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What are the Pros and Cons of No Deposit Car Insurance?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 29 August 2019
  • Copyright Protected:
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    Conjecture Corporation
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No deposit car insurance is a type of auto coverage that does not require the insured party to pay any type of fees or premiums prior to the activation of the insurance plan. Instead, the coverage is broken into payments throughout the coverage period. There are several benefits to going with a policy that does not require a car insurance deposit, as well as a few potential liabilities to keep in mind.

In terms of benefits, no deposit car insurance makes it possible to obtain coverage now rather than having to come up with a lump sum deposit on the front end. For this reason, it is possible to secure the insurance quickly and relatively easily. Most companies offering this type of coverage will consider issues like credit rating and employment status, and extend installment plans for the coverage accordingly. In any event, people who live in jurisdictions that require car insurance before the vehicle is allowed on the road can be approved and obtain proof of that coverage in as little as a few minutes.

No deposit car insurance can also be a good option when the household budget is tight. By breaking down the cost of the coverage into a series of monthly installment payments, it is easier to plan for making those payments on time. From this perspective, no deposit car insurance is more affordable for consumers that fall into the low to middle income bracket.

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Along with the pros, there are a few cons that are sometimes associated with no deposit car insurance. One has to do with the total cost of the coverage. Typically, the monthly premiums are a little higher than making one up-front payment, or even a partial deposit and a series of reduced monthly payments. There is also the potential for the assessment of at least a few additional processing fees that are assessed as well.

For this reason, anyone who qualifies for deposit car insurance may want to compare the difference between the two options and determine exactly how much additional expense is incurred by going with the payments without putting down a deposit on the front end. Depending on the policies and procedures of the insurance company, there may be as much as a 20% difference for annual coverage, making it worthwhile to look into going with the deposit approach. Comparing terms and conditions offered by several different car insurance providers can make it easier to determine which policy type is the best option for a given consumer, both in terms of the overall coverage and how the cost of that coverage is managed.

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