COVID-19 triggers PCP finance repayment worries for a quarter of car buyers

More than a quarter of PCP buyers are concerned about meeting future monthly payments on their next vehicle due to the impact of COVID-19, according to What Car?.

Its survey of more than 6,400 in-market buyers found that 25.6% of those who were looking to finance their next vehicle via a Personal Contract Purchase (PCP) said they were concerned about keeping up with the monthly payments, adding that this was affecting their purchase decision.

More than a third of PCP buyers who responded to the What Car? survey said that they looked to purchase a new vehicle in the next three months, while 27% look to purchase in the next four weeks.

But while research conducted by What Car?, with around a fifth of PCP buyers actually reported a rise in their vehicle budgets, 24% looking to purchase a larger vehicle and 24% considering a different powertrain, budgetary concerns remain.

Rachael Prasher, the managing director of What Car?, said: “The ongoing recovery of new car registrations is extremely positive news for the industry, but there are warning signs that consumer confidence is wavering.

"While it's encouraging to see many considering a purchase in the near future, with one-in-five also reporting a rise in their budgets, it’s important to pay attention to the quarter of buyers who are concerned about making their monthly payments in the future.

"Retailers need to look to reassure these customers, and in many cases it appears there is an appropriate opportunity to do that by bringing down payments with lower mileage limits."

Evidence of customers’ uncertainty came as the Society of Motor Manufacturers and Traders (SMMT) reported that new car registrations rose by 11.3% in July.

The result was largely attributed to pent-up demand, however, with many cars having been purchased before or during the lockdown period and delivered subsequently.

Concerns remain regarding a market slowdown.

Also among the recent survey findings from What Car? was evidence that car buyers looking to access finance were found to enter the buying process with a longer shortlist of cars compared to cash buyers, with nearly one-in-five PCP buyers saying they were thinking between four or more models.

Test drives were a less of a priority for PCP than cash buyers, however, with more than a third willing to purchase a vehicle without a test drive.

Just 26% of cash buyers were willing to do the same.

When it comes to stock availability, existing PCP buyers rated this higher than their cash equivalents, though.