by Ed Sneneh, Illinois Auto Insurance Agent in Chicago

Many people wonder if no down payment car insurance, also known as 'zero down payment car insurance' is a reality. In fact the vast majority of insurance companies will never offer any insurance, car insurance or other insurance, without down payment. The few companies that allow selling auto insurance without down payment are found among preferred carriers that will check the credit of the applicant, and will approve such insurance with no down payment to certain clientele, and will also report any unpaid balances to credit bureaus.
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Auto insurance coverage is a promise from  the insurance company to pay for claims made by clients in return of premium payments. If premiums are not paid there is no coverage. The question that comes to mind is: When an auto insurance company extends legal and binding offerings coverage to a client, what kind of guarantee does the company get that the client will pay the premium (the legal contact's consideration)? If the client does not make the down payment, the only guarantee is his/ her credit.

Typical Scenarios of the No Down Payment Car Insurance

1. Zero down payment auto insurance may be offered by a few preferred company for people with great credit. If client does not pay later for the time he/she was covered, the balance will be forwarded for collection and will be reported to credit bureaus. Some companies will bill the balance to the agent who wrote the policy.

2. Zero down payment car insurance may also be offered by some agent as an advertisement strategy. The way it works is like this:

Normal Situation: An auto policy may require a down payment of $185.00 and four monthly payments of $87.00. In this case you will end up paying $533.00 for that automobile policy.
No Down Payment Auto Insurance Option: The agent may ask you to make no down payment, but the agent will ask you to make the first monthly payment of $87.00 now, and four monthly payments of $113.75, hence your total will be $542.00. This means that while you may not make the down payment, your first monthly payment is due now, at the time of purchasing the policy! Also, and most likely than not, you will end up paying more than what you would have paid with the full payment option.

Insurance with no down payment is not limited to car insurance. There are also no down payment business insurance, no down payment homeowners insurance, etc. The phrase  'no down payment' and 'zero down payment' should not be interpreted as a way for you to get auto insurance and pay for it as it suits you.
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