On this page, I am going to explain to you, what deposit contributions are and how to take full advantage of them.
When you buy a car from a Main Dealer, new or used, you either have two options to pay cash, or finance for the car.
To help encourage you to buy the car on finance, they will offer you a deposit contribution. How much this is, depends on the car and what offers the dealers are running. These offers can change all the time and is worth keeping an eye out on them.
So here is an example that I saw in March 2018
I was looking at, a used Ford S Max, from a main dealer, the price of the car was £28,000. Their offer was, if I take this car on finance, they would put £1,500 towards my deposit, on a PCP finance deal.
If you were to pay cash for this car, they would not knock the £1,500 off the price.
So here is the trick, what the main dealers won’t tell you, is your rights.
Thanks to the consumer credit act, what your rights are, is that you can pay the finance off strait away, without being penalised.
So, to save yourself £1,500 off the price and you want to pay cash, just simply take it out on finance and pay it off strait away.
The only charges involved are, sometimes an admin fee and the interest used. So, let’s say you paid it off the next day, you have borrowed the balance for 24 hours. The interest on that will be almost nothing, I’ve heard cases of it being less than £5. So even if the admin fee was, let’s say £30 and the interest charged was £5, you would be £1475 better off than paying cash for the car.
Thanks to the FCA your perfectly with in your rights to do this, as this is the law.
There are other incentives also on these deals, such as you may have seen two free services included. Which is the same as the deposit contribution, you get to keep them even if you pay the finance off early.
Here is another example I helped my friend do.
My friend wanted a used VW Passat estate, VW main dealers had an offer on, where you would get a £2,000 deposit contribution and two free services if taken on a PCP.
My friend wanted to pay cash and I told him about his rights and what he could do.
He went in to the dealership, took it out on a PCP, paid it off the next day and saved £2,000 and got to keep the two-free services worth almost £400. So, in total after paying the admin fee of £20 and £5 interest he saved £2,375.
Even when writing this, it almost feels like I’m encouraging something illegal and maybe I shouldn’t post this on my website, but amazingly it’s 100 percent legal.
For further information on car finance please visit my Finance explained page.