For those who are interested in saving money on their car insurance, one of the most popular methods is the no down payment policy. No upfront payment insurance manages to remove the deposit which is usually mandatory with monthly car insurance payments.
For those who pay for the whole insurance all at once, a deposit is not required. However, for monthly payments, most insurance companies require a deposit in case you fail to make the next payment so that they are covered before canceling the policy. Most deposits are usually 20% or one months’ worth of the total amount.
For example, if you are paying $400 every six months for your car insurance the deposit will usually be $80. Learn more about your possibilities of getting low deposit auto insurance.
However, despite the obvious advantage of not having to pay a deposit for your car insurance, there are a few downsides that you will need to consider before making a purchase. By taking careful consideration of the ramifications, you can make the best-informed choice.
Higher Fees: Insurance companies, in general, like to make as much money as they can and foregoing the deposit means that they are actually losing money. So, they compensate for this deficit by charging higher fees which partially cover for the loss. You may notice extra costs that are added to the policy itself which mean that you save less money.
High Standards: To receive this type of coverage you will need to have an excellent credit rating and a good history of payments with insurance companies. While many people have both, there are insurance companies that may set somewhat higher standards above the national average so that it makes it a little harder to qualify. In the end, you may have to raise your credit score a bit or show additional evidence of your good payment history.
Fewer Opportunities: Car insurance with no down payment is not the easiest to find as many insurance companies do not openly boast about having such a policy. It only exists as a lure for individuals who have good credit scores that otherwise might not consider their insurance agency. This means that you will need to search for insurance companies that offer this type of policy which may be somewhat frustrating.
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Why Choose Auto Insurance without Down Payment?
In the end, choosing no deposit auto insurance offers many more advantages than disadvantages. However, you may find that the higher fees and stricter standards for obtaining this type of policy may not be worth the effort even if it saves you some money every six months.
With auto insurance companies vying to make you their customer, you should pay attention to what is being offered so that you can take advantage of paying less for your car insurance. Besides, you may want to consider only paying for the entire policy up front which requires no qualification.
If that is not possible, then finding a good no deposit policy will be in your best interest.