New car PCP costs rise by more than 40%, finds WhatCar?

Monthly payments on new car finance contracts have risen by more than 40% on some models since 2019, according to research by What Car?.

Research by What Car?’s team of Target Price mystery shoppers compared typical finance deals between five models currently on sale and in 2019.

It found average monthly personal contract purchase (PCP) payments had risen by at least 22.4% across the sample models, with petrol and hybrid variants of the Volvo XC40 recording a 42.5% rise in average monthly payments.

The five models compared were the Ford Puma, Mini Hatchback, Seat Ateca, Volkswagen Golf and Volvo XC40, all which have been on sale in their current guises since 2019.

All models had also recorded at least an 11.0% rise in list prices, plus interest rates had risen in all examples – and even tripled for one.

Steve Huntingford, What Car? editor, said: “PCP finance is the most popular choice for new car buyers, but the differences between the offers available today show the importance in doing your research to compare deals and consider other options such as bank loans when financing a vehicle.

“The car industry is not immune to the challenges of Covid, semiconductor shortages and now energy price increases, and they have combined to cause a significant amount of turmoil in the new car market.

“However, the price rises are not universal, nor always applicable to finance and cash purchases, so it’s still possible to get a tempting deal if you shop around or use our free new car buying service.”

While three of the five models compared were cheaper to buy via finance than cash in 2019, all five models cost more to buy via finance to-date.

However, despite rising interest rates and costs, What Car?’s team of mystery shoppers found some new cars remain cheaper to buy on finance.

For instance, buyers opting for a 42-month PCP deal on a Toyota C-HR 1.8 Hybrid Icon CVT stand to save 4.6% over the list price when financing the vehicle, due to a finance deposit contribution of up to £1250 and low interest rate of 1.9%. The cash saving equates to £1362 over the 42-month ownership cycle.

Similarly, the Ford Ecosport 1.0 Ecoboost 125 Titanium and the BMW 5 Series 530d xDrive M Sport work out cheaper than their original list price when purchased using PCP finance, with 3.8% and 2.1% savings, equating to £887 and £1202 over the list price, respectively.

Ford, the UK new car market leader by volume year-to-date (YTD), is back with a range of 0% retail offers to tempt customers to close out 2022.