This guide is here to help you understand what is meant by the term Deposit, the benefits of paying a deposit and how your deposit is used here at Creditplus.
A Deposit is an initial payment given as a guarantee to secure a purchase with the intent of the balance being paid at a later stage. In other words, a deposit is a sum payable as a first instalment on the purchase of something - for example a new car - to secure the car in advance and remove it from public sale. The best way to pay a deposit, if it's practical to do so, is by credit card, as then you will be covered by the Consumer Credit Act should something go wrong. If you decide to cancel or pull out of the deal, the seller is entitled to keep your deposit; however depending on the reasons for your cancellation, there may be room for negotiation.
The benefits of paying a deposit are that it reduces the total amount of the loan, resulting in lower monthly repayments. When a deposit is paid, it will strengthen the deal and, in some circumstances, it could be the difference between an application for car finance being accepted or declined.
Here at Creditplus the rules around paying a deposit vary depending on how you chose to finance your car. If we source and supply your vehicle, we charge a minimum deposit of £300. This is used to secure the vehicle and demonstrates a commitment to the loan, both on the part of Creditplus and the customer. Under some circumstances, this deposit can be refunded if there is an issue with the vehicle or loan. In these cases it would need to be agreed by our Logistics Manager.
If you are only applying for finance and intend to source the vehicle yourself, we may not require a deposit, especially if you have an Excellent credit score. However, if you have a Fair or Poor credit score, providing a deposit can strengthen your car finance application. We always recommend that a customer pays a deposit, simply because it reduces monthly payments and helps secure your finance agreement.
If you have an Excellent credit score and wish to take out a Personal Contract Purchase (PCP) agreement, you'll usually be required to provide a deposit of 10% of the sale price of the car.
"A deposit is money placed with some other entity. It is a credit for the party who placed it, and it may be taken back (withdrawn), transferred to some other party, or used for a purchase. It is often used with respect to banks, where deposits are usually their main source of funding." Read more at Wikipedia.
If you require further assistance, our team of Customer Advisors are here to help. We're open six days a week - you can view our opening hours here - and we're more than happy to answer your questions.