Are deposit contributions offered locally?
While not a common term in the local motoring landscape, it is not uncommon to see local manufacturers and dealers offer deposit contributions, but how does this work?
What is a deposit?
In short, many of us will put a deposit on our new or pre-owned vehicle in order to reduce the monthly payments. The deposit sum is subtracted from the initial purchase price and then the installments are calculated.
What is a deposit contribution?
In the event of a dealer or manufacturer offering a deposit contribution, there will be an additional sum added to the buyer's deposit from said dealer or manufacturer. In local scenarios we may be more familiar with discount or 'cash back' deals, but these work in very much the same way, where the dealer or manufacturer effectively gives the buyer money in the form of a deposit contribution, a discount or cash back, all aimed at incentivising the deal.
Why is a deposit contribution offered?
Both dealers and manufacturers offer deposit contributions to incentivise purchases, particularly when it comes to models or derivatives that are less popular or are soon to be discontinued.
Pros and cons of a deposit contribution
As with many things pertaining to car finance, there are both pros and cons associated with deposit contributions, and we have listed them below:
Pros
-It reduces the purchase price of the model being purchased.
-It reduces the cost of the monthly installment on the vehicle being purchased.
Cons
-A deposit contribution may incentivise the purchase of a vehicle that the buyer may not necessarily have purchased.
- A vehicle that has a deposit contribution offered may not be good buy in the long-term as it could be a less desirable model or a range that is going to be replaced soon, therefore reducing its value.
