Shopping for car insurance is always such a joy. It’s about as much fun as cleaning the refrigerator or doing your taxes. Fun or not, though, it’s one of life’s necessary tasks, and it’s always a good idea to know what’s available.
There are three payment options when it comes to purchasing car insurance.
- Pay the entire premium upfront, which will almost certainly get you a discount.
- Make an initial down payment — typically 30% of the entire premium — then pay off the rest of the premium in monthly increments.
- Or, go with a no down payment policy and simply pay a monthly amount that goes toward your premium.
A no down payment policy will likely cost you more during the year. However, if you don’t have the money to pay the entire premium or even a down payment up front, it’s a good option to consider.
When it comes to car insurance, the same factors that determine your price for a no down payment policy apply to most any type of policy.
Let’s take a look at what affects the price and the secrets to getting cheap car insurance.
7 factors that will affect your insurance rate
While many factors play a role in determining the cost of your car insurance (read about them here), some have a greater impact than others.
Here are the top eight factors to consider, listed in order of importance:
- Driving record and claim history: this has the greatest impact on the rates you will be offered.
- Age, marital status, and gender: a recent study by Insurancequotes.com found that, on average, car insurance premiums can vary by more than 50% based on age, gender, and marital status. You will pay more if you are younger, unmarried, and male.
- Car make and model: larger cars are often considered safer than smaller cars. A car with a higher safety rating can also get you a lower premium.
- Insurance carrier and policy options: some companies have more options with low or no down payments. Check out some of the major companies like Geico, State Farm, and Allstate.
- Location: the area where you live can affect your rates. For example, areas that are more densely populated have higher accident rates, which means higher insurance premiums.
- Credit: lower credit scores may get you a higher rate. But, unlike getting a loan or a credit card, your credit score isn’t as important when it comes to car insurance.
- Occupation: certain occupations require more driving and are also considered higher risk. Anyone with a high-risk occupation will fall into a higher rate bracket.
6 tips for finding good deals on car insurance
Natasha Rachel Smith is a personal finance expert at TopCashback.com, where she has searched for customer deals among many car insurance companies.
She offers several ideas for finding lower rates:
Don’t automatically renew your policy with an existing insurer just because of your loyalty to one company. Loyalty doesn’t pay!
1) Always compare quotes
“Don’t automatically renew your policy with an existing insurer just because of your loyalty to one company. Loyalty doesn’t pay! Whether you are shopping around for a new policy or looking for your first one, always compare offers,” advises Smith.
This sounds like a no-brainer. However, most people don’t feel like taking the time to research car insurance companies every year, so they simply renew what they already have.
Searching for the best quote can save you hundreds of dollars, and It’s easy to utilize an online price comparison tool. They’re free and will quickly tell you who is offering the best deal in your area.
2) Work on your credit score
“Douglas MacCormack, an independent insurance specialist at The MacCormack Agency, recently told me credit scores play a part in determining how much they pay for insurance, although the level of importance varies from company to company,” says Smith.
“There could be a cost difference of hundreds of dollars between identical policies of someone with a credit score below 600 compared to someone with a financial worthiness rating of above 750.
I recommend keeping your credit score buoyant by ensuring you have a consistently low debt to credit utilization ratio, don’t miss any monthly repayments, and don’t apply for lots of borrowing in a short space of time, in the hope that it’ll lower the cost of your future insurance premiums.”
3) Use fee-free insurance brokers but with caution
“Local insurance brokers are independent of insurance companies. They represent the interests of the buyer by searching for insurance coverage that will provide the highest benefit to the buyer at the lowest cost.
They will listen to your needs and weave through the wide pool of insurers– often giving clients preferential rates due to their relationships with these policy providers– to find the best options,” says Smith.
“Like online comparison tools, the best brokers don’t charge fees. This means you don’t have to pay for their help because they will probably be paid a commission by the insurance company that offers you the best coverage and rates.”
Although this has its benefits, it also means that your incentives may not always be aligned with your broker. Even an honest broker may be tempted to nudge toward a policy that offers a higher commission. Fee-free insurance brokers can be a great tool to sort out the best carriers but make sure you use free online tools, like SuperMoney’s insurance reviews page, to compare prices and terms.
4) Think about raising your deductible
“Responsible drivers with a history of little or no accidents can consider raising their deductible for a lower premium, which can help save hundreds of dollars in the long run.
Increasing your deductible to $1,000, for instance, could reduce your premium by 50% in some cases,” Smith advises.
5) Look into usage-based programs
Usage-based programs help determine your insurance premium based on your habits and patterns through installing a device to monitor your driving skills.
“If your driving habits are considered ‘low risk’– for instance, you abide by speed limits, don’t brake hard, and tend to drive during the day– then your premiums could be significantly lower than those with traditional insurance companies,” explains Smith.
6) Consider downgrading
If you are in the market for a new car, make sure to shop for insurance before driving off the lot with your new vehicle because that vehicle will affect the price of your insurance.
“While a Porsche sounds glamorous and you might think you can afford to buy one outright or via monthly payments, don’t forget about the eye-watering insurance cost you’ll also be burdened with. Each year. Don’t get yourself into debt to keep up with the Joneses,” Smith says.
FAQ on Low Down Payment Auto Insurance
What is no down payment car insurance?
No down payment car insurance is an auto insurance policy that requires only the first month’s premium in order to initiate your policy’s term.
Can I get auto insurance with no down payment?
Most auto insurance companies provide multiple options for payment plans. If they don’t advertise the installment plan you’re looking for, ask your agent if such an option exists. However, not all drivers will be able to obtain car insurance with no down payment.
Does car insurance require a down payment?
No company will insure you without some kind of upfront payment – either a down payment or the first monthly payment that acts as a down payment. Virtually every car insurance company requires that you pay at least one month ahead on a six-month policy.
What factors affect your car insurance rates?
Your gender, age, marital status, geographical location, and credit score all affect your insurance rates in different ways. Also, Car related factors (safety rating, vehicle size, age of the car & likelihood of theft) and personal driving habits (driving history and driving activity) will affect your rates.
Do you have to pay upfront for auto insurance?
When you buy a car insurance policy, you are required to pay your bill upfront. The insurer must collect a premium – a payment – in order for your insurance policy to be considered binding and up-to-date. Today, most people pay their car insurance on a monthly basis.
Use SuperMoney’s auto insurance comparison tool
It’s easy to compare rates and options right from the comfort of your couch.
Check out SuperMoney’s auto insurance comparison page to see what types of rates and payment options will fit your current needs. You can also read the reviews of other users and learn from their experiences with each carrier.
You’ll be able to easily compare your options side-by-side so that you can be confident you’re making the right decision.
Heather Skyler writes about business, finance, family life and more. Her work has appeared in numerous publications, including the New York Times, Newsweek, Catapult, The Rumpus, BizFluent, Career Trend and more. She lives in Athens, Georgia with her husband, son, and daughter.