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When money is tight, the prospect of securing car insurance with a $20 down payment can be appealing—it feels like an affordable way to start your policy. While it’s possible to find such low-cost options, these deals are typically available only to the most qualified drivers.

To help you understand the realities of this budget-friendly option, we examine its workings closely and offer guidance on finding the coverage you need.

What does a $20 down payment for car insurance mean?

A $20 down payment for car insurance refers to the initial payment required to activate your policy, typically representing only a tiny fraction of the total premium.

“The down payment typically includes your initial fees along with 1-2 months of premium payments depending on the payment plan selected,” says Zach Lazzari, founder of Cross Border Coverage. “Some buyers choose to pay more upfront with quarterly or greater payment options while many pay the minimum down payment before cycling into monthly payments.”

After making this $20 down payment, your car insurance policy will be in full effect. But you’ll need to continue making monthly payments to ensure the policy continues. 

Are $20 down payments for car insurance realistic?

Drivers seeking affordable coverage may crave $20 down payments for car insurance. But are you likely to find it?

“It’s certainly possible but not common to find such low entry rates,” Lazzari says. “It would require a low-value car, minimum coverage policy and a buyer with a great record and credit history. A short-term policy might fit the bill for finding a lower rate with a smaller down payment.”

If you are shopping for more robust coverage or want to insure a higher-value car, a $20 down payment might be out of reach. But for some drivers, cheap down payment insurance could be in the cards, especially if you find an insurance company offering budget-friendly payment options. 

A big caveat is where you live. Drivers in some states face significantly higher insurance costs than others. For example, finding a $20 down payment policy in Florida or Louisiana might be out of reach, even if possible in other more affordable states. 

How to qualify for a low down payment on car insurance

If you want to tap into a car insurance policy with a low down payment, the following metrics may help you assess your eligibility for low down payment insurance:

  • Low-value vehicle: Generally, it’s cheaper to insure a vehicle with less value. If you want to pay less for car insurance, opting for a low-value car can help. 
  • Maintain a clean driving record: Insurance companies consider your driving history when determining premiums. Drivers without any mistakes on their record are more likely to secure affordable coverage. 
  • Stick to minimum coverage: Most states require a minimum amount of coverage to drive legally. A more robust policy might better protect your wallet after an accident, but a minimum coverage policy helps to keep your upfront costs low. 

Where to look for $20 down payment car insurance

When searching for a car insurance policy with a $20 down payment, shopping around for affordable coverage is essential. Insurance companies vary in rates and low-deposit options, so comparing multiple providers helps you find the best policy to suit your budget and coverage needs while meeting your state’s minimum requirements.

Comparing rates from multiple budget car insurance providers is a smart first step, but it’s also important to consider companies that offer flexible payment options. Providers like SafeAuto and Dairyland are among the top choices for low down payment car insurance.

Qualifying for affordable car insurance with other larger insurance companies may be more challenging. 

Alternatives to a $20 down payment car insurance

If a $20 down payment car insurance policy isn’t available for your situation, consider exploring these alternative insurance options:

  • Pay-per-mile insurance: Pay-per-mile coverage only requires you to pay for coverage based on the miles you drive. Generally, there’s a small upfront cost to get started and then a monthly payment that changes based on how much you drive. 
  • Flexible payment plans: Some car insurance companies provide flexible payment plans, with options ranging from paying the entire premium upfront to making monthly payments. Look for a plan that best aligns with your financial situation.
  • Pay-as-you-go insurance: Some companies, like Hugo, allow you to pay for car insurance in spurts as small as a few days at a time. Your required payment will likely be lower when you only pay for a few days of coverage. The catch is that you’ll likely pay more if you leave coverage turned on for the entire year. 
  • Discounts: Even if a policy’s sticker price isn’t $20, qualifying for a discount could lower your overall and upfront costs. 

Pros and cons of a low down payment on car insurance

Like all financial products, low down payment car insurance has advantages and disadvantages. 

Let’s explore the pros:

  • Spread out the cost: Reduce the upfront financial burden by breaking your premium into smaller, manageable payments.
  • Simplify budgeting: Smaller, more frequent payments can make incorporating insurance costs into your monthly budget easier.

And the cons:

  • Higher overall costs: While paying less upfront can be convenient, it may result in higher total costs over time than a traditional policy.
  • Risk of cancellation: Missing a payment could lead to policy cancellation, and with multiple payments to manage, the risk of missing one may increase.

Tips for saving on car insurance

Whether or not you can find a low-deposit insurance option, you can tap into the following tips for reducing your car insurance costs:

  • Bundle policies: If you purchase multiple types of insurance, bundling your auto coverage with another policy could lead to savings. For example, buying your home and auto coverage through the same insurance company could lead to savings. 
  • Safe driving discounts: Most insurance companies reward safe drivers with lower rates. Good habits on the road could lower your insurance costs. 
  • Adjusting coverage: Choosing minimum coverage can help keep your premiums as low as possible, but it also means you’ll have limited financial protection in the event of an accident.
  • Raise your deductible: In general, opting for a higher deductible can lower your insurance premiums. If you’re confident in your ability to cover the higher out-of-pocket cost in the event of a claim, raising your deductible could be a smart choice.

Frequently asked questions

Can I get car insurance with just $20 down?

Car insurance with a $20 down payment might be an option, but eligibility depends on factors such as your individual circumstances and location.

Which states allow low down payments for car insurance?

Most states allow insurance companies to offer policies with flexible payment options, including low down payment options. But if your state has an expensive car insurance market, you likely won’t get coverage for a low down payment.

Do low down payment policies provide full coverage?

Generally, a low down payment policy includes just minimum liability coverage. In most cases, you’ll need to pay more for full coverage.

Are there risks to choosing low-down-payment insurance?

If you opt for a legitimate low-down-payment insurance policy, you risk having your policy canceled if you don’t make the required ongoing payments.

author image
Sarah Sharkey
Contributing Researcher

 
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Sarah Sharkey is a personal finance writer with a master’s degree in management from the Hough School of Business at the University of Florida. She enjoys helping readers find money solutions that work. She has written for numerous personal-finance publications including Money Under 30 and The College Investor.

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