Understanding PCPs

It is very frustrating to read articles in newspapers with journalists trying to explain PCP (Personal Contract Purchase) car finance and simply because they don’t understand it they conclude by telling people to be careful.

By these unfounded warnings they are driving potential customers to the “Main Street” banks who are openly offering them

  • 100% Finance ( where did we see this before?)
  • 6 Year finance terms on new cars (something similar to a 30 year mortgage when someone couldn’t afford the 25 year one)
  • In reality PCP is one of the most customer centric, transparently affordable way customers can finance their new (or pre-owned) car.

The motor industry and car dealerships understand customer needs and are acutely aware of the effects of the recession.

They knew that when the market returned that they would need to have a product that would stimulate new car sales but needed to be tailored to suit the post recession customer in the best possible way.

They knew the customer would need

    • Lower Monthly Payments
    • Lower entry deposit
    • Shorter term

Reassurance of future value

PCP was re-born (it had been in existence in USA and other countries for over 20 years).

It was and is a huge success for all manufacturers because it offers customer all of the above benefits and now 3 or 4 years into the process customers are returning after 36 months of low PCP payments and 95% of them are driving away in a brand new car for the same or very similar payments they have been paying.

PCP puts customers in the driver’s seat and gives you choices and control.

It is worth noting that the main street banks cannot offer this product because they are NOT in the car business and could not even guess the future value of a car so they are responding with longer finance terms , 100% finance and perhaps a free gift.

Of course the PCP market is competitive as it should be but one fantastic way of supporting a 3 year 6.9% PCP package is to include a 3 years service plan which is exactly what some dealers are giving their customers for 2016. Now that’s extended customer centricity!

Thank you to Auto Express for their interesting and useful comments on PCP Finance.

Winter Tyres

With winter here and snow already experienced by many people in the UK, many motorists will be asking themselves whether they should switch to winter tyres from their current summer tyres.

My advice would be a categoric yes as the benefits in traction, braking capability and overall safety have to be experienced to be believed. Once you have driven on good quality winter tyres on snow, or even on damp days when the temperature is below 7C, you will not want to go back to using summer tyres in the winter.

Winter tyres work because they are made from a much softer compound than summer tyres so that when the temperature drops they stay softer, and give more grip, than summer tyres. They also have “snipes” cut into the tread pattern that allows snow to accumulate in the tyre and then the snow in the tyre grips with the snow on the road. The deeper grooves in winter tyres also help to disperse water more quickly.

Because they are softer they will wear more quickly on warm (over 7C) roads than the summer tyre and of course in those conditions the summer tyre will perform better than the winter counterpart. However, because you will be driving in wet weather more often in the winter the wear pattern between winter and summer tyres will be very similar overall. As long as you are not planning to change your car soon (or even if you did you could sell your winter tyres with the car as a second set) then it is a “no-brainer” to drive on winter tyres in the UK during the months of late November through to March.

Please note these comments are purely the personal opinions of the writer and cannot be relied on in a Court of Law