Jessica Sautter has a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around auto insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Reviewed by Natasha McLachlan
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UPDATED: Oct 1, 2020

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For those who pay month-to-month on their car insurance, you may have noticed a deposit fee or a larger than average first payment. This is a common feature of auto insurance. It may come as a surprise to those who have not paid for car insurance before.

What is a Down Payment?

Average Down Payment in the USA

When you are paying monthly, the down payment is essentially a guarantee to the insurance company. This is because since you are not paying for all of the insurance at once, it is essentially like taking out a loan. The extra payment helps cover insurance companies in case you balk on the remaining payments, much like the interest rates on standard loans.

There are a few ways you can either avoid or lower the down payment. The easiest is to pay simply for the entire insurance all at once. While this is a significant payment, no down payment is necessary. Because you are fully covered for the length of the insurance policy. Also, if you have excellent credit and are on good terms with the insurance company, you can ask for a lower down payment.

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How Much is the Typical First Down Payment?

To be honest there is no standard in the industry. Your down payment will be based on some different factors unique to the individual policy. Such factors include credit history, driving record, type of vehicle, age, gender, and so forth.

However, as a general rule, the down payment is usually 20% or one month’s payment on a six-month policy.  20% is average for a driver who has a clean driving record and a good record of payment with the insurance company. You should note that there are many exceptions to the 20% average. You will need to check with your insurance company to find your individual rate.

If you find the down payment rate on your car insurance too high, you may consider options for a low to zero down payment option that may fit better into your budget. This is an option not every insurance company offers. So, you will need to do some checking around to find the right one for you.

Zero Down Payment Car Insurance

Note that even insurance companies that offer zero down policies may have an additional fee or payment structure that is not the flat premium rate. However, this type of policy offers the excellent advantage of having even payment rates from month to month. This means that you are not hit with a larger payment in the first month because a small or no down payment does not exist.

For those who are looking to reduce substantially, if not eliminate their down payment while still paying month to month, going with a low or zero down payment plan is the right course of action. You should talk to your insurance agency. Or, better yet shop around online for free quotes from companies that offer a low to zero down payment structure.