Near prime PCP set to be major growth product for motor finance in 2021, predicts Startline

03 Feb 2021

Near-prime personal contract purchase (PCP) is set to be probably the motor finance sector’s major growth point in 2021 thanks to a range of factors, Startline Motor Finance is predicting.

The company says that it saw an increase of around 20% for its version of the product in the final months of last year and the trend has continued into January.


CEO Paul Burgess said: “One of the key developments we saw in 2020 was prime lenders tightening their underwriting rules in response to the pandemic and more potential car buyers being referred to near-prime lenders as a result.


“So far, this has largely affected hire purchase but is now starting to become apparent in the PCP sector. There has been a definite acceleration in our near-prime product in the last quarter and heading into 2021 as a result.


“This is something we are especially seeing at major dealer groups where PCP is a more prominent product. For them, it’s clear that near-prime PCP is becoming more important.”


Paul said that the trend was also partly being powered by better online handling of motor finance by dealers and other introducers.


“The repeated lockdowns of the last year mean that everyone has had to get better at their digital customer journey, and one aspect is that car buyers are increasingly being presented more effectively with a choice of finance products and providers online.


“Within this development, consumers are able to see more clearly the advantages of PCP and the competitiveness of near-prime versions of the product, so there have simply been more online applications.”


Paul added that Startline’s near-prime PCP, introduced in 2018, remained one of a handful of products available in this market niche.


“We’ve always been surprised that there is not more competition in this sector. It is not necessarily a product that is easy to get right – and it took us a little time to finalise our version – but it has an obvious and potentially important place in the market.


“Our view is that, with the general trends that are likely to continue through 2021, it is something that is likely to make sense for an increasing number of introducers and car buyers. Certainly, we expect to see further growth over the next quarter.”