Very Cheap Car Insurance With No Deposit (2022)

Car insurance companies often require an initial deposit on new policies. This deposit is usually a percentage of the total annual rate or a few months' rate paid upfront. Very cheap car insurance with no deposit exists, but it is not offered in all areas or by all companies. Furthermore, in the long term, not paying a deposit can end up costing quite a bit more. By exploring different policies, you can find the right balance between the coverage you need and what you can afford.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: May 5, 2022

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Things to Remember

  • Most car insurance companies require the insured to pay an initial deposit
  • Buy now, pay later car insurance is available in select areas by a handful of companies
  • Even though you save money upfront by not paying a deposit, this payment structure costs more in the long run

Searching for car insurance is a complex process. Different coverages, rates, and promotions can make it challenging to choose the right car insurance policy for you. Additionally, the sizable deposit could be a deterrent when you find a very cheap full coverage auto insurance policy.

Some top companies offer instant auto insurance with no down payment. Still, these policies can be more expensive in the long run. To find very cheap car insurance with no deposit, enter your ZIP code to compare quotes from top car insurance companies.

Why does cheap car insurance require a deposit?

Sometimes drivers purchase the first month of car insurance to show proof of insurance to establishments like the government or financial institutions. These drivers will often stop paying after the first month. By requiring a deposit, insurance companies can protect themselves from situations like these.

Car insurance deposits are usually a percentage of the annual rates, or the first few months paid upfront. Many auto insurance policies require you to pay the first six months upfront. Over the long-term, both of these options will cost less than most no deposit car insurance policies.

For many drivers, a no deposit car insurance policy can end up costing hundreds of dollars more per year.

Car insurance policies that do not require a deposit are generally more expensive in the long term. You may have heard it referred to as “no deposit,” “no down payment,” or “buy now, pay later” car insurance.

These policies cost more because what would have been the deposit will instead be rolled into the monthly rates, plus fees. For many drivers, a no deposit car insurance policy can end up costing hundreds of dollars more per year.

It is tempting to save money upfront with “buy now, pay later” car insurance. The truth is you will end up spending more on no deposit insurance. The extra cost means saving less money when it comes time for renewal, thus trapping you in a more expensive cycle.

Car insurance with no deposit does not exist in all states. It also is not offered by all car insurance companies. While not everybody can afford a large upfront payment, you will save more money if you pay the deposit.

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Is buy now, pay later car insurance cheap?

It’s tempting to view a policy with no upfront cost as more affordable than one with a large deposit. Unfortunately, no deposit car insurance can cost hundreds of dollars more than a traditional payment structure. The extra cost is incurred because auto insurance companies roll the deposit and associated fees into the monthly rates.

Let’s say you received two quotes for the same policy in both payment structures. You found a great deal on car insurance that costs $2,200 annually. This policy requires a 20% deposit equating to $440 with a $147 monthly rate. After inquiring about their no deposit option, you learned that the monthly rates would be $200. Over the following year, you would end up paying $2,400, which is $200 more than the deposit option.

Compare Auto Insurance Rates With vs. Without a Deposit

Charges Deposit No Deposit
Upfront Cost $440 $0
Monthly Rates $147 $200
Total Cost $2,200 $2,400

Using some basic math, it is easy to see that paying a down payment can cost significantly less in the long term. The no deposit option could be more suitable if you can’t afford the upfront cost.

It is helpful to understand your state’s requirements before choosing no deposit car insurance. While all states require car insurance, only liability insurance is federally mandated. Some states require more comprehensive coverage, so make sure you understand what type of insurance you need to comply with your local laws.

What is the best car insurance for full coverage?

While car insurance is required in all 50 states, only liability insurance is federally mandated. Liability insurance is the basic minimum coverage when it comes to car insurance.

Liability insurance protects the other party in the event of a collision. The claims paid out for liability insurance go to repairing the damaged property or paying medical bills for the other individual involved. Liability insurance does not cover any repairs to your vehicle.

Liability insurance does not cover any repairs to your vehicle after a collision.

No state legally requires drivers to have full coverage insurance. Full coverage car insurance is more than just a single type of policy and typically includes collision and comprehensive insurance.

You are entirely covered following a collision if you have full coverage car insurance. This more advanced type of auto insurance can cover damages to your vehicle and any medical costs incurred. Sometimes more comprehensive coverage comes with other company-specific benefits such as pet injury insurance.

With a full coverage car insurance policy, you can rest assured knowing that your bills will be covered following a collision.

Full coverage car insurance is beneficial if you get in a collision with an uninsured motorist. Your policy can help cover the cost that their insurance company would have paid out.

It can cost you financially and legally if you do not have liability car insurance. You might be subject to fines or the revocation of your driver’s license if you are driving without insurance. Any mark on your driving record, including the suspension of your license, will increase your insurance rates.

Furthermore, suppose you are involved in a collision and have no insurance. In that case, the other party can sue you in civil court to reclaim costs to repair their personal property or cover medical bills.

Where can you purchase dirt cheap car insurance?

If you can’t afford a full coverage policy, there are other ways to save money. Many top auto insurance companies offer cheap down payments if you cannot afford an expensive one. Some companies may offer car insurance with a $20 down payment. Leading auto insurance companies like Progressive and GEICO provide inexpensive down payment options.

Most top car insurance companies offer promotions and programs to help drivers save money on their rates. Additionally, some car insurance companies offer add-ons to their basic car insurance coverages that provide slightly more protection than liability insurance alone.

Safe driving programs are some of the most popular ways to save money on full coverage car insurance.

Safe driving programs are some of the most popular ways to save money on full coverage car insurance. These programs rely on telematics devices to monitor driving behavior and discount your insurance rates if you are a safe driver. Telematics devices are instruments that plug into cars to track factors such as speed, abrupt stops, time of day driven, and other risky driving behaviors.

Other money-saving programs may include good student discounts. Good student discounts incentivize new drivers to perform well in school to save money on their car insurance rates.

There are more ways to save money on your auto insurance. To get the best deal for your situation, be sure to compare rates from top auto insurance companies. By comparing different rates, you can determine which company can give you the coverage you need that fits your budget.

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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Is cheap car insurance with no deposit right for you?

The different coverages, rates, and factors can make shopping for auto insurance daunting and confusing. As you compare the upfront costs, you may be wondering how to find very cheap car insurance with no deposit. Car insurance policies that don’t require an initial deposit exist, but this payment structure ends up costing more in the long term. If you are ready to find the best car insurance to fit your budget, enter your ZIP code to compare quotes from top auto insurance companies for free.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

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