Standard auto insurance can be a pain to pay monthly because of the deposit costs that discombobulate the schedule. Car insurance companies require a deposit of roughly 10% to 15% which usually equals an extra month’s payment and tack it on to the start of the policy. This can come as a surprise to many people who are unprepared to make the payment every six months.
However, there is the option of choosing cheap no deposit car insurance which does away with having to pay an extra month’s payment.
What is No Deposit Car Insurance?
Put simply; it is car insurance that does not come with a deposit. This means that you can pay the same rate every month. With no deposit to pay, you can comfortably pay for your insurance every month without having to worry about the amount changing. There are no surprises when it comes to this form of insurance payments.
Not everyone can qualify for no deposit, at least when it comes to paying monthly. If you pay off the six-month policy in one payment, the deposit is not included because the insurance company gets the entire amount. For those with good credit, have a solid history of paying their premiums on time, and have an automatic deduction from their bank account, they can qualify for a no deposit plan.
Additional Fees or Costs
However, it should be noted that this monthly car insurance plan is not as cheap as you might originally believe. Insurance companies are not so much eliminating the deposit as they are spreading it around the premiums.
The fees themselves come in several different forms, but virtually all of them are incorporated into the structure of the premiums themselves. This means that they can be difficult to spot unless you look at a breakdown of what you are paying. Many such fees come with innocuous names such as handling or service that carries no specific meaning.
However, while the additional costs may boost the premiums, you pay higher than if you had to pay a deposit, keep in mind that they often do not exceed the deposit, so you are paying the same. What you are paying for is the ability to pay the same rate month by month which is why no deposit offers an advantage that many drivers want.
Is No Deposit Right for You?
The answer will depend on your current financial situation and whether you are comfortable with paying for a deposit. The ideal solution is to pay for the entire term of the insurance at once which saves you the deposit.
Plus, you will not get hit with the fees that often accompany no deposit insurance. However, if that is not workable for you, then the next best step is to get no deposit auto insurance which evens out your premium payments.
While no deposit insurance is not the perfect solution, it may be the best for your needs. Especially if you are struggling with paying your bills from month to month.