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Low Down Payment Car Insurance

Low down payment car insurance is an appealing option for consumers who do not have sufficient financial resources to cover all or a large portion of their auto policy premiums at the outset of the covered period. Traditionally, car insurance policies are purchased in chunks of time, often six or twelve months' worth of protection. Upon contracting with an auto insurer, the policy holder usually pays for the entire policy premium in advance, or puts down a sizable down payment and pays the balance off in one or two installments. But low down payment car insurance works differently, allowing a policy holder to get insured and out on the road without having to spend a great deal f money up front.

Auto Policy Paid Monthly

In many cases, a low down payment car insurance policy is quite simply an auto policy paid monthly. In these situations, the overall policy premium is divided up based on the number of months of coverage, and the policy holder pays the balance in equal portions over the life of the policy. This is a great option for many drivers for a lot of reasons. First of all, it allows you to get legally covered and get your car registered and out on the road without requiring you to come up with a substantial amount of cash up front. If you are just starting a new job, or if you are working through a difficult time financially, this can be really helpful. You might need that car to get you to work, so you can earn the money needed to get back on your feet. But the cost of car insurance can be prohibitive for those of us who are having cash flow problems. A low down payment policy greatly helps in this type of situation.

Not all low down payment policies are exactly broken up this way payment-wise. Some simply require less up front to entice you to sign on with the company offering this bargain, and maybe spread out the remaining policy premium over several installments. In any case, as a general rule low down payment policies essentially require just enough of a down payment to ensure the insurer is covered if a claim should occur in the first few weeks of coverage.

Even so, there are actually some providers who offer no down payment options for auto insurance. Not all companies offer this option, but you can find some if you look around. Just like the low down payment option, there are generally some eligibility requirements that must be met for a prospective policy holder to qualify. These requirements may vary between companies, but there are a few general guidelines that can give you an idea of whether you may qualify.

Credit, Driving Record Affect Eligibility

As noted previously, not all insurers offering this payment option abide by a universal set of rules pertaining to the determination of who qualifies and who does not. But a few factors can really help your cause. For example, if you have great credit, it generally helps you to be eligible for most any auto insurance program. Your credit score is only one factor among many that insurers use in determining auto policy premiums and eligibility, but it is a factor in use by virtually all major insurance companies nationwide.

Taking good care of your credit and keeping a watchful eye on your credit report can really save you a lot of money and hassle when it comes to your car insurance. Another important way you can help your cause is by simply keeping your driving record clean. Avoid accidents and excessive claims to present yourself in the best possible light to auto insurance providers. Doing so will not only help keep your premiums low, but will also help your chances of being eligible for low down payment car insurance programs with providers who offer them.

Generally speaking, all the same factors that can make you a more attractive customer to car insurance companies in general can help you have better luck getting into a low down payment situation. If you have demonstrated that you are a safe driver and a low risk to insure, someone who keeps your coverage current and pays your premiums on time, you will greatly enhance your chances.

But another aspect of your eligibility may have nothing to do with your fitness as a driver or a customer. Certain insurers also have provisions for low-income auto owners to take advantage of these programs. If you qualify based on income, it is possible that you might be able to get into a low down payment car insurance policy even without having good credit or even a good driving record. The best thing you can do is take a look around at some of the companies offering this option for policy holders in your state to see if you qualify for this option.

Disadvantages of Down Payment Reduction

While getting into a low down payment auto insurance policy can be a real boon for many of us who simply do not have the funds necessary to pay for a policy in full at the outset of the covered period, there are some disadvantages to taking on this type of policy. Each individual driver investigating this option should take a closer look at these disadvantages to decide whether they outweigh the benefits. Each case will likely be different, as the specifics may change from company to company.

One of the primary disadvantages of low down payment car insurance is, believe it or not, a financial one. By enrolling in this auto insurance option, you are reducing the amount of money due at the beginning of the policy, but doing so, you are increasing the balance due for the remainder of the policy period in a few different ways. First, the reduction of the down payment itself obviously means more is left over to pay off.

And second, there are often surcharges involved for customers choosing this car insurance option. A lot of companies charge installment fees for any policy not paid in full right at the beginning, which can add up if you are making payments every month. And on top of this, you are forfeiting additional discounts you might otherwise capture by prepaying the entire premium at once. And with so many payments due, the third potential disadvantage can be an important one to consider: if you miss a payment at any time during the covered policy period, you risk being canceled, which of course can lead to additional troubles like a lapse in coverage. Each of these potential down sides to the low down payment car insurance option must be considered as well as the advantages of signing on for this type of policy.

Low down payment car insurance is a very attractive choice for a lot of us. In this day and age, there is not a lot of extra money laying around in most drivers' bank accounts, so it is good to know you still have options for getting insured if you do not have a lot of money to spend on a down payment.

 

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