$20 Down Payment Car Insurance in 2024: Is It Possible?

Can you get car insurance for $20?

Most drivers are unlikely to get car insurance for only $20 down. Any insurance company offering a down payment this cheap may be trying to scam you — most insurers typically charge the first month’s payment to activate your policy. This first payment is known as a down payment, and the cheaper your premium is, the lower your down payment will be. Only drivers with long histories of safe driving, good credit, and multiple other positive rating factors are likely to qualify for monthly rates in the $20 range.

For example, full-coverage car insurance in Auburn, Alabama, costs an average of $166 per month, according to Insurify data. So if you live in Auburn and buy a policy for the monthly average, your insurer will require $166 as a down payment.

You may also see no-down-payment car insurance advertised. This is also likely a scam; you should be wary of any insurance companies offering it. Almost every auto insurance company requires some money down with an application, typically a low down payment of the first month’s premium or whichever payment mode you select.

How do car insurance down payments work? 

Almost every insurer requires a car insurance down payment, sometimes called a deposit or a binder. It’s the amount you need to pay to activate your coverage. The amount of your down payment depends on the term you select (monthly, quarterly, semiannually). For example, if your monthly premium is $100, your down payment will be $100.

Insurers require a down payment to protect themselves financially. 

“If you owned a company, would you want to take on a risk without taking some sort of up-front payment for premiums?” Dean asks. “That’s a big risk for a company to take on, considering the possibility of paying out bodily injury and property damage [claims].”

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How to get a low down payment on car insurance

While you probably won’t find an insurer that allows a down payment as low as $20, many insurance companies will accept the first month’s premium as your deposit, provided you have a good driving record and payment history.

The best way to determine the amount you’ll have to put down is to reach out to insurers like Progressive, Allstate, State Farm, GEICO — or even a regional company like Erie — and ask. You can also work with an agent to find a low down payment.

What is no-down-payment car insurance?

No-down-payment car insurance doesn’t really exist, and you should steer clear of insurers offering it. Some may try to rephrase “down payment” as “deposit” and claim that it’s only an application fee, but it’s effectively the same thing as a down payment. Put simply, you won’t get reputable insurance without putting at least a little money down.

“If you do find an online car insurance company or someone who says they can do it, I would be wary about what coverage is actually afforded without any sort of payment,” Dean cautions. “None of the legitimate companies that I know of at this time will start a policy without some sort of payment for at least the first month’s premium.”

How to get cheap car insurance

The best way to get a low deposit is to find cheap car insurance so that your initial payment will be as low as possible. Fortunately, you have many ways to do this.

Maintain a good driving record

Many factors affect car insurance premiums, and your driving history is one of the most important. Insurance companies charge more for high-risk drivers with infractions like speeding tickets, reckless driving, at-fault accidents, and DUIs. These violations can increase the likelihood of a driver filing a claim.

Insurers often reward good drivers with discounts. So practicing safe driving habits and remaining claims-free can help lower your car insurance premium.

The following table illustrates the effects moving violations can have on minimum-coverage car insurance rates from some top companies:

Compare car insurance quotes

Just as you would comparison shop for a car, it’s a good idea to compare car insurance quotes. Prices, discounts, and coverages can vary significantly among insurance companies. Comparing quotes from multiple insurers can help you find the best rates for the coverage you need.

You have multiple options for comparing quotes. You can work with an independent agent, use an online quote-comparison tool, or get your own quotes directly from insurers.

Look for discounts

Most insurers — but not all — offer multiple discounts to help drivers save. Check out discounts for good driving, going paperless, bundling your home or renters insurance with an auto policy, getting good grades in high school or college, and more. Ask your insurer about what discounts you may qualify for when you apply for insurance coverage.

Consider pay-as-you-go insurance

Traditional car insurance charges you a flat premium that you either pay in installments or in a lump sum at the start of the policy. Pay-as-you-go auto insurance bases your monthly premium on a set base rate plus a per-mile charge, so your monthly payments depend on how many miles you drive.

Pay-as-you-go car insurance can be a money-saver for people who don’t drive much, like remote workers or seniors.

Hugo offers flexible on-demand, short-term car insurance. If you aren’t a frequent driver, its policies may help you save on car insurance costs.

Purchase liability-only coverage

Liability-only car insurance — often called “minimum coverage” — is the cheapest type of auto insurance policy you can buy. But it’s not for everyone.

If you have a vehicle lease or loan, the leasing company or lender will require you to buy full coverage, which includes collision and comprehensive coverages. And even if you own your car outright, full coverage is a good idea if you have a newer or high-value vehicle or wouldn’t be able to pay for repairs or to replace it out of pocket.

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