Thursday 18 January 2018

Battle for buyers goes on to bridge the gap to start of 152-reg orders

* Potential customers should weigh up benefits of 151 deals and scrutinise how they will finance them

A PCP is essentially a hire purchase agreement. Photo: Getty Images.
A PCP is essentially a hire purchase agreement. Photo: Getty Images.
Eddie Cunningham

Eddie Cunningham

AND so the first quarter has come and gone with car registrations well up, amid unease among some motor industry executives about the 'true' level of sales.

Now, however, the hard part begins for sellers - keeping sales ticking over for another while before the build-up to 152 registrations begins.

The intensity of deals, options and schemes over the past while has, undoubtedly, helped push up registrations and sales.

Buyers have rarely had such a scope of choice and that looks like continuing for the next few weeks at least.

The decision to buy in April or wait until July is not an easy one and, as the days slip by, it will take increasingly attractive deals or offers to sway more buyers.

All in all that is good news for the consumer and they should most certainly not rule out a 151 purchase if they see real financial benefit in it for them.

There is no doubt many dealers will continue to push deals hard to meet targets and narrow the gap until they start taking orders for 152 plates. So buyers should carefully weigh up what is on offer.

As we detailed here last week, the market is also being driven, in a major way, by Personal Contract Plans (PCPs).

However, there are still several potential customers contacting our Help Desk (Page 4) for advice as they seem to be a bit confused by what a PCP involves.

A PCP is essentially a hire purchase agreement. At its most basic you pay a deposit (10pc to 30pc) of the value of the new car. Then you make monthly payments for, usually, three years.

You agree the number of kilometres you will cover over the time of the agreement. On that basis, the car will have a pre-agreed value, allowing for normal wear and tear. That is known as the minimum guaranteed value.

Then, after three years you can:

√ Buy the car outright for the guaranteed value agreed at the start.

√ Hand back the keys and walk away.

√ Exchange the car for a new model and finance it with another PCP deal.

In most cases the agreed minimum value for the three-year-old car will be the deposit for the new one.

The most important thing to remember with a PCP is that you do not own the car unless you buy it outright at the end of the agreed term. That is vital to understand.

And, along with the basic deal, you can have service etc included.

As always with anything to do with finance, take your time. Check out other offers/schemes too. And remember some HP deals have zero or low percentage rates.

Indo Motoring

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