Can You Really Get $20 Down Payment Car Insurance?

You may have seen some ads promoting low or no down payment options for car insurance. Some promotions claim you could pay as little as $20 to get a new insurance policy. But is such a great deal too good to be true?

Probably, yes. No one wants to pay more than they have to for car insurance, but odds are slim that you’ll be able to get an insurance down payment as low as $20. All car insurance companies require at least some money down, and most of them charge more than $20.

Companies who advertise such cheap car insurance are often obscuring heavy restrictions about who qualifies and what type of insurance coverage you’d get. But, even if you can't get a $20 policy, you still might be able to save money and reduce your monthly payments by switching providers.

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What is a down payment for car insurance?

When you request a car insurance quote, you’ll see that the company requires a down payment, sometimes called a deposit, before your new policy takes effect. Insurance companies will not give you insurance coverage without having you pay at least some money upfront. Although some companies do offer payment plans.

Your down payment acts as a deposit on your car insurance policy. It’s usually part of the cost of your premium — not a separate charge. The insurance company uses deposits to help verify your legitimacy and check that you have a working payment method.

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How much is a normal car insurance down payment?

In most cases, your down payment will be some percentage of your total premium. If you plan to break up your premium into monthly installments, you may be required to pay a percentage of your first month’s bill (usually either 50% or 100%).

There are no official limits on insurance down payments, and the car insurance company can ask for two months or more worth of payments upfront before your coverage takes effect. If you’ve got some money in the bank, many insurance companies also offer the option to pay your entire six-month or annual premium upfront in exchange for a discount.

The exact deposit amount and the cost of your monthly car insurance payment will depend on the insurance company you choose, your types of coverage, and other factors such as your credit history, so make sure to consider all of your options when switching car insurance.

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So, can you actually get a $20 down payment on your car insurance?

In short, probably not. The cheaper your car insurance premium, the less expensive your down payment usually is. But even cheap auto insurance down payments usually cost more than $20. You may find that only drivers who want the state-minimum required insurance coverage, and who have perfect driving records and credit histories, are eligible for the lowest down payments.

If you need more than minimum coverage (most people do), or if you have some marks on your driving record, you’ll probably have to pay a higher down payment than $20. The FinanceBuzz Auto Insurance tool can help you compare quotes for free to see if you could be paying less.

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Six ways to reduce your auto insurance down payment

To get the lowest down payment possible, you’ll want to make sure you’re receiving the best car insurance rate possible. There are many different ways you can try and get lower rates on your car insurance. Here are six of them:

1. Decrease your coverage
Depending on the value of your car and its age, you may be able to decrease the amount of collision or comprehensive coverage you carry. Although nearly all states require you to maintain certain levels of liability coverage, as your car ages, you can start to remove optional full coverage options.

2. Increase your deductible
Increasing your deductible, which is the amount you pay before insurance kicks in after an accident, could save you some serious money on your premiums. Even increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage costs by 15% to 30%.

3. Compare different insurance providers
Pricing can vary from one company to another, so make sure to compare multiple auto insurance quotes and coverage offerings before settling on a policy. It’s easy and free to compare multiple auto insurance companies online atFinanceBuzz.

4. Ask for premium discounts
Most insurance companies offer various discounts on their policies. Insurance discounts are available for things such as being a safe driver, having good credit, or bundling multiple insurance policies together (such as home and auto insurance). Ask your insurance provider directly if there are any additional discounts you may qualify for.

5. Keep a clean driving record
Your insurance rates tend to go up after you’ve been in a car accident, but they can also increase if you get speeding tickets or other moving violations within the span of a few years. Do your best to keep your driving record clean to be eligible for the best rates available.

6. Increase your credit score
Along with a clean driving record, a solid credit score can help you keep your insurance rates low. Most insurance companies use credit scores to help determine your auto rates.

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Bottom line

Although a $20 down payment is possible, most insurance companies don’t offer it. Even when insurance companies do have down payments that low, they’re usually only offered to a few customers who meet several criteria.

Even if you can’t get a $20 down payment, it's fast and free to see if you could save money on car insurance and compare rates from multiple providers.