Reports in the press are focussing on the overwhelming increase in private car sales fuelled by PCP financing deals which account for over 80% of new car credit sales. In broad terms, the PCP product is relatively new and the industry continues to accumulate credit risk, predicated on the belief that used car values will remain robust.
However, banks and finance houses are beginning to tighten lending criteria and this will affect PCP consumers at the end of their agreement. Access to funding for firms will also become more problematical and a double-edge sword that cuts into the consumers’ plans for a further PCP deal.
The PCP is very good for the majority. However, I believe that many consumers will struggle to be granted a new arrangement when they come to the end of their PCP deal as a result of reduced access to credit – and this also presents a further risk to the credit scores of Just About Managing customers if the product goes wrong.
In addition, the PCP market is also facing an FCA investigation as it considers whether firms are taking the right steps to ensure that they lend responsibly. Problems will emerge as the regulator tightens its grip and the squeeze is felt by the consumer.
At CCTA, we are aware of the issues that the PCP market is facing. We continue to lobby on your behalf on access to credit and access to funding to ensure the regulator takes heed of the warning signs. We are also seeking to provide our Members with guidance as the FCA begins to circle the product.
Greg Stevens, Chief Executive Officer, CCTA