You can get very cheap car insurance with no deposit by comparing car insurance quotes from multiple companies and choosing a policy that only requires you to pay the first month’s premium upfront. You will always have to pay something upfront, usually at least the first month’s premium, in order to get coverage. However, there is typically no additional deposit or down payment beyond that first month’s premium.
Key Things to Know About No Deposit Car Insurance
- When is the policy active? Your policy will not be active until some amount of the premium is paid.
- Why do you need to pay before coverage starts? Coverage always comes at a price, so drivers who are unable to pay at least the first month’s premium are a red flag for insurance companies. This signals they may not be able to make payments in the future.
- Why do some insurers charge more the first month? Insurance companies sometimes charge a higher amount the first month to offset costs like requesting a full driving history, initial underwriting, and other administrative tasks associated with setting up a new customer. Some people refer to this as a deposit.
- Is it more expensive to pay monthly? Paying monthly instead of the full amount upfront will cost more in the long run. For instance, if your car insurance policy costs $1,200 per year, your monthly payments should be $100, but your insurer will likely charge more to cover the administrative expenses associated with monthly billing.
- Can you get a discount? Most insurers offer discounts for paying your premium in full at the start of your policy. If your premium is $1,200 per year, for example, a pay-in-full discount of 7.5% would save you $90 per year.
Very Cheap Car Insurance with No Deposit
The best cheap car insurance with no deposit is from GEICO, AAA, and USAA, according to WalletHub’s analysis. These companies offer low monthly rates in addition to great customer service and a wide range of available discounts.
| Company | Average Premium |
|---|---|
| GEICO | $39 per month |
| AAA | $44 per month |
| USAA | $41 per month |
| Progressive | $46 per month |
| Travelers | $53 per month |
| State Farm | $60 per month |
| Allstate | $65 per month |
| Nationwide | $74 per month |
| Farmers | $87 per month |
| Liberty Mutual | $91 per month |
Note: Premiums are representative of a minimum-coverage plan; individual premiums will vary.
How No Deposit Car Insurance Works
No deposit car insurance works the same way as regular car insurance, except initial costs are minimized. No deposit car insurance refers to policies that allow you to only pay for the first month of coverage upfront. Here’s how it works from the policyholder’s perspective:
You choose to pay your policy more frequently.
Choosing to pay monthly or for your whole policy upfront will not affect whether your insurer charges an additional fee, or a “deposit,” for administrative charges. However, paying monthly will mean a lower upfront payment. This may be more expensive annually, but it’s a great way to get inexpensive coverage quickly. You can also pay for your policy in full upfront. While this requires you to pay more initially, it will cost less in the long run and many insurers actually offer a pay-in-full discount.
You pay for the first month upfront.
No deposit car insurance allows you to pay for only the first month of coverage upfront, rather than charging you an extra fee to cover administrative costs. This upfront payment may be partially refundable if you cancel your policy before the full amount of time you’ve paid for ends.
You use your policy like normal.
Other than the upfront payment, very cheap no deposit car insurance works the same way as a regular policy. You can contact your insurer like normal for things such as filing claims, asking questions about your policy, or adding a driver or an additional vehicle.
How to Get Very Cheap Car Insurance With No Deposit
To get very cheap car insurance with no deposit, you need to determine the right coverage amounts and deductibles to satisfy your needs, then compare quotes from several different car insurance companies to find the best deal. After you pick an insurer, you'll need to finalize your policy and pay your first month’s premium to start your coverage.
1. Determine your coverage needs.
Although it’s important to find the cheapest rates, make sure you purchase at least your state’s minimum coverage requirements too. You may also want to consider collision and comprehensive insurance, which provide coverage for damage to your vehicle, and they may be required if your vehicle is financed.
2. Choose a high deductible.
A higher deductible can lower your premium, but keep in mind that you will need to pay more out of pocket if you have an accident.
3. Consider lower coverage limits.
If you have an older car or you own your vehicle outright, you may not need as much coverage as someone with a new or expensive car.
4. Purchase your coverage.
You can buy your policy online, over the phone, or in person. To purchase your policy, you will need to provide information such as your driver's license number, your Social Security number, the details of your vehicle (make, model, mileage), and the address where your car is garaged.
5. Pay for your policy.
While many insurance companies do not charge a deposit, you will still have to pay something upfront for your coverage to begin. Nevertheless, make sure you opt for monthly billing, as opposed to paying your premium annually, because this will ensure you pay as little as possible upfront.
No-Deposit Car Insurance Tips
Don’t Be Misled by Advertising
If a reputable company or insurance agent advertises “no deposit” car insurance, they mean you won’t have to pay anything beyond your first month of premiums.
Beware of Scams
As with most things, if it seems too good to be true, it probably is. Companies that advertise car insurance with no down payment, no deposit, or the first month free are likely not reputable and should be avoided.
Understand How Temporary Car Insurance Really Works
In addition to companies that claim to offer no-deposit insurance, some also advertise temporary car insurance. In reality, the shortest policy term that you can have from a reputable company will be six months. By paying monthly, you can cancel or switch at any time, though.
Don’t Pay for Quotes
A common scam is requiring a deposit in exchange for car insurance quotes. Car insurance quotes from reputable companies and comparison sites should always be free. Anyone who charges you is likely just stealing your money.
Compare Quotes Regularly
To ensure you’re getting the best deal possible, regularly compare quotes from several insurance companies.
Adjust Your Coverage and Deductible as Needed
If your current insurance costs more than you can afford, check how much coverage you have and compare it to how much you actually need. You can also consider raising your deductibles to help lower your monthly premiums.
Look for Discounts
Most insurers offer discounts for paying in full at the start of your policy. Beyond that, companies offer discounts for a lot of different things, like being a safe driver or having multiple vehicles insured by the same company.
Keep Your Driving Record Clean
Having a clean driving record, as well as a good credit score and a solid history of paying insurance premiums on time, will help to make you a more attractive candidate for insurance companies. If you don’t have a great driving record, consider taking a defensive driving course to learn better driving practices, and maybe even get a discount on your premiums for taking it.
Learn more about getting car insurance.
Video: How to Get Very Cheap Car Insurance with No Deposit/Down Payment
Methodology
The best cheap car insurance companies with no deposit were determined based on a comparison of the major auto insurance companies. WalletHub editors analyzed each company’s average car insurance premiums and considered consumer ratings to create the ranking.
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