Consumer car finance deals, including PCP, rose in the first quarter of 2017, despite the Bank of England announcing that regulators would be investigating the practices involved in issuing the deals.
The increase in PCP deals outpaced the overall growth in the overall consumer finance segment. According to figures released by the FLA (Finance and Leasing Association), the new car finance market grew by 13% in value and 5% in volume year-on-year in March. Across the quarter, it was up by 10% and 3% in the same criteria compared with Q1 of 2016.
Used car finance rose as well, with even higher figures for value and volume - 17% and 11% respectively - contributing to the raise across the first quarter.
This growth comes despite an unstable February. Volume fell by 2% in the new car market while value increased by 2%, while in used car PCP a similar situation occurred, with volume stagnating with a 1% decline, and a 3% increase in value of new business.
This fluctuation is likely due to the new ‘17’ plate coming into effect, although car-selling experts are concerned about the trade overall.
Alex Buttle, director of car buying website Motorway.co.uk, said: "The car finance industry might claim they are lending responsibly, and that may well be the case, but they can't control car values; our figures suggest diesel prices could fall 10-15% over the next 12 months.
"Car finance deals, of which many will be diesel cars, are at record levels as diesel car values are starting to fall in the wake of negative news.
"The majority of car finance deals are PCPs, which are calculated according to how the car depreciates, at a time when car values could start falling. There could be a lot of financed diesel car owners concerned that the value of their car will drop and put them in negative equity territory at the end of the deal term.”
Read more:
Bank of England looks to regulate PCP car finance deals
PCP (Personal Contract Purchase) explained: how to get it right
