No deposit car insurance companies, and how they can help you.

Car insurance is in the news again. Scarcely a day goes by without big headlines appearing in the newspapers about further losses suffered by insurance companies, yet another outrageous compensation claim being allowed by the courts, yet more increases in car insurance fraud. Since all this is paid for ultimately by the policyholders, it is hardly surprising that many of those are starting to stagger a little under the weight of our car insurance premiums.

Insurance companies are run by hardheaded businessmen these days so it is hardly surprising that a number of them have decided to capitalise on the fact that so many people are having problems paying their insurance bills by bringing out no deposit car insurance schemes. Under one of these schemes an insurance premium is worked out and then it is divided by 12, and that sum becomes the monthly repayment which is paid either by credit card or direct debit. The first payment is then made by credit card, which means that the client does not have to find any deposit whatsoever at the time of taking out the policy.

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It sounds very simple and sensible but there are drawbacks. The first and perhaps obvious one is that although no payment has to be made in the first month by the buyer (the deposit having been paid by the credit card company) he or she will have to pay that first payment eventually, as well as the normal monthly payment. The other drawback is that, not unreasonably, insurance companies charge more for this type of policy because of the extra risk that they run. It is an unpleasant fact that more often than not the people who can least afford to pay have to pay the most so if it is at all possible a no deposit policy should be avoided. By paying in a conventional manner not only are the additional credit charges avoided, but it is also sometimes possible to negotiate considerable discounts.

A possible answer could be, instead, to use a specialist car insurance comparison engine which could tell you not only what a normal premium would be but also what it would cost if you had a no deposit insurance scheme instead. In this way you could compare the costs from many different insurers, and sometimes these can be considerable. Also, from time to time some insurers offer no deposit terms without any extra costs involved; these offers invariably only last for a certain length of time and they can be very hard to find but if they do exist at the time when you need your insurance a good comparison engine should be able to find them for you.

The moral therefore is to do your homework and consider all your different options before making a decision whether or not to accept a zero deposit insurance scheme. It could prove considerably more expensive, and making regular monthly payments can be irksome but sometimes paying the whole premium in advance simply isn't possible for many people. If you find yourself in this category for the time being, make sure that you investigate as many companies as possible by using a good short term car insurance comparison site.

Copyright 2010 John Maxwell