Car finance soars as motorists opt for PCPs and more 'luxury'
Car finance has soared so far this year, according to figures obtained from the three manufacturer-owned banks here.
That is hardly surprising considering the upsurge in new-car registrations.
But people seem to be buying bigger and better equipped models as well.
The key drivers are Personal Contract Plans (PCPs).
The new figures from the three manufacturer-owned banks - BMW, Renault and Volkswagen - underline just how much of a transformation there has been on the PCP front.
Renault Bank loaned €165m to own-brand buyers by the end of July -- an increase of 52pc on the corresponding period for 2015.
A critical element in their figures is that PCPs now account for 60pc of their new-car financing for Renault and Dacia private customers.
This time last year the figure stood at 40pc - with hire purchase (HP) by far the dominant method of finance at 60pc.
The turnaround is one of the clearest indications of just how popular PCPs have become.
Renault's figures echo those of Volkswagen Bank which has loaned €340m (a 39pc increase) in the first seven months of the year as we reported in the Irish Independent's Business section on Monday last.
The Volkswagen figures show that more than one-in-three (38pc) of the Group's new-car makes - Audi, SEAT, Skoda and Volkswagen - are now financed by the bank.
Brian Merrigan, managing director, BMW Financial Services, says the average being loaned by his company has risen from €27,000 last year to €30,000 in 2016.
He believes that is because people are buying bigger and better-equipped cars.
BMW will lend more than €200m for group brands for the full year, with €106m - an increase of 39pc - already loaned to the end of July.
They have also recorded a 22pc rise in the number of cars financed - another key indicator of increased recourse to Personal Contract Plans.
More than half (55pc) of the BMWs and MINIs sold this year have been funded by the BMW bank.
And it looks like virtually everyone who has a PCP is going to stick with it. Mr Merrigan told Independent Motors yesterday: "Only two customers, of all who funded a car on PCP with us since 2011, exercised their right to hand back the keys."
Read more: 10 things you should know about PCPs