Getting Auto Insurance with Low or No Down Payment

July 1, 2013

You’ve just got a new car and now you’ve got to get auto insurance to cover it too. It’s not easy, as most car dealers will ask you to pay an amount to cover the deal. That means a policy is a contract to protect your car, and you will have to give payment in exchange to cover the contract. But not many people can afford to pay a lump sum for the car financing and then again for the auto insurance company too. As a result, a few companies have started offering a low down payment insurance policy that will attract customers. Here is what you can do to make sure you are eligible for no down payment car insurance.

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Check Your Credit Score

There are several companies that will check your credit score for you. Before you apply for any such no-deposit scheme, we suggest that you first check your credit history. The problem with no-down payment policies is that you will have to have a very good to excellent credit score. This will be checked right away by insurance companies. If you have bad credit history, we also suggest that you improve this before you try any company. As a rule, if your credit score is below 500 then you will have to pay about 10% of the entire insurance policy in advance. You will also attract higher interest rates due to your bad credit history. We suggest you check every three months, and then try to improve it if possible.

Switch Over to Monthly Payments

Most companies will ask you for a payment beforehand, but you can reduce the payment you have to make. If you have selected the yearly or annual option of payment, switch over to the monthly payment option. Ordinarily, companies will ask for a payment that will cover three months of insurance. But when you switch over to a monthly payment, you will have to pay just for a month. For example, if you sign up with State Farm, you will be able to get a 6-12-24-48 payment plan, where you might have to pay two or three months of payment beforehand.

Get Many Quotes

It’s as simple as that. Insurance companies will want your business even if you have bad credit history. If you take two or three quotes and then compare them, you are more likely to get a better deal. The process will go smoother if you show the quotes to every insurance company you get in touch with. This is a good idea, to make them reduce rates even further.

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Try a Cheaper Car

If you buy a cheaper model of car, you are more likely to get a no down payment insurance policy. This is possible even if you have bad credit history. But its really dependent on the company you choose.