PCP Deposit Query

danhenshy23

Hi,

I am in the process of buying a new car for the first time through PCP.

The advice I have received from the sales person at the dealership is to avoid putting in any cash deposit of my own, if I can afford to.
I am keen to hear what anyone who has experience of buying through PCP thinks of this.

The rationale that the sales person gave was that I would be forking out a lump sum as a deposit each time I enter a new PCP deal, effectively re-mortgaging my car. However my understanding of reasons why paying money as a deposit is a posotive include a) lowering the monthly payments and b) reducing the balloon payment at the end of the contract term, giving me a better chance of having some 'equity' to put towards a new deal in the future.

I'm wanting to know if I am being given some good advice or being led up the garden path by sales tactics. Would I be sensible to put in no/a low amount or pay as much as I can as a deposit?

Any advice would be much appreciated.

Lucky_Duck_2

The deposit won't have any impact on the ballon payment, however the more money you put down when buying the less the monthly repayments will be and the amount of interest charged will be reduced.

WaywardDriver

Skoda and probably others, have online calculators where you can try different deposits and see the effect on monthly and balloon payments. Calculation depends on interest rate so better to use calculator specific to your intended manufacturer.

flashg67

I suppose you either put the money in now, or save it and use it next time. Apart from lower payments, you will pay less interest if you put money in upfront

danhenshy23

Thanks all.

Is it in the dealership/manufacturer's interest for me to out down zero deposit?

Mercdriver

danhenshy23 wrote: »

Thanks all.

Is it in the dealership/manufacturer's interest for me to out down zero deposit?

It's a much better bit of marketing when they can advertise zero deposit - EG £230 a month with no deposit to many people sounds more attractive than £3000 deposit £195 a month.

loskie

they may have tiered commission dependant on the amount of the loan. Hence wanting you to borrow to the max.

wgl2014

Do the sums and see what works best for you.

Overall I would suggest going for whatever combination gives the lowest total payable.