Quote:
Originally Posted by isleaiw1
Or, unless you are on a 0% deal, you waste money by putting in less deposit as you then pay more interest.
What matters is how much you actually pay over the period you have the car, if you have cash up front throwing that in knowing you are likely to keep for 3 years not 4 is OK if interest rate on PCP is higher than that money is generating.
For me I had £9k sat in an account earning 0.5%, and was financing at 5% plus. I chucked in the £9k based on £3k a year, even though its a 4 year PCP. I am unlikely to VT but might not keep the car to term. Alternatively, I might decide to keep it at 4 years. I may pay down the outstanding monthly payments and just owe the GFV in next few months. I may pay it all off. Who knows - but I did know that I was happy to chuck in the £9k to make monthly payments less...
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If you know in advance that you're going to VT after 3 years, which I did, or even that you might, putting in a £9k deposit doesn't make sense even in your circumstances.
It absolutely does if you know you're going to full term and getting the benefit of all your deposit.
If not, and you end it after 3 years, you've thrown away £2,250, which is more than you've saved on interest charges over the first 3 years.