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Need No Deposit Car Insurance?

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Looking for car insurance with no deposit upfront, and up to 12 months to pay? Need to buy the cheapest possible policy? Most motorists now pay for their car insurance monthly, with small advance payments. Is this a cheap way of insuring a car however? Here is the truth about no-deposit insurance.

Can you pay car insurance over 12 months?

Many insurers offer payment terms over a full year. After all, paying monthly instalments is the way that many people buy their cars or settle their mobile phone contracts. Car insurance is a very competitive business and insurance companies need to make it as easy as possible for their customers to buy their policies.

Can I get car insurance without a down payment?

Many website owners, including some of the larger ones who should know better, state that it is possible to buy a car insurance policy with absolutely zero deposit. However, when the client gets quotes from these sites, they find that they are faced with putting down anything from one twelfth of the premium upwards. Why is this?

It is a simple matter of contract law. When you buy an insurance policy you enter into a contract with the insurer. Every contract needs what is called a consideration (in other words a payment), otherwise it is simply not legal. Something has to be paid over; even if this is only a fairly small amount.

How much deposit would I have to pay?

Your premium could be split into a maximum of 12 equal monthly payments, with the first payment to be made immediately. This is usually made by credit card of course, meaning that no actual cash has to come out of the buyer's pocket immediately. Some insurers will accept this, and others may require 20% or more.

Strictly speaking, this is not not 'no deposit' insurance. However, it is fair to point out that if a motorist cannot afford to make the first payment, then he or she may find it very difficult to afford to pay the rest of the repayments either.

Is it cheaper to pay car insurance yearly?

Absolutely. Nearly all insurers will add interest/management charges on top of the premium for those who pay monthly. Over the last couple of years this has averaged about 11% of the initial premium.

However, it should also be borne in mind that a lot of companies do not accept monthly payments at all. Some of these companies are amongst the most competitively priced insurers in the UK. This means that motorists who want to pay for their policies over several months may find that they cannot be insured by the cheapest companies. They will therefore not only have to buy from a more expensive company than those who pay yearly, but will also pay charges on top.

Can I buy a policy without paying interest?

We do see very low or even no interest offers from time to time. However, these have almost always been made by companies that did not offer very competitive premiums to start with. Also, you would almost certainly find that at renewal time the normal interest charges would be made.

Rather than automatically buy no – interest insurance, you should look at offers from other companies and decide which one gave you the best bargain overall.

Will I have to take out a credit agreement?

Yes. In effect, you will be borrowing the money for the premium from either the insurance company itself or a finance company acting on its behalf.

Can I buy car insurance with bad credit?

If you do not wish to pay the full cost of your policy upfront, and you have a poor credit record, it will be up to the insurer to decide whether to charge you extra interest - some won't - or in a very extreme case, refuse cover completely.

Can I cancel a monthly paid policy?

You cannot simply stop making payments and expect that to be the end of the matter. You would have entered into a contract to pay the full premium. However, all insurers allow motorists to cancel policies, but they have a scale of cancellation charges, which they have to make clear right from the start of the policy. This would mean that if you cancelled your insurance mid term, you would probably have to pay these charges.

When you buy a policy it is always very important to look through the documentation and find out exactly what your rights and obligations are, before you sign on the dotted line or hand over any money.