No-deposit car insurance

Key takeaways

• No-deposit car insurance spreads the initial payment across the policy term, usually on a monthly basis

• Policies marketed as no-deposit can be more expensive in the long run thanks to interest and adjusted premiums

• An annual payment is often the most cost-effective option, saving money over the policy duration

• A higher excess can reduce premiums, but make sure it’s affordable if you need to claim

Need car insurance but the cost of motoring taking up all your savings? Don’t give up on driving down up-front costs

Can I get car insurance without a deposit?

In a word, no. While the idea of buying car insurance without stumping up some cash first is an appealing one, the reality is that you can’t get car insurance without some form of deposit.

Regardless of the glossy adverts shouting about 'no-deposit car insurance', all insurers require an upfront payment to initiate coverage.

This initial payment serves as a kind of guarantee - ensuring that the policyholder has a vested interest in maintaining the insurance contract.

That said, there are other ways to keep a lid on the upfront costs involved, making it more manageable for those on a tight budget.

What is no-deposit car insurance?

Where you see ads for 'no-deposit car insurance,' it usually means an insurance policy where the initial payment is not a separate, larger sum but is instead spread out across the policy term, usually on a monthly basis.

Insurers often require a payment of around 20% of the total car insurance value upfront, with cover only starting once the first payment has been made.

But some insurance providers offer the option to spread this cost over the policy period. Essentially, that means the insurer is lending the initial payment to the policyholder, which is then repaid with interest through the monthly premiums.

Beware though - policies marketed as 'no-deposit car insurance' may end up being more expensive in the long run.

Does car insurance cover the first month?

Yes. If you pay for your car insurance monthly, your deposit is basically the cost of the first month of your cover and comes in at around 10-20% of the total policy price.

From then on, the cost of the policy is usually averaged over the remaining term of your cover.

Is it cheaper to pay car insurance monthly?

When it comes to paying for car insurance, motorists usually have two options - paying the entire premium in one lump sum for the year or opting for monthly payments.

Monthly payments can make the cost of car insurance feel more manageable, but with interest and admin fees, they’re usually more expensive.

If you can stretch to it, paying for the entire year in one go is often the most cost-effective choice - saving you money over the life of the policy.

Can you pay for car insurance on a credit card?

Yes. As long as you can pay off the balance within the card’s interest free period, it could help spread the cost without getting hit with interest charges.

You may even get rewards for the transaction, depending on the type of credit card you have. Just don’t let the debt sit there costing you money – pay it off as soon as possible.

Other tips to save money on your car insurance

Compare car insurance and pay less

Whether you’re a lump sum or monthly payment person, the best way to make sure you're not overpaying for car insurance is to use a price comparison site like MoneySuperMarket. Such platforms enable you to explore a wide range of car insurance options that don't require large upfront fees.

Key in your personal and vehicle details, along with your payment preference, whether monthly or annually, and you’ll find a policy that's tailored to your budget, circumstances and insurance needs.