WE had an enquiry in the office about used car PCH – is it happening was the question?
To be honest, we hadn’t picked up on it.
A quick look around the internet suggested that some were being offered as ‘leases’ but were in fact a form of lease purchase – a series of monthly payments followed by a balloon.
So we asked the Federation’s Steering Committee for their views, one of whom confirmed what we had found:
“The companies I’ve seen offer this kind of thing tend to actually be PCP type deals with balloon rather than actual PCH.”
Meanwhile, one told us that they had heard certain parties were looking at it – but had not seen any actual evidence, while noting “I believe it’s available in the US so sort of expecting to be available here at some point.”
However, several confirmed that Network (LeasePlan) did offer a used car PCH facility, one saying “we hardly ever write any business on this. New cars generally attract good dealer discounts and that coupled with support by the manufacturers means that a new car on PCH is likely to be cheaper per month than used!”
Others suggested that the main funders were not providing it unless it was a pre-registered car up to 90 days old, while another pointed out:
“Leasing would only be available on VAT qualifying used cars, so only available on cars that have been sold to rental, fleet and the like – not retail cars.”
Still, there were others that saw the distinct possibilities of a used car PCH.
“I think leasing could work in the used market but the main problem is the dealers wouldn’t want to give up their market share easily and they probably make a very good margin from used vehicle finance. i.e if we were to offer a lease the finance company would require proof that the vehicle is supplied by a reputable supplying dealer but the dealer would want to use their own finance routes due to the margin involved.”
Nevertheless, there has been a growth in young used cars says Manheim – aside from the glut of registrations at the end of March designed to sidestep the steep increases in VED – with a year on year increase in volume sold of 19.6% (Jan 16 to May 17) for cars under 24 months’ old .
So will we see used PCH taking off?
My feeling is that we need innovation in the car funding market, and a different form of lower cost lease would be an excellent idea.
But – and typically there is a but – I’m not sure how cheap it would actually be.
Because this a product that would require a maintenance agreement to run alongside it I would have thought, given that the vehicle would be probably three years old with a chunk of mileage on it. Certainly FCA guidelines would require any leasing brokers to consider affordability – not just the monthly lease but the running costs too.
And that may well load up the price.
But if a funder can bundle it all into a ‘cared for life’ package where all that’s left to pay is the fuel – and you can drive off in a used Audi/BMW/Ford etc at a significant discount to new, that would surely have consumer attraction.
The key will be getting the price to the right place – and confidence that it doesn’t undermine new car leasing deals, because it’s opening up leasing to a new market place.
What do you think?
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