Car Insurance is Expensive.

When looking for cheaper auto insurance, you will eventually run into the idea of “no down payment” or “no-deposit” auto insurance. It may be a gimmick.

Let me explain:

If you drive, insurance is mandatory and big chunk of your monthly budget.

There are plenty of ways to save money with your auto insurance dollars, and we will take you through the steps to saving more money than you thought possible.

Looking for “buy now, pay later” insurance can be tricky. You are required to have money to start an insurance policy. It’s part of the contract. The policy is not binding until money (or premium) is exchanged.

So, what do companies mean when they say “cheap no down payment” or “first month free”? Depending on the agency or company, the phrase “no upfront money” could have different meanings.

Here are the Options:

1. Broker Fees

In many states, such as California, agents can charge a broker fee. When they advertise “no money down” insurance, it may mean they are waiving their broker fees.

For example, the premium may be $1200 for a year, and the agent normally charges a $120 broker fee. For a limited time, they may be willing to waive that $120, but you will need to put down $100 for the first month’s premium.

2. Premium Finance

You could find yourself sitting in front of an agent promising “no money down.” You sign the policy and get started with no money until that second month when your payments begin. You notice that $500 six-month policy is really costing you $600 because you are paying $120/month over the next 5 months.

How did that happen?

The agent paid your insurance through a premium finance company. Your payments are going to the finance company and not the insurance company. That extra $100 is actually the interest you are paying for the convenience of no money down.

That extra $100 may feel steep, but if your budget is pinched, it could be the perfect option to help start your mandatory insurance.

3. Car insurance without a deposit, but…

When you start an insurance policy, unless you plan on paying it in full, someone must make the first payment. Rather than requiring one month’s worth of premium, some companies will require a bigger portion of the premium. We often see companies require 30-50% of the total policy premium as a down payment.

On a six-month policy of $600, you could be forced to hand over $200-$300 to get the policy started.

In this scenario, “no deposit” means you won’t need anything but one month’s premium. You will still make an initial payment, but it will only be the first month’s $100 premium. It’s not free, but it is better than $300.

4. Zero Down.

At this point, you probably think “zero down” insurance is a myth that only lives in the imagination of a slick salesperson.

Believe it or not, there really are places where you can start a policy with nothing down. First of all, it depends on where you live.

There are 8 states that allow a true car insurance policy without a down payment: California, Nevada, Arizona, Washington, Oklahoma, Georgia, Florida, and New York.

Am I Eligible?

Not every person will qualify. Your credit and driving record will impact whether an agent or company in those states will offer a very cheap no down payment option to you.

Just remember, “low down payment” or “no deposit” could mean something different depending on your state, your agent, or your company. If you are struggling to find affordable auto insurance, there are other ways to lower your initial deposit, and you may even be able to buy with nothing down.

Let’s look at 2 ways to save you money.

  1. What Makes Car Insurance Cheaper for You?
  2. How to Get the Lowest Down Payment Possible?

Here we go.

Factors that Make Car Insurance Cheaper for You:

Pricing for car insurance is complex, and multiple factors go into the pricing formula companies will use. Have you noticed how you and a friend with similar cars can pay drastically different prices for their insurance?


If you are a young, inexperienced driver, age is going to hurt you. The older you get, the better your insurance rates will become. The sweet spot for most insurance companies is between 30-55 years old. Once you hit your senior years, rates based on age start increasing again like they did when you were a teenager.


Whether you are male or female makes a difference. Years ago, it mattered much more than it does today. Sorry men, but women were considered to be better drivers and saw lower rates.

But to be honest, it wasn’t because they were better, it was because they drove less. Over the past two decades that is changing, and women are now spending as much time on the roads as men, and those differences in rates have almost disappeared.


You wouldn’t think credit could affect your insurance price, but it does. Years ago, insurance company analysts discovered that the lower a person’s credit, the more likely they were to report a claim.

Credit was an indicator of whether a person could absorb a loss without relying on the insurance company. This is a factor you can control. If there is one thing you can do to make your auto rates cheaper, it is to improve your credit.

If you know your credit has improved, it is time to requote your insurance. Let us shop you through all our carriers, and we can guarantee you’ll end up with a cheaper auto rate.

Driving Record

You knew this one, didn’t you?

How you drive matters. If you have speeding tickets and violations on your record, it’s going to hurt you. But don’t worry, many companies minimize the impact of driving records, and we can still find you very competitive pricing even with a blemish on your MVR.

Claim History

Like the driving record, most of us know that frequent claims will impact our pricing. One thing you can do is avoid reporting small claims—just pay them out of pocket. It might not make sense, but it will save your insurance dollars. Use your insurance if you ever have a big claim.

It’s not just at-fault accident that will affect your pricing, not-at-fault accidents can impact you negatively also. Most of the time, it is difficult to determine which party is completely at fault. This is why companies will use the term “not-at-fault” to describe many accidents.

Type of Car

Your car will have a lot to do with your price. Most people assume newer cars will be cheaper, but this is not always the case. Newer cars have a lot of features that older cars don’t. There are sensors and cameras located everywhere. A simple bumper could be thousands of dollars because of all the technical elements built into it.

Older cars may not be the way to go either. As parts become harder to find, the price to fix an older vehicle may become more expensive.

Read how used cars can help your monthly budget by keeping the cost down.

It’s hard to tell the impact your car will have on your insurance costs.
The best advice is to shop. Every company has their own special rates for each type of vehicle. And if you are in the market for a new car, shop the insurance on the vehicle before you make a decision.

Where You Live

Insurance companies price your insurance based on where you live. In many places, your zip code could change your rate. Companies will lump all their accident data together by zip code and create a price for that factor.
Not only will your zip code matter, but your state has a huge impact on your rate.

Here’s a chart of all 50 states and the average annual premiums and monthly rates. This is based off state minimum liabilities on a 2016 Vehicle:

Michigan, Florida, and New York win the top spot for rates, and Alaska, Iowa, and South Dakota are the cheapest place to live for insurance.


Coverages will always make a difference in rate. Adding Collision and Comprehensive will be more expensive than buying Liability only. The best way to reduce price without sacrificing coverage is to manipulate your deductibles. The higher the deductible you choose, the lower your price.


Some of those factors you control and some you don’t, but there is one area where you have some influence – discounts. Every company from Safeco to Progressive to Liberty Mutual to MetLife and AAA will offer discounts, and every company is slightly different. Most companies will give you multi-policy discounts, good student discounts, and low mileage discounts.

Companies now offer tracking devices (such as: Drivewise from Allstate) you can install for a short period of time that will give you discounts based on your driving behavior.

The other area most people forget is affinity discounts. Where you went to college, or clubs, or your employer may receive discounts. Don’t forget to ask.

Get the Lowest Down Payment Possible:

Earlier, we talked about finding the mythical “no down payment” option. It does exist, if you have good credit, a great driving, and live in one of those 8 states that allow it.

If those criteria don’t fit, you can still lower the amount you pay upfront.

The first tip is to shop early. If you buy before you need to, most companies give a substantial discount and will only require 1 month’s premium to get started, and you may not need to pay it right away.

If you can purchase a policy 30 days out, you will get the best down payment possible, and they can issue the policy without upfront payment on your car insurance.

The second tip is automatic bill pay. Setting your billing up will automatically give you special credits and cheaper down payment as well. This could be through automatic bank draft or recurring credit card.

Now you know the inside secrets of cheap auto insurance.

Request a free auto insurance quote from us today. We will show you the most competitive carriers in your area and help you find the most affordable premiums and lowest pay plans available.

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