Auto-leasing companies, that have been the engine behind a rise in new car sales in the UK over the last few years, are moving into the used car market as they try to make the most of an excess of used vehicles.
Development in the new car market has been enhanced by car-leasing deals, which provide finance for about three-quarters of new car sales in the UK, however industry professionals are stressed that secondhand vehicles will flood the market when long-term leases pertain to an end.
Arval, LeasePlan and Lex Autolease are one of the most significant companies that buy new cars from manufacturers and provide capital for personal contract hires, that are long-term rental agreements.
Unlike standard finance plans, such as personal contract purchases– where drivers have the choice of purchasing their car at the end of the leasing duration– vehicles bought through PCH are returned to the finance companies at the end of a agreement. The companies then sell the used automobiles at auction.
PCH represents only 8 percent of all new car sales, however it is the fastest-growing sector of car finance. The number of new cars obtained by PCH in the UK boosted 36 per cent in the first six months of this year compared to the same duration in 2016, according to industry figures.
As a result, the amount of used cars striking the auction market is expected to increase greatly in the coming years.
A handful of smaller funding companies, such as Lancashire-based Hippo Leasing, currently offer PCP for used cars. However larger groups, consisting of Arval and LeasePlan, have also started offering PCH for used vehicles.