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Can You Get Car Insurance Without Paying a Deposit?

Written by, Marija Petkova

Updated November, 24, 2022

When you’re on a tight budget, the last thing you want is a big car insurance bill. 

So, can you get car insurance without paying a deposit?

Let’s find out. 

No Deposit Car Insurance 

Car insurance without a deposit technically doesn’t exist.

What insurance providers mean when they refer to ‘no down payment car insurance’ is that you have the option to choose to pay monthly car insurance, instead of a lump sum, normally by direct debit.

You can get a no deposit car insurance quote from most insurance providers in the UK. 

If you purchase no deposit car insurance in the UK, you’ll have to pay the first month’s instalment immediately. Technically, this doesn’t count as a deposit because your insurance provider is allowing you to spread the cost of the policy over a year. 

How Can You Pay for Car Insurance?

Car insurance in the UK is calculated annually and there are two ways you can pay for your cover. 

  • Lump-sum: Paying for the premium in one lump sum is the more popular option of the two because it’s essentially an interest free car insurance plan that works cheaper in the long run. You’ll have to pay a larger amount of money in one go, but you’ll avoid monthly interest fees.
  • Monthly instalments: If you opt for car insurance with no down payment, then your insurance provider will split the payments evenly over 12 months. You won’t have to pay a large sum upfront, but you’ll have to cover monthly interest fees. 

How Are No Deposit Car Insurance Quotes Calculated?

Car insurers take into consideration several factors when calculating the cost of your premium, including: 

  • The type of car you drive – expensive cars cost more to insure.
  • Your driving record – Drivers with points on their licence typically pay higher premiums. 
  • Your claim history – Recent claims increase premium costs.

How to Get Cheaper Car Insurance?

There are several ways that you can reduce the cost of your car insurance, regardless of whether you opted for a lump sum or monthly instalments, and get cheap car insurance quotes with no deposit.

Increase your voluntary excess 

If you want a cheap car insurance deposit, you can increase your voluntary excess. A larger voluntary excess means that your car insurer would pay less in the event of a claim. This would reduce the cost of your premiums but might prove more expensive if you get into an accident. 

You may be interested in: When do you pay excess on car insurance?

Security increase

Better car security usually means low deposit car insurance. You can improve your car security by installing an immobiliser or an industry-approved alarm and parking your car in a locked garage overnight. 

Lower mileage limit

Fewer miles means that you’re less likely to get into an accident and make a claim, which, in turn, will reduce the cost of your car insurance with no deposit.

Choose a black box policy 

Black box car insurance is a type of insurance that uses technology to track and record the driver’s behaviour. In this case, the premiums are based on how safe (or risky) the driver behaves when they’re behind the wheel. 

If you drive by the rules, you’ll get cheaper car insurance with no deposit policy.

Add a named driver 

Adding a named driver can result in cheaper car insurance with no deposit in the UK because it’s assumed that you’ll spend less time driving and therefore be less likely to get into an accident. 

Interest-free credit card

You can defer your first payment and spread the cost of the entire insurance with an interest-free credit card, but only if your insurer accepts credit. Keep in mind that with a credit card you’ll have to repay the full amount within a certain period and you’ll lose the benefit if you miss a payment. 

Bottom Line 

No deposit car insurance in the UK doesn’t exist, at least not in a literal sense. The insurance plan advertised as ‘no deposit’ simply means that you’ll pay your annual premium in monthly instalments.
You can get cheap car insurance in the UK with no deposit by increasing your voluntary excess, improving security on your car, or adding a named driver.

Frequently Asked Questions And Their Answers

Do you pay a deposit in the first month of car insurance?

Car insurers usually require an upfront payment between 10% and 30% of the sum. If you opt for an insurance car policy in the UK with no deposit payment, your insurer will spread the entire sum evenly over 12 months. 

Does the deposit cover my first month’s insurance?

Depending on the amount, your deposit can cover more than a month’s worth of insurance.

Do I get my deposit back if I cancel my insurance?

If you haven’t made any claims in the period between receiving your policy documents and cancelling your insurance, you will be entitled to a refund, but only for your unearned premiums. 

Can I get monthly car insurance with a poor credit rating?

All car insurers run a credit check before offering a quote. A good credit score usually means a lower interest rate. 

Do you get a car insurance deposit back?

Car insurers don’t refund deposits. Instead, they apply the down payment to future payments.

How much is the average car insurance deposit?

Car insurance deposits vary between 10% and 30% of the total insurance sum. 

Can you get car insurance without paying a deposit?

Not in the traditional sense. You can opt for monthly instalments, but you’ll have to pay your first month’s instalment immediately.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.