The Personal Contract Purchase (PCP) method of buying a car involves a buyer paying a fixed amount on the car per month for the entirety of the contract. The reason why they have become so popular is they allow you to have less money upfront. You are essentially taking out a mortgage on your new car.
Why PCP Has Hurt Resale Values?
In short, PCP has become a victim of its own popularity. The used car market has become completely saturated. Prices for the most popular second-hand cars have fallen. And that means good news for used car buyers. They can pay less, even if they decide to pay for the car outright.
This alone is a reason to buy. One of the tricks to getting a great deal on used cars is to buy at the right time. Now is the right time, and you can potentially save hundreds of pounds by buying now, as opposed to if you had purchased a couple of years ago.
Popular Cars Only
Understand that this trend only applies to the most popular cars, such as those from Ford and Vauxhall. Less valuable cars have not seen the same market saturation because people are less likely to take out a PCP contract on them. This applies even without the presence of PCP, though.
If you want to get the best deal on cars, you need to opt for the ones that are the most popular. Natural market demand will drive down the price, and so if you purchase these cars, you are going to get a better deal.
Buying Privately vs. Buying from a Dealer
The rise of PCP has meant buying from a dealer is often cheaper than buying privately. It used to be the exact opposite because private sellers simply wanted to shift their cars quickly. The reduction in price caused by PCP has equalised these prices somewhat.
Private sellers are only willing to drop their prices so far. And so they are now on an equal footing with dealers.
Shopping Around Remains King
The used car market has never been standardised, and it never will be. You will always see radically different prices based on the dealership you go to and the part of the UK you decide to shop around in. You should always shop around to get the best deal on used cars
There are multiple ways in which you can do this.
Move Around – Geographically, there’s a difference in used car prices based on the area of the UK you happen to be in. Poorer areas will always have lower prices because these dealerships are targeting the town or city they are in. Travelling from afar can make it easier to get a better deal.
Sponsored Dealerships vs. Private Dealerships – Used car sellers associated with specific car brands will always be more expensive because these operators have less flexibility when it comes to sourcing and pricing. Private dealerships that sell everything may be less reliable, but find the right one and you can get a better deal.
The Person – Sometimes you will get a better deal just because you’re dealing with the right person. You can have two similar dealerships with radically different offers on the table. This alone is a reason to shop around.
Try to Pay Cash
Used car dealers want their money as soon as possible. They work on the same principle as sellers of property. If you can pay in cash, this allows them to get the money fast, and they do not have to worry about a potential default later. The money is already in their pocket.
If you have the means to do so, offer to pay cash. This will often save hundreds of pounds, in terms of both the price on the table and interest payments going forward.
The PCP market has changed the used car market for the benefit of buyers looking to get a great deal. Shopping around is still the best option to get a used car at the best price, though.
What are your experiences with the used car market?