The truth is out there
03 July 2017
Even the Bank of England has now paid lip service to the big, scary PCP bubble cooked up by the mainstream press.
Playing devils advocate, governor Mark Carney admitted that people need their cars and were therefore more likely keep up with repayments; but he is worried about a worst-case scenario in which used car values fall by a third.
Fair enough, but everyone Ive spoken to who knows the used car market well seems to think its been in pretty good shape throughout 2017. Conversion rates took a bit of a knock after Easter, but thats been blamed on old-fashioned seasonality and, less predictably, good weather. Quite simply, people would rather have a barbeque than go car shopping.
Like any market, it could take a turn for the worse, but as our story in this weeks Agenda proves, PCPs are not a risky form of finance. The fact is and Ive said this in previous blogs that the risk with a PCP contract is with the finance provider, not with the consumer, and therefore far less of a worry.
Other forms of finance may well be cause for concern (see last weeks welcome wave goodbye to logbook loans for details) but this seemingly relentless demonisation of PCPs billing them as the architects of the next financial crash seems a tad sensationalist.
Auto Retail Agenda