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Guest opinion: the growing importance of finance in car purchasing


Joe Pattinson, general manager sales and marketing at BMW /MINI Financial Services.

“Choosing a finance package is increasingly seen as the savvy way to purchase a car by a more financially aware consumer.

Attitudes to ownership are changing, and people realise buying a car via finance carries a number of benefits; from acting as a gateway to a better model to offering the opportunity to change their car more regularly.

In the US, personal leasing products have been popular for some time now, and although British buyers are yet to embrace the leasing model to the same extent, more and more are using personal contract purchase products to get the car they really want.

With Personal Contract Purchase buyers pay a fixed monthly fee to obtain and drive a new car for a typical period of between two to four years.

Legal ownership is retained by the finance company that provides the car until the end of the contract period where buyers have three options - (i) purchase the vehicle for the price agreed at the start of the contract, or, (ii) if the vehicle is worth less than the pre-agreed price, return or part-exchange it, or, (iii) part exchange it for a new vehicle using any equity as another deposit.

The third option is by far the most popular.

As traditional attitudes to car ownership evolve, adoption of PCP style products has increased dramatically over the last two years.

Where people once prioritised ‘owning’ their car, using savings or even buying on HP, a significant majority are now savvy to the benefits that contract purchase provides.

They can choose to buy a new car, one that fits their lifestyle needs, and comes with a warranty.

The latest figures from the Society of Motor Manufacturers and Traders paint a complex sales picture for the wider automotive industry, which is still fighting hard to recover.

Finance is an important aid in the market’s return to buoyancy and providers must make a dual effort to innovate in their offerings while ensuring that buyers feel they can approach dealers for an open dialogue about what they can afford.”

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