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How does a down payment work when it comes to car insurance?
I thought I could just start my monthly payments for car insurance, but apparently I need to make a down payment, too. Why is there a down payment for car insurance?
Shannon Martin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
If you’re going to make monthly
car insurance
payments instead of paying in full, you’ll usually need to give a down payment upfront. Think of an insurance down payment as a way to kick-start your policy and make sure you can get covered right away.
Many insurance companies require a down payment, plus the first month’s policy premium, to start the policy. You may see it written like this: $200 down, $100 to start, with five monthly payments of $100.
Other companies may roll your down payment into the first month’s payment. You may see it written like this: $200 down with five monthly payments of $100.
The down payment is usually just a higher percentage of the total policy premium. If you want to avoid a down payment, you’d have to pay for the whole policy term (either six months or a year) in one lump sum.
The cost of your down payment will depend on many of the same factors that impact your monthly rate:
- Your zip code
- The car you drive
- Your driving record
View full answer
- Gregory R.
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