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When something is described as having ‘no deposit’, it typically means that you won’t have to make an upfront payment. But this isn’t the case with no deposit car insurance. So, let’s demystify what it means and how you can take advantage of it to manage your costs.
‘No deposit’ car insurance is a misnomer — while you don’t pay a large upfront lump sum, you’ll still usually pay your first monthly premium before cover begins.
The term is more of a marketing phrase used by some providers to describe their pay-monthly insurance policies. These allow you to spread the total cost of your car insurance over monthly instalments rather than paying your annual premium in one large lump sum.
Be aware that you still have to make an initial payment — usually the first month’s premium or a percentage of the total cost — before your car insurance cover kicks in. So, while it’s called ‘no deposit', it’s not truly deposit-free, just less costly upfront than paying in full.
Here’s how the process of no deposit car insurance works:
You apply for a car insurance policy and request to split the cost into monthly instalments.
The insurer runs a hard credit check on you to determine whether you’re eligible for a payment plan.
If approved, you pay an upfront deposit (usually 20% of your total cost), which immediately provides you with coverage.
You pay the rest of the costs in monthly payments via direct debit, typically over 10 or 12 months.
No deposit car insurance is for anyone who wants to spread the cost of their insurance over monthly instalments to make it easier to afford.
Car insurance is a legal requirement — and a significant expense. On average, car insurance costs around £622. However, this can vary significantly depending on your age, job title, car, and other factors, which can increase overall costs to over £1,000.
This type of insurance can be especially useful for:
Drivers on a tight budget: It avoids the need for a large initial payment, helping you stay insured without financial strain.
Infrequent or seasonal drivers: If you only drive occasionally, a flexible payment plan might seem appealing — but be cautious. Cancelling a monthly policy early can lead to cancellation fees, meaning you could pay more for less coverage. In some cases, short-term car insurance may be a better fit.
First-time drivers: New drivers, who often face high premiums, may find it easier to get on the road with a no deposit option.
No deposit insurance doesn’t eliminate the fact that you’ll still have to make an initial payment. So, is it worth it?
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Whether you decide to make monthly payments or cover the total cost in one go will depend on your personal circumstances and needs.
It might be better to split payments into monthly instalments if:
You don’t have the funds available to pay the total cost of your premium upfront.
You want to manage your budgets more effectively.
You’re looking to increase your credit score.
If you opt to pay annually, you’ll pay your car insurance cost in one go with no interest fees, covering you for the remaining 12 months.
You might choose to pay annually if:
You want cheaper car insurance and have the financial capability to cover the total cost upfront.
You want the peace of mind that comes with paying in one go.
You have a low credit score (insurers only do soft credit checks to verify personal details, which don’t show up on your record).
That said, paying annually requires a significant upfront investment, which can harm your immediate cash flow.
No deposit car insurance is more expensive than paying annually. Plus, costs climb even higher if you’re a new driver or need add-ons like breakdown cover.
Luckily, there are still ways to get cheaper car insurance if you want to pay monthly:
Don't just go for the first offer you see. Shop around and compare car insurance quotes from different providers to find one that suits your budget and needs.
Your voluntary excess is the amount you agree to pay towards any claims. The higher your voluntary excess, the lower your premium.
New or younger drivers can get cheaper car insurance by adding an experienced named driver (usually a partner or parent). Just be careful to avoid fronting, which is a criminal offence.
The less time you spend on the road, the less risk you pose in the eyes of insurers, prompting them to offer you lower premiums.
Insurance providers want to know that your car is safe. Consider parking your car in a garage or investing in anti-theft devices (alarms, GPS trackers, steering wheel locks, etc).
This involves installing a black box on your car that tracks driving habits like speeding, braking, and acceleration. If you’re proven to be a safe driver, you’ll get lower car insurance quotes.
Finding cheaper car insurance is easy with the right comparison tools. Money Expert lets you quickly compare car no deposit car insurance quotes to find the best deal for you.
Simply head over to our car insurance comparison page and enter some basic details (such as your age, driving history, and the make, model, and age of your car). Select the type of policy you want and instantly access a bespoke list of policies and quotes that are suited to your needs.
From there, you can choose the most appropriate no deposit car insurance policy at the best price for you and save money on car insurance.
Technically, no. You’ll always have to pay an upfront cost, whether it be the total cost of your car insurance or a partial sum.
Monthly car insurance policies usually ask you to pay a deposit that’s 20% of your total annual cost. The average price of car insurance is £622 per year. So, you'd expect to pay an upfront deposit of around £124.40 — but this can vary.
Yes. In most cases, your deposit is your first month’s insurance. However, some insurers may front-load admin fees or make you pay a larger first instalment than the others.
Not usually. The upfront payment you make — typically your first monthly instalment — may include some admin fees, depending on the insurer.
However, interest charges for paying monthly are usually spread out across your remaining instalments, not paid upfront.
If you have bad credit, the insurer will decide whether to offer you no deposit insurance at their discretion.
When you apply for a pay monthly policy, the insurance provider will run a hard credit check to determine whether you have the financial capability to reliably keep up with payments. If they deem you too high of a risk, they might deny coverage. Or, they might deem you eligible but subject you to higher interest rates.
*51% of consumers could save £518.14 on their Car Insurance. The saving was calculated by comparing the cheapest price found with the average of the next four cheapest prices quoted by insurance providers on Seopa Ltd’s insurance comparison website. This is based on representative cost savings from June 2025 data. The savings you could achieve are dependent on your individual circumstances and how you selected your current insurance supplier.
