Many U.S. drivers simply can’t afford to buy car insurance with a down payment, and therefore need coverage that offers them the option to make a low down payment or no down payment at all. Getting cheap car insurance with no down payment is not difficult when you compare auto insurance quotes online to find companies who offer these policies and payment options.
States and Companies With No Down Payment Car Insurance
Not all states offer the option to buy no down payment car insurance; the states that do include Arizona, California, Florida, Georgia, New York, Oklahoma, and Washington, to name a few. However, the state with the most companies that offer no down payment insurance is California. The best part is that many of the top insurance companies offer the coverage as well, such as GEICO, State Farm, Progressive, and Allstate.
How Does No Down Payment Car Insurance Work?
When paying for your policy, auto insurance companies offer you 2 main options: either make a one-time payment for 3-month, 6-month, or 12-month coverage, or make monthly payments with no commitment.
Advantages of Car Insurance With No Down Payment
The obvious benefit of a car insurance policy that offers a low or no down payment option is that drivers do not need to pay the full premium upfront, avoiding a huge cash commitment. Instead, you will pay a small administrative processing fee and make monthly payments to continue receiving coverage for the remainder of the policy’s term.
This gives you the option to renew coverage or find another auto insurance company. The advantage is that you to get the mandatory insurance you need without a long-term commitment, meanwhile having the freedom to shop around and get cheaper rates.
Disadvantages of No Down Payment Car Insurance
While buying a no down payment car insurance policy may be the only way you can afford coverage, you should still be aware that the option is actually costing you money. When you pay your car insurance premiums upfront for 6 or 12 months, insurance companies offer you a discount. The longer the policy and premiums are locked in, the greater the discount the carrier is able to give. With no down or upfront payment, you forego this discount.
Additionally, many car insurance companies charge a monthly billing fee of around $10, which adds up to $120 annually. This money is not being spent on additional coverage, but rather on administrative fees.
Finally, when considering low down payment car insurance, consumers should expect to have their credit score and history checked. Most major companies will run a credit check before issuing a policy. If you have bad credit or a low score, your car insurance rates may be higher. If this happens, check with other carriers. The insurance industry is very competitive and providers are always looking for ways to get more business and customers.
Get Cheap Car Insurance Rates
You should always research or ask if there are any fees associated with a no or low down payment policy. In most circumstances, the company or agent wants your business bad enough where you can negotiate any fees that may be due on the policy start date. You may even be able to get the coverage you want without paying any fees at all except the first month’s premium.
When you are comparing car insurance quotes on no down payment coverage, you should always ask the following questions:
- Is there a billing, processing or administrative fee?
- How much would it cost to pay for a full 3, 6 or 12 months up front?
- What discount do I get if I pay upfront?
- Are there any ways around the fees?
Many of the best car insurance companies will usually waive the monthly fee if you allow payments to be directly debited from your checking account. In the end, the best way to find cheap car insurance with no down payment is to compare policies until you find the one that best meets your needs.