deposit contribution from the dealer - whats the catch?

TomO

TomO

TomO

Soldato
Joined
28 Oct 2002
Posts
3,356
looking at getting a new car and the dealer has said they are offering £750 deposit contribution if I take finance from them. The rate isnt the best, 8.9%, but I dont need to finance the car necessarily and he said I can pay the finance off anytime after the first payment without penalty (He implied the first payment was when they get the kick back from the finance deal).

There is a £180 acceptance fee and £95 transfer fee at the end of the agreement. So if I pay back after 1 month, I will be c. £500 better off.

This is how simple the dealer is making it sound, but wanted to check with the OCUK masses that may have experience with this and dont have a vested interest in flogging my car finance!! seems like a relatively easy way to get another £500 off the car price essentially, buy if its too good to be true etc.
 
Usually the catch is exactly as you've found, you're tied to both the rate on offer and they'll use the contribution to tell you no more money can be taken off the car.

Try checking how much you can get off list with a broker - you'll find they can usually add on (well, take off) deposit contribution etc too. If it's no better than what's on offer then you haven't lost anything
 
but is the process as simple as he makes out with regards paying early?

Its seems to be a manufacturer funded offer, so not sure if the dealer has movement on that.

edit - its a second hand car with Mercedes - so broker option not relevant.
 
When I looked into it properly on Audi finance the "having to make the first payment" was false information. The cash inducement was not directly tied to the finance, and therefore if you withdraw from the finance within the cooling off period you kept the discount. However the salesperson doesn't get their bonus from from the finance deal, read into that what you want!

If you make the first payment you are then bound by the contract and have to get a settlement figure which will be significantly higher than than exercising your right to withdraw which costs nothing other than the interest accrued within the period. I took Audi finance with 3 years servicing then withdrew and paid the loan amount in full a week later using a personal loan. Note if you do this you must specifically state you wish to "exercise your right to withdraw".

Do however check the small print on your finance contract though as each situation can be different, I am just giving a view on Audi finance.

Edit:

On Merceded own website:

Right of Withdrawal

I was told I could withdraw from my agreement, is that correct?

As of 1 February 2011, the ECCD provides customers, who are within the ECCD parameters, the right to withdraw from their finance agreement by paying the amount financed. If you would like to withdraw from your finance agreement, please ensure you contact us within 14 days (excluding the date the agreement was signed) of signing the finance agreement.

Contact us

If I withdraw from my agreement, what will I need to pay?

You will be asked to pay the balance financed which you can do either by Direct Debit or Debit Card. You need to make this payment within 30 days of notifying us. We reserve the right to charge interest on a daily rate until such time as full settlement has been received.

If you are thinking of withdrawing from your finance agreement, please contact our Customer Services Department on 0370 847 0700.

Contact us
Click to expand...

Note it states the only impact of withdrawing is having to pay the financed amount plus potentially interest. Still need to check all the small print though and anything you sign directly relating to the £750 discount (unlikely to be anything as usually it's just shown as a discount on the purchase price).
 
Last edited:
Abyss said:
The £750 discount will be on the basis of they will make significantly more out of the finance you take.
Click to expand...

Well yes, but if they're coming up with "We'll take £750 off this car through contribution sir" before any actual price has been agreed, I'd read that as "there's plenty to get off this particular car if you try hard enough"
 
Not a catch, you just have to realise that they are there in the hope they will get more back through interest.

However, if the APR is good (in your case it is not) it is worth it. Ford have 4.3% on a 2 year pcp which is around about what a bank loan would be, so i have gone with Ford finance and therefore the contribution on the car i have just bought.

Like everything with financing you need to look at the whole picture and the complete cost and work out what is cheapest.
 
price was nailed down before finance discussed, so did as well as i could there.

looks like i can pay off in first 14 days no problem, and I need to check the small print for what interest and charges applies thereafter.

all agreed now and plan to pick up on sunday, so new car thread thereafter :)
 
You must log in or register to reply here.
Back
Top Bottom