As our series on debt shows, personal contract purchase agreements, PCPs, now account for 80% of new cars sold. PCP monthly payments are lower than hire purchase ones because they do not cover the whole cost of the car. What consumers are “buying” is the difference between the current value of the car – less any deposit – and the expected value of the car at the end of the contract. If prices fall, then drivers would either have to walk away or find the extra cash to finance their next PCP deal. These fears are not unfounded: the diesel emission scandal has already depressed secondhand car prices.

Source: The Guardian September 19, 2017 17:48 UTC