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No deposit car insurance

There’s actually no such thing as no deposit car insurance, but there are ways to spread the cost.

Can you get car insurance without paying a deposit?

No deposit car insurance doesn’t exist - it’s a marketing tactic to advertise car insurance with monthly payments. You’ll always need to make a payment before you’re insured. Read the terms and conditions or policy documents carefully to find out exactly what to pay and when.

Car insurance is calculated annually, so you'll either pay for it at the start in a single lump sum, or split the payments over 12 months and pay by direct debit.

Most pay-monthly policies include a 20% payment in the first month, but no deposit policies spread this cost equally over the course of the year, making it seem like you’re not paying a deposit.

When do I start paying?

If an insurer offers ‘no deposit’, be aware that the first payment will only be days away.

That’s because car insurance must be paid in advance of getting behind the wheel, to make sure you’re insured to drive immediately.

no deposit car insurance

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^Up to £250 refunded after claim settled. Car insurance purchases only. Excludes breakdown, windscreen and glass repair/replacement. Full T&Cs apply.

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Paying annually

You’ll pay for an annual policy in full, all in one go.

As you’re paying in full, you won’t need to pay any interest, and you’ll pay less overall.

But it means making one large payment, which you might not be able to afford to do.

Paying monthly

If you can't afford to pay your car insurance as a lump sum, you can choose to pay in 12 monthly installments. You’ll set up a direct debit and spread the cost into smaller, regular payments.

When you do this, you enter into a credit agreement - which is a type of loan. That means there'll be a credit search visible to other lenders on your credit report.

Although it means you won't have a large up-front cost when you take out your car insurance, you'' pay more overall because interest will be added on.You won’t be able to cancel the direct debit if you need to save money one month.

You won't be able to cancel the direct debit either if you need to save money one month.

If you don’t meet the repayments, the insurer will chase you for the outstanding amount, and your credit record could be affected. That can make it much harder to get loans, credit cards and other credit products in the future.

Using credit cards to spread the cost of car insurance

If the insurer accepts credit, you could defer your first payment and spread the cost with a 0% or interest-free purchase credit card. It’s an option if you’re good at managing your finances and have a decent credit history.

  1. It’s interest-free for an agreed length of time. You could use the credit to pay off the entire insurance balance and avoid the interest on direct debit payments

  2. Make at least the minimum monthly repayments and repay the full amount within the lender’s agreed period and you won’t have to pay interest

  3. Don’t risk missing a payment - divide the full cost by 12 and set up a direct debit to repay the card by at least that amount each month so you don’t forget

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