What is Deposit Contribution?

A deposit contribution acts as a discount on the deposit, this being the payment you need to secure your vehicle. A deposit contribution works by giving you some money towards this. A deposit contribution is typically offered to push you to select a certain car finance agreement as an incentive from car leasing companies. They are actually quite straightforward and can save you a lot of money, making them very important when choosing the right car finance plan for you. 

How do Deposit Contributions Work?

If you’d like to purchase a new car with finance, either the car manufacturer or the dealer can offer you a deposit contribution. Deposit contributions are limited to customers planning to purchase funds for certain car financing deals. 

Here is an example: If you have £1500 to put on your new car as a deposit, this amount would normally be subtracted from the price of the car, with the calculation of your monthly payments adjusted accordingly. The bigger the deposit, the more the monthly payment decreases. If a manufacturer or a dealer is offering a £2000 deposit contribution, it gets added to your £1500 deposit. Therefore £3500 is taken off the full price of the car and your monthly payments. 

What Else is Deposit Contribution Known as?

As with many terms in the automotive industry, deposit contribution is known as a few different things, some of which are listed below:

1. Finance deposit allowance
2. Dealer deposit contribution
3. Retailer contribution
4. Manufacturer deposit contribution

What are the Advantages & Disadvantages of Deposit Contribution?

Advantages:

1. A deposit contribution is essentially free money or a discount without any strings when a car is purchased on finance. 
2. Sometimes manufacturers take part in a national promotion for a certain type of car. 
3. It is possible that the minimum deposit with a £2000 contribution is £2001, so you only have to bring £1 to the deal. Though, again, the bigger the deposit you put down, the lower your monthly payments will be.

Disadvantages:

1. Deposit contributions do not necessarily represent the best value you can get when buying a new car.
2. The deposit contribution is sometimes reserved for buyers using certain car finance products. 
3. Ensure that the dealer gives you a complete quote for the deposit contribution agreement they offer and carefully look at the total payable interest amount. It might be that in the end, you pay the same amount as the contribution in interest payments. 

Is Deposit Contribution right for me?

If you get into the car you want, then you absolutely! You need to stack up the numbers and do some research, request a complete quote from the dealer, ask each question you may have and don’t be scared to walk away. You can always buy another car. As with any finance offer, so with deposit contributions: do your research to make sure that the deal on offer is, in fact, the best value means of buying a new car.