Sounds good, doesn’t it?
Well, most things that seem too good to be true usually are.
If you are looking for cheap car insurance but are unable to shell out your hard earned cash to pay for the deposit up-front, don’t worry, you may have some options.
But don’t assume that you’re not going to have to pay a deposit one way or another. Insurance companies are smarter than you think, but you can be smarter too!
This guide brings you the hard truth about no deposit or low deposit car insurance by answering your top questions to help you make an informed decision.
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Can I get car insurance with no deposit?
The simple answer is, no.
No Deposit Car Insurance theoretically doesn’t exist. You cannot get an insurance policy without paying at least some amount of money up front.
Some insurance providers may advertise their policies “no deposit monthly car insurance” or “car insurance with no upfront cost” but in reality these are actually monthly car insurance policies where the initial deposit amount is spread out over the course of the year. No deposit car insurance however, still helps you avoid you paying this amount all at once.
So, car insurance with no deposit required basically do not exist. It’s a marketing ploy that companies use to sell their car insurance as a cheap monthly subscription option. You would still be required to pay the first month’s premium up front before you can be insured.
What is a no-deposit car insurance?
It is crucial to know what this means – that this is as good as the insurer lending you the deposit money, which you will have to pay back in installments, with interest.
Insurance providers typically charge around 20% of the value of the value of your car as a deposit to be paid at the time of buying the policy.
What does exist, fortunately, is Low Deposit Insurance.
Companies such as Be Wiser and a few others offer cheap deposit car insurance where you can pay just 10% of the policy value as your deposit amount as opposed to the usual 20% charged by most companies.
But, this does not mean that insurers are going to simply waive off that extra 10%. They will charge you on average anywhere from 10% to 30% interest on top of the premium to be able to recoup that cost over a 12 month period.
Why should I get a car insurance with no or low deposit?
The first thing to ask yourself is if you are ready and willing to pay a few £1000’s all in one go for an annual payment option.
Whether you’re a young driver with the highest cost of car insurance or an experienced over 50’s driver dependant on a fixed monthly salary, chances are you might appreciate the freedom of splitting your car insurance cost into smaller payments.
Let’s look at some of the reasons why you might want to get “no deposit” insurance:
- You don’t have to shell out a large sum upfront.
- You have the peace of mind to spread your payments over 12 months.
- You have the option of activating your car coverage at a later date or when you pay your first instalment.
- It’s a secure, customizable and affordable car insurance solution if you’re looking for cheap monthly car insurance.
What are the Best no deposit car insurances?
With the cost of car insurance having significantly increased over the past year, many motorists are looking online for cheap car insurance with low deposit or even monthly car insurance options to save some money.
If you’re financially fragile but need to be able to drive as soon as possible, perhaps a ‘pay monthly’ car insurance policy could make more sense for you. Let’s take a quick look at some of the key features of some well-known insurers in this category.
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But with so many insurers now offering a plethora of services, especially online, it can be a daunting task to find the best and cheapest car insurance to cover your needs. Our online car insurance comparison tool offers a simple, one-stop solution to help you compare quotes from hundreds of insurance providers in the UK.
All you have to do is key in your details as accurately as possible and let our search engine find the best deals for you.
Do I have to pay a deposit if I buy monthly car insurance?
If you opt for a monthly car insurance policy your first month’s installment is usually considered to be your deposit amount.
Typically, insurers require you to pay 20 percent of your policy value up front in the first month. While there are some low deposit car insurance policies which only require you to pay 10 percent of your policy value in the first month, it is important to note that the overall cost of insurance in the long run would be significantly higher.
Is it cheaper to pay car insurance monthly?
No. Convenience always comes at a price.
Insurance can be an expensive affair with some premiums costing well over £1000. Coughing up these amounts can be a bitter pill to swallow for most people and so paying monthly can help sweeten the deal.
However, you must know that it is almost always more expensive to pay for monthly car insurance because insurers factor in anywhere between 10-30% interest on such pay-as-you-go options. It’s quite simply the cost of convenience.
For example, an insurer may give you two quotes for a policy:
- An annual lump sum payment of £1000.
- An up front deposit of £200 followed by 10 monthly instalments of £100.
If you go with the second option you will be paying £200 more for the same policy but you have the benefit of paying in installments. You will always get a better deal if you opt to pay your premiums up front but not everyone can afford this.
Can I get a no deposit car insurance with a bad credit score?
The higher your credit score the better your chances.
Getting cheap monthly car insurance is directly dependent on your credit history. This is because technically, it’s like taking a loan from your insurance provider to be able to pay your deposit amount over a period of time. Your credit score helps insurance companies understand your financial ability to pay your premiums on time.
That said, it is not impossible to find monthly car insurance even if you have a bad credit score. But, it will come at a cost.
As explained above, insurers can charge anywhere between 10 to 30 percent interest on the value of your policy for a monthly car insurance policy.
So for example, If you have defaulted or delayed your credit card payments in the past, you might be required to pay a much higher rate of interest for your monthly car insurance policy than someone with a good credit score.
When do I start paying my no deposit car insurance?
Pay before you drive.
Technically, car insurance must always be paid in advance so as to make sure that you are covered before you are allowed to sit in the driver’s seat. No deposit car insurance or monthly car insurance is a convenient solution if you cannot afford to pay everything at once.
Different insurers provide different pay as you go options but in general, the validity of your coverage under a monthly car insurance policy only begins the moment you make your first payment.
For example, if you have bought a car in June 2019 and want to start driving by July 2019, you would need to find a suitable monthly policy and pay your first month’s installment before you can hit the road.
Many insurers charge extra for last minute policy purchases so make sure you give yourself enough time to compare all the offers available to you. Our online comparison tool is a quick and easy way to get the best no deposit car insurance quotes.
Tips to pay less up front fees when I buy car insurance
If paying less money up front is your primary objective there are a few things you could do:
- Use a credit card – Some insurers have tie ups with credit card companies to offer benefits such as 0% interest on monthly car insurance, discounts and waivers. If you have a decent credit history, you might not have to pay high up front fees when you buy car insurance.
- Increase your excess – Excess is the amount you are willing to pay out of pocket in the even of a claim. The higher is your excess, the lower is your insurance premium.
- Find reliable insurers – Many insurance companies these days use tactics to lure customers by advertising their monthly car insurance policies as No Deposit policies. Always look for providers who give you precise and accurate information about the nature of the policy and any additional costs.
- Compare multiple providers – The best way to pay less is to compare as many quotes as possible. Our online comparison tool helps you compare car insurance quotes from hundreds of reputed car insurance companies in the UK, all in the comfort of your home.