PCP is where you want a £30,000 car.
You pay £7000 up front ( in most cases the trade in value of a 5 year old car), £350 a month for three years. Then a final payment of say £15,000.
As most people do not have the £15,000 to pay the car off, they go for another PCP deal but as they have already lost the deposit from the old car they had three years ago, the usually have to get a lower priced car the next time.
Now to get the car sales, the final lump sum is more than the car is worth ( in order to get the monthly payments down) in the trade therefore a lot of big manufacturers have many many expensive cars in disused airfields that they release very slowly to the second hand market as they cannot allow the secondhand values of the cars to tank.
The Bank of England is concerned about certain manufacturers that have massive stocks of overvalued secondhand executive cars.
With cheaper cars say around £10,000 or so the deposit can be around £170 with 36 payments of £170. This works as the value of say a Polo or Fiesta is still quite high at three years old as they are cheap to run and find plenty of secondhand buyers.
