Often people mistake the term “no down payment” to be no payment at all towards their insurance policy of their car. However, this is not the case as there is a typical requirement of money to be paid when signing up for the insurance cover. This amount is usually the monthly premium that you are supposed to pay and the difference is that you are paying it upfront. While some people have the money and resources to be able to pay a lumpsum for insurance there are other who choose to take the no down payment policy for their car.
Difference between lumpsum upfront and no down payment
The difference between the two options that you have is the fact that your monthly premiums would be higher if you opt for a no down payment policy. However, for people who pay a lumpsum upfront would have a lower monthly premium for their vehicle. So, depending on your choice and the budget you can choose either the lumpsum upfront option or the no down payment option. Always remember, the cover that you obtain for both the types of policies would be the same. The only difference would be the monthly premium that you would have to pay through out the term that you are covered for.
Eligibility to avail the no down payment option
There are factors which makes a person or a vehicle eligible for the no down payment option. Cars that are expensive and new often find it difficult to obtain an insurance with low or no down payment option. This is because the insurance company is at a higher risk of having to cover huge expenses if the car ends up in an accident. However, for older cars it is easier to obtain a no down payment option for your insurance as the risk factor is considerably lower in these cases.
Apart from this, your credit history, driving record and the need to file an SR-22 may find it difficult to obtain a no down payment option from insurance providers. This is due to the higher risk the insurance company would have to take while insuring their vehicle. Despite all these things, it is always recommended to talk to your insurance agent about the potential no down payment options provided by the insurance providers.
You would also have to belong to either the state of CA, AZ, FL, GA, NY, OK or WA to be able to avail the no down payment option. This is because there are the only states which support the no down payment policy in the United States.
Costs involved with no down payment options
One has to always remember that their monthly premium would be higher when choosing the no down payment option. You would also end up paying a larger amount in the longer run when compared to paying a lumpsum upfront. Despite being called as the no down payment option the insurance company would require you to pay the first month premium in advance before your insurance policy starts.
Among the various insurance companies that provide no down payment option the average upfront cost you would have to pay would be anywhere around $125 or upward. The monthly premium would be around $130 and upward for your insurance premium per month.
Cheapest car insurance companies
There is no rocket science involved in being able to save money on insurance policies for your vehicles. It is always advised for people to choose paying a lumpsum in order to have lower monthly premiums and save money in the process too. However, in case you choose the no down payment option the chances of you paying a little higher is always prominent.
You can choose to speak with an expert on automobile insurance policies to have clarity on the cheapest insurance providers in the United States. They can advice you on which provider you can choose in order to save money on insurance policies. Insurance agents would always suggest that you go for a lumpsum upfront unless you are not able to manage funds for the same. It is also possible for you to obtain free quotes over the internet without having to spend a penny. This would give you all the information that you need to have your car insured in the cheapest way possible.