What Is a Deposit Contribution?
What Exactly Is a Deposit Contribution and How Do They Work for you?
Feb 23, 2015
If you are thinking of buying a new car then you may have seen your local dealer advertise a new model with a ‘deposit contribution’. This incentive is becoming increasingly common on new car deals but can be difficult to get your head around.
We’ve put together a guide explaining everything you need to know about ‘deposit contributions’ including how they work, how they benefit you and some examples of current deals. Keep reading to find out more.
What is a deposit contribution?
Many car dealers offer a range of incentives and special offers in order to encourage you to buy one of their new cars. One such incentive is a ‘deposit contribution’.
This type of deal means that the manufacturer or dealer is offering you a fixed amount towards the price of the car – effectively reducing the cost of the new car by this amount. For example, a ‘deposit contribution’ of £1,000 on a car with a list price of £15,000 would mean that you effectively have to pay £14,000 for the car.
The main condition of taking advantage of a ‘deposit contribution’ deal is that you have to take the manufacturer or dealer’s finance in order to qualify. If you are buying the car using cash or your own finance you generally won’t qualify to receive the deposit contribution.
When would you benefit from a deposit contribution?
If you were planning to use the manufacturer or dealer’s finance in order to buy your new car then a deposit contribution is an excellent perk. It means that you will pay less for the car because the dealer/manufacturer is reducing the cost by the amount of the deposit contribution.
If you were planning to use alternative finance or cash then you won’t be eligible for the deposit contribution, meaning you would have to pay the full price for the car.
You should work out whether it is cheaper for you to:
- Take the deposit contribution and use the dealer finance.
- Forego the deposit contribution and use your own finance – the payments may be cheaper but you will have to pay more for the car.
Even if you have found a lower interest rate/APR through your bank or another finance company your overall cost may be more than if you took advantage of the deposit contribution and used dealer finance.
What types of deposit contribution can you expect?
The amount of deposit contribution that you can expect varies between dealers and manufacturers although can often run into thousands of pounds.
There are also huge deposit contributions available on many popular new Fords. It is possible to receive a £2,500 contribution towards the price of certain C-Max models while you can benefit from a deposit contribution of up to £2,000 on some new Ford Focus models.