What Is A Deposit Contribution?
Added: 23 March 2017
What is a deposit contribution?
A deposit contributions is basically a discount on car finance schemes which lower the amount you pay when taking out a car finance agreement. Deposit contributions are usually offered by the manufacturer or sometimes even the dealer. Deposit contributions are usually offered with Personal Contract Plans (PCP for short). The larger the deposit contribution, the less you will pay for your new car.
Let's say you want to put down £2,000 as a deposit for a brand new car, you find out there is a £1,500 deposit contribution being offered by the manufacturer, your total deposit will be £3,500 which will lower the monthly payments on your car finance agreement.
What's the difference between discount and a deposit contribution?
The difference is when a dealer offers a discount it comes out of their own profit margin. A £500 discount means that you the customer saves £500, but it costs the dealer £500. A deposit contribution is being offered by the manufacturer when you take their finance plans i.e a PCP agreement, which means the dealer is not discounting the car.
Can I get a deposit contribution without taking a finance offer?
No, to be eligible for a deposit contribution, you will have to sign up for a finance agreement such as a PCP. You can sometimes get discount on a car without taking finance if the dealer are running their own offer at the time.
What happens if I don't take the finance offer which offers a deposit contribution?
Let's say there is a £2,000 deposit contribution on a car, if you don't take the finance offer you won't be eligible for the deposit contribution, that car will then cost you an extra £2,000. If you are planning on paying cash, using a bank loan or another finance company these methods may cost you more than using the dealer's finance offer, be sure to do some sums before making a decision.
Do deposit contributions expire?
Yes, every quarter the manufacturer updates their finance offers sometimes increasing or lowering the deposit contributions on offer. Their is no way to tell what the offers will be in a few months time, the sales executives don't know what the next offer will be, take that into consideration when you are planning on buying a brand new car.
Is there a catch?
No, remember you have 14 days from the finance agreement being activated to cancel a finance agreement. You must do this in writing and send it to the finance company, not the dealer.
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