No deposit car insurance – does it exist?

We all know that when something sounds too good to be true, it usually is. So if you’re offered cheap car insurance with no deposit, you might be disappointed when you explore the detail. 

Can I get car insurance with no deposit?

No, it doesn’t exist. When something is defined as ‘no deposit’, it means that you’re able to buy it without paying any money upfront. All car insurance policies require some kind of initial payment before the cover can start.

Insurance providers that claim to offer deposit free insurance are being a little choosey with the language they use. What these companies are offering is the opportunity to spread the cost of your car insurance over monthly instalments. And while you won’t have to pay a deposit upfront, you will have to pay the first month’s cover, at least.

toy car on top of coins

So I can spread the cost of my car insurance?

Yes, most insurance providers now let you spread the cost of your yearly car insurance, usually over 12 monthly instalments. But be aware that this option is usually more expensive than a one-off payment as interest might be charged on the instalments. Your first instalment is often slightly higher than the rest of the payments, but your insurance provider should give you a breakdown so you’ll know exactly how much you’re paying each month.

You’ll need to decide, based on your personal circumstances, whether it makes sense for you to spread the payments or whether you can afford to pay the full amount upfront.
Alternatively, you could pay for your car insurance with a credit card, but you might have to pay an administration fee in addition to the cost of your premiums – and you’ve got to make sure you can pay off your balance so that you don’t end up with additional interest charges.

What else can I do to save money on my car insurance?

Spreading the cost of your car insurance can help if you’re on a budget, but there are other ways to save money on your car insurance.

Increase your voluntary excess

Consider choosing a higher voluntary excess. Although this could cost you more in the event of a claim, as you’ll need to pay the voluntary excess you choose as well as the compulsory excess set by the provider, it could mean a cheaper monthly premium. Just make sure you can afford the full amount.

Restrict your mileage

Limiting the number of miles you do a year, and therefore the amount of time you’re on the road, could reduce your risk and therefore lower your premium. All policies ask for a maximum mileage, so set this as low as you realistically can. But make sure you give an accurate estimate; if you underestimate and make a claim, your policy could be invalid. 

Consider a black box policy

Black box insurance, or telematics insurance, rewards good driving. A small device is placed in your car, or you download an app to your phone, that tells your insurance provider how you’re driving. If you drive safely, your premiums could be reduced. 

Avoid penalty points

Incurring points on your licence – which you must tell your insurance provider about – can mean your premiums increase. On the other hand, if you drive well and don’t make claims on your policy, you could find your premiums come down. Building up a good no claims discount could also help to reduce your premiums, as insurance providers reward drivers who haven’t made a claim in the previous 12 months. 

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