Car PCP and deposits on them

[Dizeee]

Myself and other half have car loans, typical 3 year PCP jobbies with the balloon payment at the end. She put down £4k deposit on her loan, 0% APR at the start to lower the monthly payments. I have just put down £1k deposit on mine having only just purchased however mine is at 4.5% APR or thereabouts.

However, it has been pointed out to me that I may have shot myself in the foot. I intend to use the car as equity for another car at the 3 year point so don't intend to keep it long term. Having paid £1k deposit my payments have come down by roughly £35 a month from what they would have been with a zero desposit. However it was pointed out to me that I will end up losing out, as the total amount I have saved each month off the monthly payments will equate to less than the £1k deposit. Had I have put down no deposit I would have been paying slightly more each month but after 3 years I still won't have paid as much in total as I have by putting down a deposit. The balloon payment remains fixed in any case so that doesn't change.

So am I completely missing something here, or is it a waste of time to put down any deposit on a short term PCP on a car that you don't intend to keep?

[Dizeee]

Ok so maybe not as straightforward as I thought although what rehab has said is what is thought to be the case, i.e the balloon payment is the same no matter what deposit you put down, so is it basically boils down to whether or not you wish to "buy yourself" a lower monthly payment?

Interesting to see most replies think I haven't wasted my money though.

[Dizeee]

FWIW I picked up my car today, my baloon is tiny, £3200 to be precise, in 3 years I am guaranteed a minimum of around 5.5k hopefully more which means I will have 2.5 to 3k deposit on the next car. ( The person I am dealing with is a friend of 10 years, so I know this to be accurate ).

I put down £1k deposit, which has removed some negative equity on my trade in plus given me a deposit of 750 ish. All in all for a new car I think this is pretty good, under 180 a month, free servicing for 3 years, no tax, tank of fuel plus fully fitted mats and styling kit all chucked in.

I will think carefully about PCP deposit amounts in the future though!

[Dizeee]

TVR1 said:

onthlies but no flexibility (well tgere is, but you will pay for it)

On a typical 42 month PCP for every £1000 more or less, your payments change by approximately £29. Can you see why it's a bad idea to put in thousands more to reduce your payments by such a small amount-especially if that deposit is greater than 10-15% as thats money you can kiss goodbye.

HTH

This sums up the conversation I had today when I picked up the car, I chatted about with my friend / the sales manager, and he agreed that it was around a £30 difference for every 1k, roughly speaking. In my case, putting down 1k on a 4.9 % deal over 3 years has lowered my payments by £30, and if you work out the difference in what I would have saved per month over 3 years not putting that down vs what I have put down, there is around a cup of tea or so difference, at this price point. Knowing that my balloon is smaller than I realised, knowing what they are likely to give me in general terms as a trade in and also knowing that my friend will always treat me with honesty and give me the best deal he can in the future all serves to reassure me that actually this was the right move.

I am glad I bought this up though, for a higher value car it seems to me it is like throwing money down the drain if you do not intend to keep it post deal.