You always have to make a payment to start a new insurance policy—but some insurers will use your first month’s premium as your deposit or down payment.

Written by Amy Bobinger

Edited by Kianna Walpole

Updated on May 16, 2024

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Car insurance companies require a payment to start a policy
How much is a car insurance down payment?
How to save on car insurance and get a lower down payment
FAQ
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You always have to make a payment to start a new

car insurance

policy, so in that sense, there’s no such thing as “no down payment car insurance.” But the amount you have to put down can vary—some insurance companies add a percentage of your total premium to your first payment, while others only require you to make your normal premium payment to activate your policy.

Car insurance companies require a payment to start a policy

When you’re shopping for car insurance, you can

request quotes

from as many insurance companies as you’d like. But quotes aren’t binding—to secure your policy and have active car insurance coverage, you must make a payment to the insurance company.

This initial payment is sometimes called a deposit or a down payment. Its main purpose is to help offset some of the insurance company’s risk in covering month-to-month customers. This ensures that there’s at least some revenue coming in if customers

file a claim

shortly after beginning a new policy.

When you enroll in a monthly payment plan, you may be charged an additional fee (often called an installment fee). This is separate from your down payment and will generally be applied to each monthly premium.

What is “no down payment car insurance”?

All car insurance providers require you to make a payment to start your policy, so “no down payment car insurance” doesn’t really exist. However, some insurance companies will advertise “no down payment” or “low down payment” policies. Usually, this means they don’t charge onboarding fees—once you make your first premium payment (either the full policy amount or your first installment), your coverage will be activated.

How much is a car insurance down payment?

The amount of your car insurance down payment will depend on the total cost of your car insurance policy and whether you’re paying your premium in monthly installments or all at once at the start of your policy term.

Paying in full vs. monthly installments

If you’re paying monthly (or in other installments), your down payment will be your first installment, plus any additional onboarding fees. This is sometimes calculated as a percentage of your total premium. Depending on your insurance company, this percentage could range from 10%–30%.

If you’re paying your car insurance premium in full, your “down payment” will just be the total premium for that policy term. You’ll typically get the best rate for paying in full—if you pay in installments, your monthly rate will generally be slightly higher.

Most legitimate providers require at least a whole month’s installment as a down payment—if they’re offering less than this, it could be a scam.

There are two reasons why paying your premium in a lump sum can help you save over the life of your policy:

You may get a

paid-in-full discount

: Many insurance companies offer a discount for paying your six-month or annual premium in full at the start of your policy term. These discounts typically range from 5–15% off your total premium.

You could avoid installment fees: Installment fees are an additional charge added on top of your total policy when you split your car insurance into multiple payments. If you pay all at once, you won’t be charged installment fees.

Example: Jordan is reviewing quotes from

Progressive

and is given two payment options—pay $310 up front today for a six-month policy, or make a $140 down payment today, then four monthly payments of $50 each (a total of $340 for a six-month policy).

Policy cost

It’s simple math—the more your total car insurance premium costs, the more your down payment will be. There are a lot of

factors that impact your car insurance

, including where you live, the car you drive, what your driving record looks like, and the coverage options you choose.

Let’s compare the down payments for the driver above (Driver A) with a driver who has

poor credit

, drives more miles than average, has violations on their record, and has allowed their insurance to lapse (Driver B).

	Paid in full	Monthly payments
Driver A	$310 (6-month policy)	$140 down payment, then four monthly payments of $50 each ($340 total)
Driver B	$484 (6-month policy)	$212 down payment, then four monthly payments of $78 each ($524 total)

Because the cost of your premium will directly affect how much you have to pay to activate your policy, the best way to save on your car insurance down payment is to find cheap car insurance coverage. And since every insurance company uses their own formula to determine drivers’ rates, the best way to save on your car insurance is to compare quotes from several different providers.

When you shop for insurance with the

Jerry

app, we’ll compare car insurance quotes from dozens of companies to help you find the lowest rate possible. We also make it easy to compare payment options—so finding an affordable car insurance down payment is easier than ever.

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How to save on car insurance and get a lower down payment

Here are some of our favorite tips for lowering your car insurance payments—thereby reducing how much you’ll have to put down at the start of your policy:

Shop around: As we mentioned above, comparing quotes is the easiest way to be sure you’re getting the best car insurance rates. Shopping with

Jerry

is the fastest way to compare rates from over 55 providers.

Look for discounts: All insurance companies offer

car insurance discounts

, so ask your insurance agent if there are any you’re missing out on. For instance, you could save by

bundling your homeowners and auto insurance

, signing up for automatic payments, or being a safe driver.

Keep a clean driving history: High-risk drivers pay significantly higher auto insurance rates than drivers with a clean record. The longer you go without an accident, traffic violation, or insurance claim, the more likely you’ll be to find savings on your car insurance costs.

Raise your deductible: The higher your deductible, the lower your insurance premiums will be. Just be sure to

choose a deductible

you can afford if you need to file a claim.

Improve your credit score: It can take time to work on your credit, but it’s worth it—according to the

Credit Federation of America (CFA)

, drivers with poor credit pay over 100% more than drivers with good credit.

We don’t recommend reducing your coverage limits to save on your car insurance. Most drivers can benefit from higher liability limits and full coverage car insurance. Choosing liability-only minimum coverage can leave you unprotected if you have to file a claim.

FAQ

Why do auto insurance companies use down payments?

Car insurance companies add down payments to the first month’s payment to help offset some of the risk that comes with covering customers who pay on a monthly installment plan.

Is it better to pay car insurance upfront?

Yes, if you can afford it, it’s usually better to pay your car insurance upfront because you’ll typically pay less overall. But that can be a large amount of money to pay at once, so if making an upfront payment will put you in a financial bind, it’s probably better to stick to a monthly plan.

Can I get no-deposit car insurance?

No down payment auto insurance (or very low down payment car insurance) is usually a scam. Most reputable auto insurance providers will require you to make a down payment if you pay monthly installments, and your policy will not take effect until the first payment is made.

Are car insurance payments refundable?

If you pay your car insurance premium and then cancel your policy before the next payment is due, you’ll be entitled to a refund of any unused portion of the premium, minus any cancellation fees or administrative costs deducted by the insurer.

Why is my insurance asking for a down payment?

Insurers require customers to make a payment before they can start a new auto insurance policy. This payment is generally called a down payment.

Can you get very cheap car insurance without a down payment?

There’s no such thing as zero-deposit car insurance. You may be able to find an insurance provider that offers affordable rates without additional onboarding fees, but you’ll still need to make a payment to activate your coverage.

Are there any insurance companies that don’t require a down payment?

Even the cheapest car insurance companies will require you to pay something down at the start of your policy term. But major providers like GEICO, State Farm, Progressive, and USAA may offer flexible payment options that allow you to find a down payment that will work for you.

Meet our experts

Amy Bobinger

Licensed Insurance Agent — Expert Insurance Editor

Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars.

Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.

Kianna Walpole

Expert Insurance Writer & Editor

Kianna Walpole is an insurance writer and editor with a comprehensive background in consumer behavior and online publishing. With experience in car insurance, maintenance, and repair, she is dedicated to building informative content that helps customers reduce costs while achieving the best service. Prior to joining the Jerry editorial team, Kianna worked as a junior editor in the content marketing industry, using consumer data and key insights to create and edit content for an array of large-scale clients in the real estate, cybersecurity, and healthcare industries.