New PCP deal for used cars to benefit thousands of buyers
* Company to work with all franchised and independent dealers
* APR of 8.9pc; Cars of three years (131-reg) and younger qualify
The PCP revolution is about to widen significantly to include potentially thousands of people buying a used car.
The move is likely to shake up the market as it brings cars costing €13,000/€14,000 into the PCP net - effectively for the first time on a major scale.
Up to now PCPs (Personal Contract Plans) were only available for new-car buyers - with the exception of a few nearly-new used vehicle deals.
That is about to change with one major finance company now starting an across-the-board PCP drive for most cars with 131-reg plates or younger. Significantly, the PCPs will be available through all franchised dealers and virtually every independent used-car dealer.
Behind the development is First Auto Finance Ireland. Based in Dublin, it is the business partner of Close Brothers Motor Finance in Ireland. The latter company claims to be the third largest provider of finance in the UK. First Auto was established five years ago and now employs 40 people, all from motor finance backgrounds.
In response to queries from 'Independent Motors', First Auto Finance managing director Frank Donnellan said the new plan is aimed at buyers looking for fresh, well-minded three-year-old cars - or those of more recent vintage.
He claims the 8.9pc APR means monthly repayments will be lower than traditional financing methods.
Key details include: Ω The minimum deposit for a PCP deal is 10pc - but it can be much higher.
* The deals run for 36 months.* Cars that qualify will have a maximum 75,000km on the clock at the start of the PCP period and 125,000km tops at the end.
Trade-ins can be used as full or partial payment of the deposit. A guaranteed minimum future value is worked out in advance as is the case with new cars. And the same options apply: You can buy the car outright, hand back the keys and walk away, or use equity in the vehicle to buy a newer one.
Mr Donnellan said his company solely look after the finance; every other aspect of the transaction will be similar to a customer buying from a dealer.
"Cars will be traded in with the dealer exactly the same as buying and trading in. Our route to market is through motor dealers. We are seeing cars coming back off PCP. They are in good condition, well minded (and) were well looked after."
While he agrees they are not the only ones in the used market - Bank of Ireland Finance announced a specific deal some time ago - he stresses: "We are the only ones making PCPs available across all brands."
Asked if the mileage bands might be too restrictive for some, he said they are fixed for now but "it is something we may have to look at as it evolves". They will probably look at it in the future but as of now it stands: 75,000km to 125,000km.
"The whole area of credit is freeing up," he says. "Consumers are much more confident than they have had for the last five to seven years." His company had been getting a stream of enquiries on nearly-new cars which helped prompt the initiative.
PCPs have radically changed the way new cars are bought and there are expectations this latest intervention will have major implications for secondhand buying.