WEDNESDAY, NOVEMBER 16, 2011
Zero Down Payment Car Insurance
by Aya Mus, Illinois Car Insurance Expert in Chicago
You may have seen an ad here or there advertising zero down payment auto insurance or homeowners insurance, or no down payment car insurance. To some people the zero down payment or no down payment auto insurance is a reality while to others the concept is nothing but a marketing pitch to attract attention of potential clients. Is there such a thing called no down payment auto insurance?
Technically, the answer to the above question is yes, although it is hardly ever found those days. To elaborate we need to consider the nature of auto insurance companies offering auto insurance.
Credit Oriented Auto Insurance Companies. Some auto insurance companies require credit check before they issue a firm auto insurance proposal. People with super credit get very good coverages at very great prices. In very few situations some of these companies may issue policies to certain clientele who have good credit and MVR records. Auto insurance companies that extend auto insurance coverage without down payment will wait for the down payment to arrive from either the agent or the insured person. If payment is not received the amount, even at small amounts, will be reported to the credit bureau. Some of these companies may still charge the agent by deducting the amount from commissions owed to agent on other policies. Advertising zero down payment insurance is not a strategy of preferred and standard insurance carriers.
Non Standard Insurance Companies. The vast majority of non standard insurance companies providing what we know as low cost auto insurance will not check the credit of auto insurance applicants. For that reason, these companies will not issue a policy without some sort of payments. All states impose laws governing cancellation of policies for reasons related to non payment of premiums. In Illinois auto insurance policies have to be given 10 day notices before the policy is cancelled. Longer periods may apply under certain circumstances. Generally speaking, these companies will not check the credit and will not report any balance to any credit bureau, as they simply will not insure anyone without some sort of payment to cover the initial period.
So what is behind the no down payment auto insurance advertised by agents of non standard insurance companies? The answer to that is in the language. Policy premiums can be divided in to two components, down payments and monthly payments (due after specific number of days from effective date of the policy.) Some insurance agencies my ask you to not make a down payment, but will definitely ask you to make the first monthly payment. So, even with no down payment is required, a monthly payment may be required to start your auto insurance.
It is clear that all the talk about zero down payment insurance is merely a marketing pitch to attract attention of potential clients. Customers should evaluate each and every policy proposal based on only two pieces of information. One: Compare the cash price of the policy if you want to pay it all now, and Two: In the event you want to go with an installment plan, compare the total of all the payments that you will make under different scenarios.