Car Finance Becomes More Important When Purchasing A Vehicle


Joe Pattinson, BMW/MINI Financial Services general manager, recently told AM-Online several interesting things regarding UK car finance. He said that car buyers have become savvier when selecting financing and their attitude toward financing in general is beginning to change.

Leasing has been popular in the U.S. for years but UK consumers did not begin to embrace it until recently.

Car buyers now recognize that the proper car finance package enables them to regularly purchase a new car. They are also realizing that they can purchase a better model than would otherwise have been possible. This is leading an increasing number of UK car buyers to enter personal contract purchase pcp arrangements to purchase their dream car.

Personal contract purchase pcp packages feature a fixed monthly payment and enable an individual to drive a new car for between two and four years, depending on contract length. Under this financing model, the individual does not assume ownership of the vehicle until the contract period ends.

This provides flexibility not available with traditional car loans.

When the personal contract purchase pcp period ends, the individual can do one of three things. He or she may purchase the car at a price stipulated within the contract, return the car if its value has

fallen below the agreed-upon price, or trade it in for another vehicle, applying the equity as a deposit for the new car.

Currently, most UK consumers are selecting the third option.

Having the ability to trade in the vehicle for another car and use accumulated equity as a portion of the deposit is very attractive to consumers. It enables them to regularly upgrade to a newer model of vehicle without having to make a huge deposit.

When considering financing options, consumers should compare personal contract purchase pcp to car loans to determine which is more suitable for them.