Car finance deposit contributions

CHrisP86

I am currently negotiating a deal on a new car on finance.

Does anyone know who it is that actually incurs the cost of the deposit contribution that is advertised with some finance deals?  Does the finance provider/manufacturer put this in or is it the dealer?

I thought it was the manufacturer but a dealer was trying to justify their measly discount by saying that they have to cover some of the deposit contribution.

Thanks

Snap

Just recently bought a car. As far as my deal was concerned, the manufacturer contributed, not the dealer. Always remember, most car dealers are looking after themselves first and foremost, and never ever believe anything that is remotely like a sob story, or appears to be them doing you a favour.

also, always use a broker like broadspeed, or orangecar, similar. They will put you in touch with the dealer who is prepared to do the best deal. Often, a dealer out in the sticks will ahve a lot more leeway to do a better deal than a big town/city dealer. Certainly has been my experience.

Wazmeister

It depends... sometimes it's the dealer, and sometimes it's the manufacturer.

The fees are certainly there, and someone (dealer or manu) will be picking up the cost.

Most mainstream dealers (Peugeot, Ford etc etc) have much less profit in a car than you would ever imagine. For example, when I worked with Peugeot, a 206 generally held about £700-£800 front end profit. Certainly not the the 1000s that most people believe...

My advice is dont always doubt the dealer; just find a GOOD salesman, who you like, can trust and doesn't spin you any tales. They do exist.

Sporky

Wazmeister said:

My advice is dont always doubt the dealer; just find a GOOD salesman, who you like, can trust and doesn't spin you any tales. They do exist.

Yup.

Also go in with quotes from Carwow or similar - they may not be able to match someone else who's just trying to hit their last sale to get quota, but it'll keep their pencil sharp.

CHrisP86

Thanks, I'm looking at a new Audi so I assume they have reasonable margins.  I think I will stick to my guns and see what happens.

richardhomer

CHrisP86 said:

Thanks, I'm looking at a new Audi so I assume they have reasonable margins.  I think I will stick to my guns and see what happens.

In my experience they have the narrowest margins of all; about 2" if they're driving behind you on a motorway - and about the thickness of a top E string when overtaking....

Sporky

CHrisP86 said:

Thanks, I'm looking at a new Audi so I assume they have reasonable margins.  I think I will stick to my guns and see what happens.

They're a bit mean though. A work chum (who is probably a better negotiator than I am) got about 12% (£4k) off his new Audi but it took a lot of work. I got 16.5% off my VW with very little effort...

paulnb57

Sporky said:

CHrisP86 said:

Thanks, I'm looking at a new Audi so I assume they have reasonable margins.  I think I will stick to my guns and see what happens.

They're a bit mean though. A work chum (who is probably a better negotiator than I am) got about 12% (£4k) off his new Audi but it took a lot of work. I got 16.5% off my VW with very little effort...

I guess the RRP is inflated enough to give a perceived discount to the customer, if said customer is a poor negotiator, then the sale makes more......getting a greater discount on the Audi could be because the manufacturer did not have to fit working indicators?

Sporky

It varies by manufacturer though - and by model. Try getting a discount on a Porsche...

And I got more off the VW than he did off the Audi.

Majorscale

I used the carwow approach with my dealer. He couldn't/wouldn't match the cheapest in the country (who were 250 miles away), but he did match the best price from a dealer who was reasonably close (45 mins away). Got about 12.5% off RRP with no extended negotiations as a result...

Steffo

Deposit contribution can be from either dealer or finance company or both.
I just got a new C class coupe and there was a contribution from both and on top of that a hefty discount from the dealer. Bought via drivethedeal, even cheaper than car wow and miles better than the dealer price, monthly payments 1/4 less for a much better specced car. They even delivered the car to my house, perfect!

Sporky

Majorscale said:

I used the carwow approach with my dealer. He couldn't/wouldn't match the cheapest in the country (who were 250 miles away), but he did match the best price from a dealer who was reasonably close (45 mins away).

Much the same for me - he claimed that the cheapest bunch were making about £50 on the car, but he did better than any of the others by a useful amount. And I didn't have to drive 300 miles to get it.

strtdv

If it's a new car then you should be able to get a fair bit off list price.
Used car margins are pretty small though. When I got my Golf GTD I actually saw the dealer screen (they showed me a finance example on it) and with a straight sale with none of the optional guff they sell you they were only making a couple of hundred quid.

They gave me £15k for my car as trade in and it needed 4 new tires (£700 worth), a service, and the bonnet paintwork needed some attention. They've got it listed for less than £17k with everything sorted on it. Not much margin in that. 

Although I agree that car dealers are largely crooks and liars, I don't in principle begrudge them making a profit, as after all the alternative (a complete free for all where you just hope the car you're buying isn't a lemon) is much worse.

DanR

At Skoda we get 8% margin, if you take the PCP we lose 6% to fund the low rate finance.

We then can earn upto an extra 6% based on achieving a certain volume, CSI level & PCP renewals.

Certain models also have a lower margin as well and don't achieve any top up.

At Kia we used to just have 12% no having to hit standards but that was around 4 year ago.

Were lucky if we make more than 2% in a car nowadays.

CHrisP86

Well that explains why the Skoda dealer I went to didn't do a very good deal!

Has been a productive day thanks to carwow. Current discount from Audi is around 16%, although that includes s bit of finance contribution.  Quite pleased with that though!

DanR

Im assuming you don't pick your guitar based on which brand has the biggest discount available.

Why would your car purchase be any different.

duotone

I watch this Kiwi guy on YouTube. He lives in the USA btw.

fretmeister

20 odd years ago I worked at a ford main dealer for about a year.

I was amazed to find the profit levels in a car were no better than about 5% depending on model. The special editions were worse!

IIRC it was the first year that Ford Credit made more money than Ford Cars. The salesmen got far more commission on the finance products than on the cars.

I have no idea if that is the same these days, with the more recent rules on financial product selling.

Wazmeister

DanR said:

Im assuming you don't pick your guitar based on which brand has the biggest discount available.

Why would your car purchase be any different.

Wisdom mate.

Sporky

DanR said:

Im assuming you don't pick your guitar based on which brand has the biggest discount available.

Why would your car purchase be any different.

Indeed.

I was looking (after some research) at the Golf Alltrack, the Octavia Scout and the Leon X-Perience. Very similar cars (though not as identical as some would have you believe). It came down to the dealers (Seat knocked themselves out pretty early as did the closest VW dealer), which had the right set of kit and options and the end price.

After all, even if Audi had offered a 25% discount on an A4 Allroad it'd still be far more money than any of the above three at the same spec.

olafgarten

DanR said:

Im assuming you don't pick your guitar based on which brand has the biggest discount available.

Why would your car purchase be any different.

A car purchase is a bit different though because saving a few hundred is different to saving £3000 off a Toyota Yaris.