What Is a Deposit Contribution?
What Exactly Is a Deposit Contribution and How Do They Work for you?
February 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.
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.
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.
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.
The amount of deposit contribution that you can expect varies between dealers and manufacturers although can often run into thousands of pounds.