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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One of the downsides in paying month to month for auto insurance is that you must provide the insurance company with a down payment that can be up to 20% of the whole policy. However, for many people, they do have the choice of going with insurance that does not require a down payment.

What is No Down Payment?

Car insurance with no down payment worth your money?

Mostly, full coverage with no down payment car insurance means that you do not have to pay the insurance company a deposit when you go with a monthly payment plan. Auto insurance plans are designed to be paid all at once.

However, when you pay monthly it is like taking out a loan from the insurance company, and the deposit ensures that if you miss a payment, they are not losing any money.

A no down payment policy means that you forego paying a deposit which can save you the 20% of the total insurance cost. This type of policy is available to those who qualify, namely people who have good credit ratings and a strong payment history with an auto insurance company.

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Advantages of No Down Payment Coverage

The benefits of not having to put up a deposit are considerable, especially if you work off a budget and like to pay your bills in smaller, more manageable chunks.

  • Pay Less to the Insurance Company
  • Pay the Same Amount Each Month
  • Works Better with Budgets

When you consider that with a $500 auto insurance policy, a deposit adds $100, you can see instantly why not having to pay the deposit can save you money. Besides, you are not paying a larger than the normal amount on your first bill where the deposit is included. Considering that a $500 policy divides into six payments of $83.33 each, the deposit makes the first payment $183.33. Not having to pay the extra $100 can be nice and works well with your budget.

Keep in mind that some insurance companies will charge additional fees for having this type of policy, although in most cases they will only be a fraction of what a deposit will cost.

When is No Down Payment Not Right for You?

There are those who may not need a no down payment policy as it will not be right for their particular needs. The most obvious are those who pay their entire policy at one time and not spread out month to month. For those who pay all at once, there is no deposit added to your bill.

Others who may not benefit would be those who may find it too difficult to qualify based on their credit score or track record with trying to pay on a monthly basis. For people in this position, they are better off working on their credit score and improving their monthly payment procedure instead of trying to get a no down payment policy.

In the end, a no down payment policy is one that you will need to consider to lower the total cost you pay to insurance companies. However, keep in mind that it is not a policy meant for everyone.