a driver is required to file an SR22, then he or she will be required to put a down payment, usually 10% or more of the total premium.
The good news is if you are a safe driver with a good history of continual coverage, you can qualify for cheap car insurance with nothing down. Apply online and compare rates.
Why Some Auto Insurers Do Not Provide Zero Down Policies
There are numerous providers that do not sell zero down auto insurance plans. One reason is the clients are often looking for short-term insurance. This means they are likely to cancel the policy or switch to another company after getting insured. If a company insurers someone with the first month free, then they need to get that money back, by way of future premium payments.
If someone cancels the policy after 1 or 2 months, then the carrier will not make any money on that policy. In short, it’s just not good business for most providers. Also, if the client switches after a brief time, the insurer will lose money and incur increased risks.
This makes low down payment polices more risky for car insurance companies, so many choose not to sell these types of policies. There are also administrative costs insurers incur, like onboarding fees to vet a new client. When a company offers coverage with the first month free, they are taking a big risk and will likely lose money for the first few months.
Average Car Insurance Costs
According to the popular comparison site The Zebra, the average annual cost of insuring a vehicle in the United States is about $713. This is only a rough estimate. There are so many factors that go into rates. These include where you live, your driving record, vehicle, marital status, gender, and credit.
The more expensive your automobile is, the higher it will cost to insure it. You should also keep in mind that people who live in highly congested areas, like big cities, are going to pay more to get their car insured. There are a lot more auto accidents in Las Vegas for example than someone living on a farm in Kansas.
The Coverage You Select Affects the Down Payment Cost
If you need to get monthly auto insurance with the first month free, then you should carefully select the coverage and limit amounts. In general, the more protection you need, the higher your premiums will be. This will result in a larger down-payment requirement.
Liability is the cheapest car insurance you can buy and is mandatory in each U.S. state. A basic plan with state minimums can be purchased for as low as $29 per month, with the initial month free. If your automobile is paid for and is more than six years old, consider liability only if you need to reduce the cost of covering your car.
If you add greater amounts of coverage, including collision and comprehensive, the premiums will go up. This will also increase your no down payment car insurance cost. For those with very good credit and a long track record of being insured, some companies may still offer a comprehensive coverage plan with high limits for zero down. In this case, it’s about attracting long-term customers that will hopefully stay insured with the same company for years.
Is a Zero Down Policy More Expensive?
The short answer to that is yes, but not much. On average, these types of policies only cost about 5% more. For those consumers strapped for cash and desperate to get their car insured, it’s worth it.
To illustrate this, a typical policy might cost $1,140 per year if paid in full. The same auto insurance plan with nothing down and the first month free might cost $1,200 per year, with 11 monthly payments of $109. If you cannot pay the premiums in full, then monthly payments can help you cover the cost of insuring your vehicle.
States that Allow Auto Insurance Policies with Zero Down
It’s important to note that only select states allow carriers to sell zero down policies. Some of the most populous states, including California, New York, and Florida do allow these deals. Here is a list of the seven states offering these policies:
- New York
Auto Insurers that Offer No Down Payment Auto Insurance Deals
There are several regional and national carriers that offer no down payment car insurance. Two of the biggest are Geico and State Farm. With Geico you can buy a policy direct online. With State Farm, you need to go through a dedicated agent. Here is a list of insurers that offer zero down automobile insurance policies.
- State Farm
- Safe Auto
How to Buy Auto Insurance With the First Month Free
If you need the best no down payment car insurance deals, then shop online. Direct insurers have online deals that are cheaper than most agents or local brokers. Comparison sites like Direct Auto Insurance are a great place to start. You can search for the coverage and down payment plans that fit your budget. Get started now with a free rate quote.