Understand the subscription approach to car finance

Customers are demanding new ways of owning and using cars. It isn’t all about HP and PCP deals now, especially as subscription offers become more widely available

It could be argued evolution in the world of car finance has been slow over the years. Hire purchase, which has dominated the market for decades, actually began in the 19th century when the industrial revolution created a demand for the financing of new machinery such as sewing machines.

More recently, some of us can remember the control orders on hire purchase to slow the 1970s. This covered many different types of equipment, and in the case of cars required a 33.3% minimum deposit and maximum repayment period of 24 months. Can you imagine the outcry if those conditions were imposed today!

Up to the early-90s, hire purchase was the only consumer form of finance offered in car showrooms, quite often with low deposits to five years. Then Personal Contract Purchase (PCP) was launched by Ford Credit, quickly followed by most other captive finance companies. The original idea of PCP was to improve customer retention and was only available for new cars. The aim was to encourage faster change cycles with repayment periods of 24 or 36 months, but with monthly repayments kept