Used car market to be turned upside down by financing deals

[AtW]

The used car market could be revolutionised by personal contract plans, the financing deals that have driven sales of new vehicles to record levels, according to the boss of Britain’s biggest car dealer.

Trevor Finn, chief executive of Pendragon, says the way motorists buy second-hand cars is being turned upside down by so-called “PCP” deals.

These require a small deposit and then a fixed monthly payment, rather than the full price, making the cars appear more affordable. At the end of the term, the finance provider guarantees the value of the vehicle, meaning buyers are effectively only paying for the depreciation of a car.

At the end of the deal’s term, buyers can hand back the keys and walk away or use equity built up in the car as a deposit to purchase another vehicle.

Mr Finn said: “Three-quarters of new cars bought on finance are with PCPs and that’s spreading to used cars, especially as younger buyers have got used to the small monthly payment concept from the way they buy mobile phones.”

Source: Used car market to be turned upside down by financing deals - Telegraph

With crazy high taxes people don't even have the money to buy a second hand car now

[v8gaz]

I have bought many a second hand high end car on PCP. How is this news?

[DimPrawn]

I preferred it when you got a Northern Crock 125% LTV mortgage, meaning not only did you get a house you couldn't afford, you also got extra free money for a fancy car you couldn't afford on the drive too.

[ShandyDrinker]

I have bought many a second hand high end car on PCP. How is this news?

Perhaps it's not news but it's certainly becoming more prevalent.

I think the stats of how many cars are bought on PCP are quite worrying. The only positive I can see with these deals is that it manufacturers have to put their money where their mouth is for the residual value of the vehicle.

I preferred it when you got a Northern Crock 125% LTV mortgage, meaning not only did you get a house you couldn't afford, you also got extra free money for a fancy car you couldn't afford on the drive too.

So true!

[MarillionFan]

I have bought many a second hand high end car on PCP. How is this news?

I looked at this recently. I've always boughtcars up front but looked at this method. It still counts as a loan and the interest rates are built in. Still better to buy cash

[AtW]

I looked at this recently. I've always boughtcars up front but looked at this method. It still counts as a loan and the interest rates are built in. Still better to buy cash

Plus, as far as your personal situation is concerned, the artile made is very cler that PCP is not offered on 10 year old Ford Fiestas...

[AtW]

I think the stats of how many cars are bought on PCP are quite worrying.

80% of brand new cars are "sold" like that!!!

[ShandyDrinker]

80% of brand new cars are "sold" like that!!!

Precisely... there's a strong chance people will end up in these PCP deals in perpetuity to add to the already ridiculous amounts of debt on mortgages, credit cards, education (particularly since tuition fees were introduced) and so on.

[AtW]

Precisely... there's a strong chance people will end up in these PCP deals in perpetuity to add to the already ridiculous amounts of debt on mortgages, credit cards, education (particularly since tuition fees were introduced) and so on.

Nah, there is no permanent debt involved - they just overpay massively for renting a flashy new car... makes it good for used car market

[BrilloPad]

I preferred it when you got a Northern Crock 125% LTV mortgage, meaning not only did you get a house you couldn't afford, you also got extra free money for a fancy car you couldn't afford on the drive too.

Buy a couple, let them out and end up a millionaire. What is wrong with that?