25 May 2023
A deposit contribution, also known as a finance deposit allowance, is a financial incentive offered by car dealerships or manufacturers towards the purchase of a vehicle. It represents a contribution made by the dealer or manufacturer towards the required deposit amount for a car finance agreement. The deposit contribution is typically deducted from the overall cost of the vehicle or used to reduce the initial deposit amount required from the buyer.
A deposit contribution can be beneficial for car buyers as it helps reduce the upfront financial burden associated with purchasing a vehicle. By providing a contribution towards the deposit, dealerships or manufacturers make the vehicle more affordable and accessible to customers. It enables buyers to secure car finance with a lower initial deposit, making it easier to manage their finances and potentially widening their choice of vehicles within their budget.
Let's say a car is priced at £20,000, and the car manufacturer offers a deposit contribution of £2,000. If a buyer chooses to finance the vehicle with a car finance agreement that requires a 10% deposit, they would typically need to pay a deposit of £2,000 (10% of £20,000). However, with the deposit contribution, the buyer's required deposit would be reduced to £0, as the manufacturer contributes the full amount. This makes it easier for the buyer to secure the car finance and purchase the vehicle without having to pay an upfront deposit.
|Total charge of credit||£0|
|Total amount payable||£0|