Can I get car insurance without a deposit?

Key takeaways

• “No-deposit” car insurance usually means your first instalment is similar to your later monthly payments, rather than paying nothing upfront

• Paying monthly can involve a credit agreement and may include interest, although some providers offer 0% APR payment arrangements

• You should check for what your first payment will be, as well as the APR, total amount payable and the monthly price before choosing a policy

What does no-deposit car insurance mean?

No-deposit car insurance usually means paying your annual premium in monthly instalments without a larger initial payment. It doesn't normally mean you can start an annual policy without paying anything - you'll usually need to make your first instalment before or when your cover begins.

Different insurers can structure monthly payments differently, and some insurers market policies as “no deposit” where the total cost is split equally over the policy term, but a first payment is still required.

How does no-deposit car insurance work?

You buy the same type of annual car insurance, but spread the cost rather than paying the whole premium at once. The process will usually look something like this:

1. Compare car insurance quotes: Choose whether you want to see annual or monthly payment options

2. Check your first payment: Some providers charge a larger first instalment while others split payments more evenly

3. Check the finance cost: Look at the APR, monthly payments and total amount payable

4. Complete any credit checks: If the payment plan involves a credit agreement, the provider may check your credit history

5. Make your first payment: Once the policy and payment arrangement are agreed, your cover can begin on your chosen start date

“No deposit” describes the way you pay for the policy - it isn't a separate type of car insurance cover.

Will I need a credit check to pay monthly?

Usually, if your monthly payment plan involves a credit agreement - paying an annual premium in one go does not normally require the same type of credit application. When you compare car insurance quotes, insurers might carry out soft credit searches to verify your information, but these won't affect your credit score and aren't visible to other lenders.

If you then choose to pay monthly using credit, the provider might carry out a hard credit search before agreeing to the arrangement - this is recorded on your credit file and can be seen by other lenders. Your credit history can also affect which monthly payment options are available to you.

Does no-deposit car insurance charge interest?

Often, but not always - many insurers charge interest or other finance costs when you pay your annual premium in monthly instalments, although some providers offer 0% APR arrangements.

The Financial Conduct Authority (FCA) found that premium-finance interest rates fell by an average 4.1 percentage points between 2022 and 2026, saving around £8 a year on a typical motor policy. More than half of the insurers reviewed had reduced the cost of premium finance - even so, monthly payments can still cost more overall than paying annually.

What should I compare when looking for car insurance?

Don't look only at the size of the first payment - you should also check:

• The overall annual premium

• Your first instalment

• Monthly instalments

• APR

• Any fees

• Total amount payable

A smaller initial payment can make insurance easier to budget for, but it does not necessarily mean the policy is cheaper.

Is it cheaper to pay monthly or annually?

Paying annually is usually cheaper overall, while monthly payments can make the cost easier to spread - when you pay annually, you avoid the interest or finance costs that many providers charge for monthly instalments. If you cannot comfortably afford the whole premium at once, monthly payments may still be the more manageable option.

Some providers offer monthly payments at 0% APR, so check the actual total cost rather than assuming every monthly policy will cost more - read our guide to paying for car insurance annually or monthly for a fuller comparison.

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.

What happens if I miss a monthly payment?

Contact your insurer or finance provider as soon as possible if you know you cannot make a payment. Depending on the provider and agreement, a missed payment could lead to:

• Late or missed-payment fees

• Another attempt to collect the payment

• A negative mark on your credit file

• Cancellation of your car insurance if the payment remains unpaid

If your policy is cancelled, you must not drive until you have valid insurance in place - and a cancelled policy can also make future insurance harder or more expensive to arrange.

How do I compare no-deposit car insurance?

MoneySuperMarket helps you compare full car insurance policies - when you compare quotes, look at both the cover and how you can pay for it, and if you're considering monthly payments, check:

• How much you need to pay when cover starts

• The monthly instalment amount

• APR

• The total amount payable

• Any fees

• The level of insurance you get and the excess you'll need to pay

A low first payment can help with budgeting, but the cheapest first instalment won't necessarily give you the cheapest policy overall. With MoneySuperMarket, you can compare car insurance quotes from different providers and choose the price, cover and payment option that suit your needs.