Should I Buy an ex-PCP or ex-Hire Car?

We hear plenty about the advantages of PCP deals as far as new car buyers are concerned, but such schemes can also be of benefit to the used car buyer. That’s because they provide dealers with a steady stream of used car stock as buyers move from one PCP deal to the next. 

Pay to drive, not pay to own
“The popularity and growth of PCP represents a ‘pay to drive’ rather than ‘pay to own’ model,” says Andrew Mee, senior forecasting editor at cap hpi, a company specialising in vehicle history checks and valuations. People are comfortable paying a monthly fee to be mobile. This opens up the market to new opportunities,” he adds.

For the used car buyer these opportunities include the prospect of being able to choose from a consistent turnover of high quality cars that are being traded in by their original owners at the end of two or three year PCP contracts. These vehicles represent what Mee describes as an ‘attractive sweet spot in the market’, due to the way this type of finance scheme is structured with mileage limits and vehicle condition checks, both of which are designed to protect future residual values. What’s more, cars run in this way – and it is most new cars, remember – tend to be sensibly specified in terms of colours and optional extras.

Where to Buy
It is often the case that the best places to find good examples of ex-PCP vehicles are franchised dealerships, which take in cars at the end of finance contracts to resell as used stock. Admittedly, these probably won’t be the cheapest used cars around, but that is not to say that they aren’t still good deals, not least because they come with the reassurance of a full inspection and a manufacturer-backed warranty.

Alternatively, in the event that a dealer decides not to resell a car at the end of a PCP it will instead generally be passed on to an auction house. If you’re a confident car buyer there’s nothing to stop you attending an auction and looking for one of these cars yourself, but it can be a fast-moving and intimidating experience, with little opportunity to inspect a vehicle beforehand.

That’s why in most cases snapping up such cars is left to smaller car dealers and traders, who then sell them on for a small profit. That’s no bad thing, incidentally, as long as you know the seller is trustworthy, which is where CarGurus dealer ratings can help. After all, a good trader will know exactly what to look for at auction and can almost certainly rectify any minor faults prior to sale much more efficiently than a private buyer could.

What About Ex-Hire Cars?
Where ex-PCP vehicles tend to be two- to four-years old and will have covered anything up to 40,000 miles, an ex-hire car will be much newer. That’s because they accrue mileages in a much shorter space of time than an ordinary car would, making it logical for hire car companies to move them on at around seven or eight months old with 10,000 miles or so on the clock. This means then can be advertised as ‘nearly new’, which in turn maximises their potential selling price.

If you see such a car for sale and want to know who owned it first asked to see the V5C registration certificate (also known as the ‘logbook’) and look under the section that lists the details of the previous owner. For a cautious buyer seeing the name of a hire car company on the V5C might bring to mind unsettling thoughts of abused engines, smoking clutches and crunching gearboxes. However, in reality most people treat hire cars with the same respect as they would their own. What’s more, a hire car will have been maintained regardless of cost, as well as ordered in a resale-friendly specification.

So, as long as you’re happy with the condition of the vehicle (you can always pay for an independent inspection if you’re not sure what to look for) there’s no reason that an ex-hire car shouldn’t make for a good purchase.

The Bottom Line
The key to a successful purchase of an ex-PCP or hire car is the same as with any vehicle: buy on condition as well as price, carry out a history check if you’re unsure (this will also reassure you than any outstanding finance has been settled), and find a dealer you can trust. 

What’s most important to understand is that rather than something to be concerned about, the presence of such vehicles in the used car market is in fact good news for both buyers and sellers.

For more information about how car finance works, read the CarGurus guide: Car Finance Explained

Find Used Cars in your area at CarGurus.

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The content above is for informational purposes only and should be independently verified. Images used are for illustration purposes only and may display options and accessories not mentioned in the article.

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