Over the last few years the popularity of PCP (Personal Contract Plans) has increased in the UK. A PCP plan gives you the ability to acquire a new vehicle for an agreed length of time, with the option to trade in the vehicle at the end of the agreement or pay off the guaranteed future minimum value and keep the vehicle.
Of course, like every industry, the motor finance industry has been hit hard by the impact of the pandemic but there has been a significant spike of interest around personal vehicles and motorhomes recently.
CAVA can help with Personal Vehicle Finance
Whilst CAVA Finance primarily focuses on commercial, minibus and taxi finance, Mike has a wealth of knowledge and experience across both business and personal vehicle finance.
During the months in which car dealerships were closed, applications dropped by 82% but have since increased. From July to August this year new and used car finance applications rose by 24% in comparison to the previous year, according to Experian.
It is looking to be a strong September for the industry, with new 70 plates being released earlier in the month.
PCP is one of the most popular ways to finance a vehicle, new or used, because of lower monthly payments. One thing to note if you are considering PCP, is that lenders will be assessing people’s financial situations even more carefully than usual, due to the potential impact of coronavirus on finances, to ensure the deals offered are manageable and affordable in the long term.
The PCP Calculation
The amount you’ll pay each month on a PCP agreement is determined by firstly your deposit amount and secondly, the estimated value of the vehicle after the length of your agreement payment term.
You won’t own the vehicle unless you pay a final ‘guaranteed minimum future value’ sum, which is based on the predicted residual value of the vehicle at the end of your PCP agreement.
If you’re looking at a used vehicle, be aware that age is not just a number! The age of the vehicle could impact the cost of your monthly repayments or could mean you’re not able to find a suitable PCP agreement because the age of the vehicle makes it difficult for lenders to predict its residual value.
New or Used – what’s best?
Currently the figures reported by the FLA are much stronger for used vehicles than new, there are a number of factors why, from the impact on finances to the dip in production and closure of dealerships but ultimately it’s your decision.
If you’re considering a new or used vehicle for personal use and you require any impartial, no obligation advice, or if you’re considering your finance options but don’t know where to start, please get in touch. You can call Mike on 0161 222 9599 or use our contact form and he’ll be happy to discuss your needs.