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Car finance opportunity still exists despite PCP revolution

A car finance agreement being signed

Car retailers in the North East of England have the biggest car finance penetration success according to a new compiled survey of over 2,000 UK motorists, conducted by Opinium for

According to the research, nearly two-thirds (63%) of car owners bought their last car outright using cash or a debit card, with over 55s the most likely to side-step a finance offer in favour of a single payment.

The East of England is the region most likely to buy their car outright (70%), with motorists in the North East least likely to (51%). 

Over 55s are much more likely to buy a car in cash (72%) than younger age groups, with half (54%) of 35 to 54 year olds buying outright, and two-fifths (42%) of 18 to 34 year olds.

One in 10 (10%) car buyers use a personal contract purchase (PCP), 7% on hire purchase, and 5% on lease. 

The publication of the InsuretheGap research coincides with that of data compiled from Mini UK’s new car sales and finance data and the Office for National Statistics alongside input from AutoTrader, which shows that buying a car has become more affordable in the past 60 years thanks to new finance products.

Mini claimed that, on average, the retail price of a car has fallen from 300% of the average annual UK household disposable income in 1959 to less than two thirds of that today. 

The average cost of a car in 1959 was £780, compared to £500 for the newly-launched Mini.

Fast-forward to 2019 and Mini – which has cars available from £16,195 – said that more than half (52%) of motorists now consider the price of a car as a monthly cost, rather than the full retail price due to the rise of Personal Contract Purchase (PCP), which accounts for around 80% of all new Mini sales.

Phil Kerry, sales and marketing director, BMW Group Financial Services, said: “Over the past 60 years, how we buy and finance Minis has evolved just as much as the cars themselves.

“The industry has been successful in responding to the changing needs such as creating greater flexibility in purchasing options.

“But the future Mini driver will increasingly buy and finance online, use subscription services, or hire their car.

“The challenge now lies in how we will respond to consumer behaviour as definitions of ownership change further.

“We know the car showroom and retailer will still be central to the Mini customer journey – but as consumer expectations and attitudes change, automotive firms must adapt to their needs.”

Mini claimed that car ownership would remain essential for 80% of motorists in the next decade, but said that 10% claim they would use a car subscription service, while 70% said they would buy the car via a finance package online. 

Ian Plummer, Commercial Director at Auto Trader, said: “Our latest research shows that people are more open to buying a car online if using a finance agreement because it’s considered less risky, in fact nearly half 45% would consider buying a new car online without seeing it in person.

“Car financing options have boosted car buying in the last few years and they will continue to give consumers more transparency and flexibility when buying their next car for years to come.”’s findings contrast the key findings of the Mini study in many ways, suggesting that there remains a finance penetration opportunity for car retailers as older customers move towards finance or subscription-style offerings, however.

Ben Wooltorton, chief operating officer of, said: “This survey shows that many UK car buyers save up and buy a car outright rather than using finance, making it one of the most expensive cash purchase most people will ever make.”

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