Motorpoint offers PCP and HP finance with zero-deposit options – read on for everything you need to know
Buying a car on finance often mentions a deposit before a set number of monthly payments, but did you know that you can get no-deposit car finance at Motorpoint? Perhaps you can’t stretch to a big initial deposit or don’t fancy the idea of parting with a large sum of money at once.
You can drive away in your dream car without paying a penny upfront, with your monthly payments a bit higher to make up the difference. Our finance calculator lets you adjust your deposit to suit your requirements, whether you’re planning to take out Personal Contract Purchase (PCP) or Hire Purchase (HP) finance.
What does no-deposit finance mean?
Most PCP deals are advertised as having an initial deposit, a set number of monthly payments and then an optional final payment. HP deals have an initial deposit and then a set number of (more expensive) monthly payments – you’re covering the whole cost of the car, unlike on a PCP.
With zero-deposit finance, you can skip straight to the monthly payments. But you’ll need to bear in mind that not paying a deposit upfront will increase your monthly payments.
We’ll use a £17,000 Ford Fiesta as an example. Putting a £2,000 deposit in on a 48-month PCP agreement with a 6,000-mile annual limit results in repayments of £256 per month, but the same deal with no deposit will push the monthlies up to £306.
Why? It’s to do with the optional final payment. In this example, the Fiesta is expected to be worth around £7,000 after four years and 24,000 miles, so you’re going to be paying roughly £10,000 over the course of your contract. If you put in a £2,000 deposit, you only need to pay £8,000 on finance, and so your monthly payments are lower.
If you can cope with paying slightly more per month, choosing car finance without a deposit is a good way to drive the car you want without paying a large sum of money upfront.
Is it better to pay a deposit for car finance?
If you put a deposit in, not only will your monthly payments be lower, but you’ll pay less interest overall as well. That may be more of a concern on an HP finance deal, as you’ve agreed to pay the Total Amount Payable figure. On a PCP deal, you can choose not to pay the final payment – instead, you can hand the car back or use any ‘equity’ you’ve built up as a deposit for your next car.
The flipside of the coin is that you shouldn’t stretch to a car deposit if you can’t afford it. In this case, a no-deposit car finance deal – or a low-deposit one – could be your best option. For tailored advice to suit your needs, speak to us online or in store.
Am I eligible for no-deposit car finance?
No deposit car finance does depend on your credit rating and history, so we’d recommend double-checking your finance options before signing on the dotted line. Our friendly team can help you, be it through our live chat function or by speaking to a staff member in store.
Which car finance option is best when paying no deposit?
This depends on your situation and budget. PCP car deals with no deposit will have cheaper monthly payments than HP no-deposit deals because, with PCP finance, you’re not paying the full amount of the car. At the end of the agreement, you can choose to pay the optional final payment to make the car yours.
PCP finance deals include mileage and condition limits – these are how you’ve agreed to return the car at the end of your contract. You may get charged for any excess mileage you do or any damage caused to the car.
On the other hand, at the end of an HP deal the car is yours, as you’ve paid off the full cost of the car. If you cover a lot of miles or plan to keep the car for a long time, it may be more cost-effective and less stressful to choose a Hire Purchase agreement. You’re also not bound by any mileage or condition charges.
Want a newer car without breaking the bank? Check out our cars for sale under £10,000.