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No deposit car insurance

No deposit car insurance doesn't exist, but some insurers use this phrase to promote their monthly direct debit car insurance. When you buy insurance you'll always need to make a payment upfront, but there are still ways you can reduce your costs and find cheaper car insurance. 

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Why can't I get car insurance without a deposit?

You won't be covered by any car insurance policy without paying something first, whether you choose annual or monthly insurance. You make your first payment on or before your insurance start date. Driving your car before this means you aren’t covered and are driving without insurance.

However, with monthly car insurance you can spread the cost instead of having one large upfront payment at the start of your policy. When you compare car insurance quotes with us, we’ll show you how each insurance provider sets its monthly payment schedule. Policies that advertise having 'no deposit' usually just split the payments evenly across all 12 months, which can make them much more affordable.

Some monthly policies include a higher payment for the first month. However, if your annual quotes are too high, this can still be a good way to get more affordable car insurance.

Is it more expensive to pay for car insurance monthly?

It’s usually cheaper to pay for your car insurance annually if you can afford the large upfront cost. But both options have benefits depending on your own circumstances.

When paying annually:

  • You pay it all in one upfront payment, so it's sorted at the start of your policy
  • You may have to pay a large amount in one go
  • Insurers only need to make a soft credit check
  • There’s no interest added to your policy price

When paying monthly:

  • You pay in smaller monthly instalments, so it may be more manageable if your insurance is expensive
  • Insurers usually make a full credit check
  • The total cost is often more expensive due to interest charges. On average, insurers charge 38%2 more when you opt to pay monthly.


2Based on Confused.com data October - December 2023. 

How can I reduce my car insurance costs?

If paying annually isn’t an option for you, there are still lots of ways for you to get cheaper car insurance:

  • Use a 0% interest credit card
  • Increase your voluntary excess
  • Enhance your car's security
  • Choose a black box or telematics policy
  • Choose fully comprehensive insurance
  • Build your no-claims bonus
  • Consider temporary car insurance

Use a 0% interest credit card to spread the cost of your insurance. If you have a good credit history and are confident in managing your finances, this could be a good way to afford one payment and then repay your credit card balance during your agreed 0% interest period. Not all credit cards will give you 0% for the whole 12 months so check your agreement terms. It might be helpful to set up a regular direct debit to repay your balance to make sure you don’t miss a repayment. Otherwise, you risk losing your 0% interest and it can have a bad effect on your credit rating. 

Increase your voluntary excess, which is the amount you pay voluntarily toward any claim you make. This could lower your car insurance costs, but make sure you can afford to pay this initial cost if you make a claim.

Enhance your car's security with features like an alarm, immobiliser or tracker. This makes it harder to steal and shows your insurer you're less likely to make a claim for theft.

Choose a black box or telematics policy, which bases the cost of your insurance on how well you drive. These policies monitor your driving for things such as braking, speeding and how much you drive. This data generates a driving score, which can reduce costs for safer drivers. These policies are particularly useful for new drivers.

Choose fully comprehensive insurance: Even though they give you a higher level of cover, fully comprehensive policies tend to be cheaper than third party policies.In fact, our data shows the average price for a fully comprehensive policy is £9413, compared to £2,1742 for third party only insurance.

Build your no-claims bonus (NCB) and you could get discounted prices as a reward for several years of safe driving. For each year you go without making a claim, you get another year added to your NCB. Having just 1 year of NCB could save you 37% compared to having none2. The higher your NCB, the bigger the discount you could get.

You could look out for policies with protected NCBs so that you don't lose your bonus if you do have to make a no-fault claim. There's usually an extra cost for this, so you'll need to weigh up whether it's worth it to you.

Consider temporary car insurance if you don't use your car regularly throughout the year. This allows you to set up cover as and when you need it rather than having continuous cover all year. Compare prices against annual policies to see if this is an affordable option based on how much you'll be driving. If your car usage increases later, you can always get an annual policy then. Note that you will have to declare your car 'SORN' for any time it's uninsured.

2Based on Confused.com data, January - March 2024.

3Confused.com Q1 2024 price index data.

What our car insurance expert says:

"You won't find a true "no deposit" car insurance policy where you don't have to pay anything upfront, but there are things that might make your cover more affordable.

"Many assume parking on a driveway overnight is safer, but you might actually find cheaper prices by parking your car on the roadside. It's worth checking both if it's an option for you, but remember you risk invalidating any claims you make if you aren't honest about it."

Louise Thomas, Motor Insurance Expert at Confused.com
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How do I know which are black box policies?

When you get a quote and see your list of prices, any black box policies available will have a banner at the bottom of that quote with more information. Look out for this banner and icon to identify black box and telematics policies in among your quotes.

You’ll also see similar banners to identify other policy types, like pay per mile or if the price includes a discount for Confused.com customers.

A phone screen showing the quote process with a banner highlighting the black box policy symbol enlarged

Can I get monthly car insurance with a bad credit score?

While you might still be able to pay monthly for your car insurance with a low credit score, you may find you’re offered fewer quotes, or less competitive deals.

This is because with a monthly policy you’re effectively ‘borrowing’ from your insurer to pay for your car insurance, so they’ll need to do a credit check when you apply. Your monthly payments are likely to be more expensive than someone with a better credit rating because insurers factor in the risk of future payments being missed.

This is why it’s so important to compare car insurance quotes to get a range of prices.

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