Q: Can I change my mind after paying a deposit on a car?

In most cases, holding deposits are placed as part of a contract in which you agree to buy the car. Of course, you can back out if you wish, but it's very unlikely that you'll get your money back. Put simply: You should ensure you're ready to buy your car before you put your deposit down, unless you don’t mind losing your money.

Q: What type of car finance does not require a deposit?

There are three main types of car finance : Hire Purchase (HP) deals Personal Contract Purchase (PCP) deals Personal loans Whilst most types of finance can require a deposit, some lenders will be able to offer you no-deposit car finance under one of the options mentioned above. At Car Finance 247, we are proud to state that some of our lenders specialise in no-deposit car finance, so we may be able to help you find the perfect deal!

Q: Is a holding deposit on a car refundable?

A holding deposit is usually non-refundable, as the money is paid to 'hold' the car for you. Once received, the dealer should take the vehicle off the market and save it for you. If they sell the car to someone else after you've paid a holding deposit, the dealer has to refund you in full. You'll get the money back when you return to the dealer to make your purchase - it will either be refunded or deducted from the cost of the car. However, if you put down a holding deposit and decide you don't want the car later on, it’s unlikely that the dealer will refund you.

Q: What is a deposit contribution for a used car?

When searching for a new car, you may see the words deposit contribution crop up occasionally. If your vehicle of choice is described as having a deposit contribution , it means that the dealer has included a set amount of money towards the deposit for you. If that sounds too good to be true, there's often a catch - you usually have to opt for a specific finance product to buy the vehicle, instead of choosing between HP or PCP finance. There may also be a minimum car value that needs to be charged or a maximum deposit allowance too. On the other hand, a deposit contribution finance agreement may be ideal for some people, as the dealer's donation will be taken off the total cost of the car.

Q: Do you need to put a deposit down when buying a car?

No , you don't necessarily need to put a deposit down when buying a car, particularly if you have a good credit score . However, you may find that having a deposit is more cost-effective in the long run , as it should reduce your monthly payments and the cost of the optional final payment at the end of your loan term.

Q: Is it easier to get car finance with a large deposit?

In most cases, putting down a larger deposit will make it much easier to get car finance, as there’s less risk involved for the lender - particularly if you have bad credit. If you've got a poor credit score or you've been refused car finance in the past, a larger deposit may signal more trust to your lenders.

Question 1

Can I change my mind after paying a deposit on a car?

Accepted Answer

In most cases, holding deposits are placed as part of a contract in which you agree to buy the car. Of course, you can back out if you wish, but it's very unlikely that you'll get your money back.

Put simply: You should ensure you're ready to buy your car before you put your deposit down, unless you don’t mind losing your money.

Question 2

What type of car finance does not require a deposit?

Accepted Answer

There are three main types of car finance:

Hire Purchase (HP) deals

Personal Contract Purchase (PCP) deals

Personal loans

Whilst most types of finance can require a deposit, some lenders will be able to offer you no-deposit car finance under one of the options mentioned above. At Car Finance 247, we are proud to state that some of our lenders specialise in no-deposit car finance, so we may be able to help you find the perfect deal!

Question 3

Is a holding deposit on a car refundable?

Accepted Answer

A holding deposit is usually non-refundable, as the money is paid to 'hold' the car for you. Once received, the dealer should take the vehicle off the market and save it for you. If they sell the car to someone else after you've paid a holding deposit, the dealer has to refund you in full.

You'll get the money back when you return to the dealer to make your purchase - it will either be refunded or deducted from the cost of the car. However, if you put down a holding deposit and decide you don't want the car later on, it’s unlikely that the dealer will refund you.

Question 4

How much deposit do I need for a used car?

Accepted Answer

It's a well-known fact that new cars start to depreciate as soon as they drive off the forecourt, losing around 40% of their value by the end of their first year. As such, buying a used car is usually going to be cheaper, meaning you'll often need to put less of a deposit down for the same vehicle.

It's still worth adhering to the 10% deposit rule though, although 10% of the cost of a used car will naturally be cheaper than 10% of a new car anyway.

Question 5

What is a deposit contribution for a used car?

Accepted Answer

When searching for a new car, you may see the words deposit contribution crop up occasionally. If your vehicle of choice is described as having a deposit contribution, it means that the dealer has included a set amount of money towards the deposit for you.

If that sounds too good to be true, there's often a catch - you usually have to opt for a specific finance product to buy the vehicle, instead of choosing between HP or PCP finance. There may also be a minimum car value that needs to be charged or a maximum deposit allowance too. On the other hand, a deposit contribution finance agreement may be ideal for some people, as the dealer's donation will be taken off the total cost of the car.

Question 6

Do you need to put a deposit down when buying a car?

Accepted Answer

No, you don't necessarily need to put a deposit down when buying a car, particularly if you have a good credit score. However, you may find that having a deposit is more cost-effective in the long run, as it should reduce your monthly payments and the cost of the optional final payment at the end of your loan term.

Question 7

I am looking for car finance. Can I use my old car as a deposit?

Accepted Answer

If you already have a car and you'd like a new one, you can use your old car as a deposit. This is called part-exchanging, and it's much easier if you own your old car outright. However, if you have a car finance deal at the moment and you'd like to get a new vehicle, you could also consider refinancing.

With a refinance deal, the balance owed on your old contract is rolled into your new agreement, although this could make it more expensive, depending on how much you have left to pay. Refinancing tends to be more popular with PCP deals than HP loans, as many people choose to refinance the balloon payment.

If you own your old car, you can avoid refinancing altogether. Your dealer will assess the value of your car and reduce the cost of your next vehicle, based on how much your old car is worth. You may find that this money is taken off your deposit, or it could be taken from the remainder of the money, making your monthly repayments more affordable. As such, it’s

Question 8

What is the 10 percent rule for car finance?

Accepted Answer

If you've been browsing through your car finance options for a while, you may have come across something called the 10% rule.

Essentially, the 10% rule states that you should spend 10% of your desired vehicle’s worth on your deposit to get the best deal.

Of course, you don't have to adhere to this rule, but if you're not sure how much to spend on your car, they may be of use.

Question 9

Can I get a car on finance without a deposit?

Accepted Answer

Yes, you most certainly can get a car on finance with no deposit!

However, whilst a deposit isn't always required, it may make lenders view your car finance application more favourably, as well as reducing the amount of interest paid. You're more likely to be approved for no-deposit car finance with a good credit score, but it's not completely out of the question if your rating isn't quite up to scratch.

Question 10

Is it easier to get car finance with a large deposit?

Accepted Answer

In most cases, putting down a larger deposit will make it much easier to get car finance, as there’s less risk involved for the lender - particularly if you have bad credit. If you've got a poor credit score or you've been refused car finance in the past, a larger deposit may signal more trust to your lenders.

Question 11

How much deposit do I need for car finance?

Accepted Answer

The deposit amount you need to put down for car finance will depend on several factors:

Your credit score and your previous borrowing history

The model and age of the car you'd like

Whether you’d like a new or used car

What you’d like your repayments to look like

Whether you foresee any changes to your financial situation in the future

Whether you choose HP (Hire Purchase) or PCP (Personal Contract Purchase) finance

Most people recommend a deposit of 10% of the total cost of the car, but at the end of the day, it's really about what you're comfortable with. If you'd like lower monthly payments, paying a large deposit could be a good idea.

Another thing to consider is the type of finance you’d like. With Hire Purchase (HP) finance, you'll usually be required to pay a higher deposit. On the other hand, with Personal Contract Purchase (PCP) finance, the deposit amount will often be lower. This is because, with PCP deals, the value of the car is deferred into the optional final payment (known as a balloon payment) at the end of your PCP finance.

Question 12

Is a car finance deposit refundable?

Accepted Answer

In most cases, your car finance deposit will not be refundable. If you decide you don't want to go ahead with your finance agreement, you'll usually lose your money. However, your deposit will be held against the value of your vehicle - the more you pay upfront, the less you'll pay later on.

The only time you can expect to get your deposit back is if the finance company or dealer decides to renege on the contract before you've received your car.

Question 13

How does car finance work with a deposit?

Accepted Answer

A car finance deposit is pretty similar to any other type of deposit you might be required to pay. It's fairly typical to be asked to pay a deposit before taking out a new finance deal, regardless of the asset you're buying.

The likelihood is that you'll have paid a deposit for something before. A car finance deposit works in much the same way - you'll pay an upfront sum of money to secure the sale of your vehicle. Once your deposit is paid, the dealer will save your car for you, providing you still want to carry on with your purchase. However, your deposit isn’t just about holding your car. It also enables you to receive a cheaper finance agreement and save money, as you’re technically paying part of the cost of your car loan upfront.