You have been struggling to make ends meet, but you are getting by. You may not be able to afford some of the cheaper luxuries you would like to, yet you have a home and a car. Whilst sitting down to dinner, you grab your stack of mail and toss what seems like junk. Your eyes stop on a piece of post that you are tempted to throw away, but know you cannot – your car insurance renewal letter. The company is informing you that it is time to renew your policy, and for a moment you consider selling your car and buying a cheap bicycle instead.

Know that you are not the only one in this situation; premiums have been steadily increasing over the past several years, as much as 40 percent between 2010 and 2011. While the knowledge that others are frustrated as well, it does not help you when you have almost nothing saved in the bank and prices for everything, not just car insurance, are skyrocketing through the roof. Stricter regulations require you to purchase car insurance if you are driving a vehicle, and you cannot own a vehicle without insurance unless you have made a SORN. You simply have no other option but to pay the insurance company for a policy, but there is one way that you can do so and not risk breaking the bank: cheap deposit car insurance.

Insurance companies are competing for your business. Not only do they want you to purchase a car insurance policy through them, but many hope that you will purchase home and life policies with their companies as well. Many providers resort to television advertising, sales gimmicks and promotions to try to grab you, so you may believe that there is no such thing as cheap deposit insurance. Well, you are right and you are wrong.

Instead of asking you to pay annually, an insurance company will take the amount of the full policy, divide it into 12 equal increments and ask you to pay every month. They may add extra administrative charges, so make sure to research the provider thoroughly before purchasing this type of policy. Where does the no-deposit bit come in? Well, that is the unfortunate part. There is no such thing as no-deposit insurance. Car insurance companies will ask you to pay a small deposit up-front so that the contract is considered valid, but the good news is that you can pay this using a credit card and worry about that bill later.

If you are considering purchasing a cheap deposit policy and plan on paying by credit card, you may need to pay both the deposit and the first monthly repayment at the same times, so make sure you budget your money well in order to avoid falling behind. Many companies have strict penalties for those who do not pay on time, especially because they are doing consumers a favour by giving them the convenience of paying every month.

You can use a specialist car insurance comparison website to find providers who provide no-deposit or cheap deposit insurance policies. You may want to consider using these resources to compare what your policy would be if you were to pay annually in full, but you can also see which companies have added fees, penalties and the total costs of the policies.

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