03 July 2017

Even the Bank of England has now paid lip service to the big, scary PCP bubble cooked up by the mainstream press.

Playing devil’s advocate, governor Mark Carney admitted that “people need their cars” and were therefore more likely keep up with repayments; but he is worried about a worst-case scenario in which used car values fall by a third.

Fair enough, but everyone I’ve spoken to who knows the used car market well seems to think it’s been in pretty good shape throughout 2017. Conversion rates took a bit of a knock after Easter, but that’s been blamed on old-fashioned seasonality and, less predictably, good weather. Quite simply, people would rather have a barbeque than go car shopping.

Like any market, it could take a turn for the worse, but as our story in this week’s Agenda proves, PCPs are not a risky form of finance. The fact is – and I’ve said this in previous blogs – that the risk with a PCP contract is with the finance provider, not with the consumer, and therefore far less of a worry.  

Other forms of finance may well be cause for concern (see last week’s welcome wave goodbye to logbook loans for details) but this seemingly relentless demonisation of PCPs – billing them as the architects of the next financial crash – seems a tad sensationalist. 

Jack Carfrae

Acting editor

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Tags: Bank of England, Logbook Loans, Mark Carney, PCP, used car market