If I understand PCP correctly (and I may be deluding myself) it is utterly unregulated credit designed to keep the manufacturers products moving through the supply chain to customers.
It is a loan, often funded by the manufacturer, where cash flow is everything.
Used cynically, a PCP makes it possible to get 3 years unsecured interest only credit at a -ve interest rate, followed by a purchase at the end.
So, if you can't quite afford to buy the car or don't want to spend the full amount PCP makes sense as it unlocks an unique discount, called "dealer contribution' and then requires low monthly payment and then makes it possible to purchase the car at a discounted rate.
An example.
Car cost is £54k.
Deposit is £25K, including £5k "dealer contribution"
PCP payments, 36 @ £199 = £7.1k
Purchase price is £25k
Total cost is £57K so £3k interest over 3 years but the dealer paid £5k so no real interest.
They get really unhappy when you pay off the final amount and own the car. The last time we did this I had multiple calls from the dealer and the car company finance company asking me why I didn't want another car.
This is an unsustainable system that is causing concern and I and others feel could end up just like the bank crisis of 2007/08.
Enjoy whilst you can....
