15 May 2017

The mass media jumped all over the FCA’s plans to investigate supposedly dubious sales of consumer finance in the auto retail sector, but having read some of the mainstream press coverage, some fairly important details have been glossed over.

The biggest issue is that PCP deals have been lumped in with the coverage, which can’t be right, because the risk with a PCP contract lies with the financier, not the consumer.

Also – and I could be reading the wrong articles – but I’ve yet to see any lip service paid to just how low finance rates are for new cars. For context, I thumbed through the back pages of sister publication Bulletin, where we collate manufacturers’ current APR rates. At a glance, the highest figure I could see was 7.9% (Dacia, if you’re interested); 0% wasn’t uncommon and the 3-5% ballpark seemed the most popular.

Granted, the rate and the sales process are two different things, but anyone can see that these are rock bottom APRs, and typically lower than you’d associate with most other forms of consumer finance.

It would be daft to suggest that any industry is 100% squeaky clean all the time, but claiming that ultra-low PCP deals are bringing consumers to their knees seems equally far-fetched. What’s also not cricket is that the FCA announced its investigation last month but has still yet to clarify exactly what it is investigating. It’s created something of a void, and we could do with details rather than speculation.

Jack Carfrae

Acting editor

Auto Retail Agenda

Tags: APR rates, FCA, PCP