No deposit car insurance

It’s an expensive time for UK motorists, so no deposit car insurance might seem like an affordable way of spreading your costs. But unfortunately, there’s no such thing. We’ll explain...

It’s an expensive time for UK motorists, so no deposit car insurance might seem like an affordable way of spreading your costs. But unfortunately, there’s no such thing. We’ll explain...

Alex Hasty
Insurance expert
4
minute read
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Last Updated 18 MAY 2022

What does no deposit car insurance mean?

When something is described as ‘no deposit’, it means you can buy it without paying anything upfront. But all car insurance policies require you to make a payment before cover can start.

You might see car insurance advertised as ‘no deposit’. But it simply means that car insurance providers are letting you pay for your annual premium in monthly instalments, usually by direct debit. So, even though you’re not paying an upfront deposit, you’ll need to pay an initial deposit – usually 20% of the total annual amount.

The alternative is to pay for a whole year’s car insurance at once. Paying for your car insurance annually usually works out cheaper overall because there’s no interest on the payments, but it does mean paying a large sum at once. That’s why many people prefer to spread their payments over the year. While your insurance will likely end up costing more, it lets you break it down into more manageable chunks.

How to get cheaper car insurance without a deposit

As we’ve said, there’s no such thing as no deposit car insurance. You’ll always have to pay something upfront before your policy begins. But there are ways to spread the cost into manageable monthly payments.

Most insurance providers let you spread the cost of your annual premium over 12 monthly instalments. Your insurance provider should give you a breakdown, so you’ll know exactly how much you’re paying each month.

If your insurance provider accepts credit card payments, another option could be to pay for it annually with a 0% credit card. This lets you spread the cost of your car insurance without paying interest – provided you can pay it off before the interest-free period ends. If you can manage the repayments and have a good credit history, this could be an option.

Before deciding on a payment method, here’s what to know:

  • Most insurance providers charge around 20% of the annual premium for the first month’s instalment, then equal monthly instalments for the rest.
  • You’ll probably have to pay interest on monthly payments.
  • A 0% credit card is only interest free for a limited time. This can encourage you to spend, but be careful – if you miss a payment, you could lose your interest-free period, damage your credit rating and have to immediately repay the full amount owed. 
  • Some insurance providers offer interest-free monthly repayment deals. If you shop around, you may find a deal that lets you pay monthly without incurring interest. You’ll still have to make a payment before your cover starts, but this is probably the closest you’ll get to a no deposit car insurance deal.

How else can I save money on my car insurance?

If you’re on a budget, it can help to spread the cost of your insurance payments, as long as you know you’ll probably end up paying more overall.

But there are other ways to save money on car insurance:

For more ways to reduce your car insurance costs, check out our tips.

When will I start paying for no deposit car insurance?

Technically, no deposit car insurance doesn’t exist. One way or another, you’ll need to start paying for your car insurance as soon as you sign up for a policy.

Will my deposit cover my first month’s car insurance?

If you pay by direct debit, your first payment includes a chunk of the amount owed, together with interest and any deposit. If you pay for the whole year at once, you can avoid paying interest.

So, can I get no deposit car insurance?

No, you can’t. You can’t take out car insurance without paying something first – no matter how small the amount. All car insurance premiums require some form of upfront payment. However, by spreading out your payments and taking steps to reduce the cost of your premium, you should still be able to save money and get a good deal.

Compare car insurance quotes

Our price comparison service is a great way to compare insurance providers and see what deals are available.

Frequently asked questions

How much is the average car insurance deposit?

The size of deposit you’ll have to pay will vary between insurance providers, but you can expect it to be around 20%.

Can I get low deposit car insurance with bad credit?

If you want to pay monthly for your premium, your insurance provider will probably carry out a credit check to make sure you can afford your repayments. If you have a low credit rating, you may have to pay more for your monthly premium as you could be charged a higher interest rate. That’s why it pays to shop around.

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