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Margaret Dibben: Money Matters

Regulars | By ​Margaret Dibben | September Issue

Beware the PCP pile-up

If you wonder how so many people can afford to buy brand new cars every few years, it is because they are using a fast-growing and controversial form of credit called PCP – personal contract purchase (or plan). One expert reckons you pay less each month, using PCPs, to drive a new BMW 1 Series than to buy a secondhand Ford Focus on hire purchase. That sounds tempting but PCPs are described by Resolver, the UK’s biggest free complaints resolution service, as unaffordable, misleading and hard to understand ( You may have used PCPs yourself without knowing how they work. Until PCPs were created, you bought cars on credit, with personal loans or on hire purchase (HP). Now, 80 per cent of cars are paid for through PCP plans. The trick with PCPs is that you do not borrow the full price of the car, but only the difference between its...

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