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PCP temptation could lure car buyers into cash shortfall

Almost two fifths of buyers replace their car more frequently than a decade ago, with tempting finance deals one of the the primary motivators, but savings deficit could leave buyers short-changed

Words ByWhat Car? team

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Tempting finance deals such as Personal Contract Purchase offers (PCP) are luring car buyers to upgrade their cars more frequently, potentially creating an embarrassing cash shortfall, What Car? can reveal.

In a recent survey of motorists, 37% of respondents said they now changed their car more frequently than they did a decade ago, while more than one in five (22%) said that a generous finance offer would be the primary motivator in the decision to change.

However, with earnings on savings at an all-time low, and four in 10 adults having less than Β£500 in savings in the bank, motorists could be overstretching themselves when the initial, low PCP payment term ends.

What Car?’s survey indicates that these pitfalls are unlikely to be at the forefront of the car buyer’s mind when they make the purchase - a third of motorists agreed that modern car finance solutions such as PCP make upgrading easier.

The haste of buyers to switch to the latest model using car finance rather than cash coincides with a Β£48bn increase in national unsecured debt in just three years.

What Car? editor Steve Huntingford commented: β€œThe range of finance options available to car buyers is now more generous than ever and can often be an effective way to spread the cost of paying for a safer, better-equipped car.

β€œHowever, these finance options shouldn’t be seen as β€˜free money’ and buyers need to ensure they have a financial cushion to cover the costs at the end of their initial payment term in order to stay on the road.

β€œThe final payment to secure a vehicle on a PCP term is typically several thousand pounds, and the deposit on the next car can also require a substantial cash injection.

β€œDamage and excess mileage charges on a PCP-financed vehicle could also be an unpleasant surprise if not accounted for, so it is important to read the small print before making the commitment.”

Other reasons to change vehicle included the launch of an interesting new model and the desire to have the latest connectivity features.

Read more – Understanding PCP deals

Read more – Best car deals for less than Β£200 per month


The survey used responses from the Haymarket Motoring Panel which consists of 4,000 respondents drawn from readers of What Car?, Autocar and Pistonheads

Four in 10 adults having less than Β£500 in savings in the bank according to Money Advice Survey, March 2016

National unsecured debt on car loans and credit cards rose Β£48bn to Β£353bn in 2012-2015 according to a report by TUC, August 2016


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