No-Down-Payment Car Insurance (2025)

Almost every reputable car insurance company will require some sort of deposit or down payment before providing you with coverage. But if you’re strapped for cash, some insurers only require the first month’s premium as a deposit, rather than a separate fee.

You can find other ways to save money on car insurance — including discounts, payment plans, and comparison shopping — to get the lowest rates available to you.

What to know about very cheap car insurance with no deposit

Car insurance with no deposit or down payment doesn’t exist, as insurers don’t want to take on the risk of insuring you without some sort of payment. 

The misconception of no-deposit car insurance may come from the differences in down payment amounts among companies and for different drivers. Deposit amounts can vary based on many factors, including the insurance company, your state, driving history, credit history, and more.

For example: Let’s say your insurer last year only required you to pay the first month’s installment as a down payment. But this year, you got into an at-fault accident, and now your new insurer wants more than one month’s premium as a deposit.

You may think the deposit amount is your first month’s premium plus an added fee — but it’s really just a higher percentage of the total premium.2

Why do insurance companies require a down payment?

Insurance companies require a down payment because it protects them from significant risk during the first month of the policy. When you sign up for car insurance coverage, your insurer is agreeing to take on financial responsibility for various claims outlined in the policy, so it needs a deposit or down payment to offset that risk.

Is no-deposit car insurance a scam?

You should be wary of any car insurance company offering no-deposit car insurance. No reliable insurance company will give you a policy without some sort of down payment.

Keep an eye out for insurance companies that require the first month’s payment as a deposit rather than a separate charge. They may advertise the policy as “no deposit” or “no down payment car insurance” since the money goes toward your policy costs, but you’ll still need to pay this money before your coverage kicks in.

Alternative with a low down payment: OCHO

No-deposit car insurance doesn’t exist, but OCHO may be able to help you cover the cost of your down payment or first month’s payment interest-free. Founded in 2021, OCHO is a car insurance agency that works with insurance companies to underwrite policies. And its OCHO Pay product provides zero-interest loans designed to cover some or all of your up-front costs.

You pay back your OCHO Pay loan in small increments every two weeks as part of your regular premium payment. The company reports payments to the credit bureaus, which can help you build credit. But OCHO charges an $80 broker fee, split into payments of about $7 over the term of your policy.

OCHO could be a good option for high-risk drivers and other people who need to make a big first payment on their auto insurance policy. Unfortunately, OCHO is only available in seven states: Arizona, Illinois, Missouri, New Mexico, Texas, Washington, and Wisconsin. But the company expects to expand into Georgia and California by the end of the year.

How to lower your down payment

If you want to find the best deal on car insurance and lower your down payment, you can do a few things to save money. Follow these tips to decrease your deposit and monthly premium:

1. Compare multiple car insurance quotes from different companies

2. Consider pay-as-you-go insurance

3. Ask for discounts

4. Reduce car insurance coverage

• Best for: All drivers

You should always compare car insurance quotes before buying a policy. Every insurer calculates rates differently, and each driver has unique characteristics, such as their location, driving record, and age, so insurance premiums can differ drastically. The cheapest car insurance company for you may be different from the cheapest option for your parents, for example, given their age.

Since most insurers will ask for the first month’s premium as a deposit, finding very cheap car insurance through quote comparison can lower your down payment.

• Best for: Safe or low-mileage drivers

If you don’t drive much, you may benefit from pay-as-you-go or pay-per-mile insurance. These types of insurance are similar, though not entirely the same.

Pay-as-you-go insurance — also known as usage-based insurance — charges you based on how much and how well you drive.3 Pay-per-mile insurance charges you based on how many miles you drive on top of a base rate.

These types of policies typically have lower down payment requirements. But they’re not without risk. You may not get the same level of coverage as you would with typical full-coverage car insurance. With pay-as-you-go insurance, the insurer can even penalize you for poor driving, so consider how carefully you drive before signing up.

Here are the top insurers for pay-as-you-go car insurance.

Hugo: Best for 3-day coverage

Mile Auto: Best for pay-per-mile coverage

Seven: Best for manageable payments

Nationwide: Best for safe drivers

• Best for: Most drivers

Most car insurance companies offer a variety of car insurance discounts. Consider your situation and which offers you may qualify for, such as good student, loyalty, clean driving record, and defensive driving discounts. Ask your insurance agent to check for you, or research an insurer’s website to learn which discounts it offers.

• Best for: Low-risk drivers, drivers with no financing costs

Consider reducing your coverage level. Liability car insurance costs significantly less than full coverage. But it won’t cover damages from collisions or weather damage.

Liability coverage is only good for people who don’t drive frequently or can afford to pay vehicle expenses out of pocket. If you drive a lot and wouldn’t be able to pay for significant vehicle repairs, you should probably carry full coverage. If you took out a loan to pay for your car or lease it, your lender or leasing company will require you to carry full coverage anyway.

The following table illustrates the difference in coverage costs among top insurers, according to Insurify data.