Often people want to be able to buy car insurance with no down payment. There is a variety of reasons for this. Money is too tight to afford a lump sum. Money has been spent on the previous insurance. Advertisements are out there that claim you can get auto insurance without a down payment. The veracity of this is questioned.

As insurance is a contract between the insurer and the policyholder, there is an exchange of money and service. For this to take place some kind of money must change hands.

There are however some companies that permit you to pay monthly. If only auto cover is required according to state legislation then as little as one month’s premium may be sufficient. This premium may be around the $100 mark.

It has been established that there are companies that offer a low down payment, however it is highly unlikely that there is a company that will not want at least the first month’s premium.

If you paid the previous insurer in advance for cover then a refund of premium will be due to you. The reputable companies are regulated and would not risk keeping money that is not theirs. Some companies will refund you within a week. Therefore, there is no need to concern yourself about this money.

The alternative is to plan taking out new cover before you are due to pay the old insurer for the next batch of insurance cover. You are usually given thirty days grace before your policy lapses.

Exercise caution to not be without cover for any length of time. The new policy must be in force before you cancel your old cover. The cover is there to indemnify you against loss so make sure you are covered. Many states demand that you have insurance when driving a car, do not break the law by being uninsured.

There are pros and cons to upfront payments and monthly payments. Paying monthly means you have better cash flow with which other expenses can be paid. Annual payments could entitle you to a discount that monthly payers are not afforded. Monthly payments means in an emergency you could have the cash instead of having to take out a loan.

Paying via a monthly draft could also get you a discount. It also has convenience value as you do not have to remember each month to pay the insurance company. The jury remains out as to whether car insurance with no down payment is better than monthly.

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Category: Finance/Insurance
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