A new finance scheme for car purchase, based on a widely-used UK product, has been launched by Conister Bank for Isle of Man residents.
Conister’s Purple Plan is a Personal Contract Plan (PCP) designed to give greater choice and flexibility to the customer by enabling them to take home a new or pre-owned vehicle in return for significantly lower fixed monthly repayments than they would make through a traditional Hire Purchase or Personal Loan agreement.
In the UK, PCPs have been rising steadily in popularity: according to figures from the Finance and Leasing Association, such plans accounted for 70% of new car sales in 2013; by 2015, this figure had risen to 76%.
The key ingredient of PCPs is a lump sum – known as the Guaranteed Future Value (GFV) – payment of which is deferred to the end of the consumer’s contract. The GFV and the initial deposit are deducted from the vehicle’s cash value, leaving monthly repayments based on the remaining balance (plus interest). After repaying the difference between the vehicle price and the GFV, the consumer only need to finance the depreciation of the vehicle.
There are multiple options for the consumer at the end of their payment term: keep the vehicle, either paying off or re-financing the outstanding GFV payment; return the vehicle with nothing to pay (provided the agreed usage conditions have not been breached); part-exchange from any manufacturer or dealer, converting any difference between the trade-in value and the GFV into a deposit on the next choice of vehicle; or sell the vehicle privately, retaining any profit beyond the GFV.
Conister Bank is among the very first financial organisations to offer a PCP product in the Isle of Man, and Head of Isle of Man Sales Andy Bass is optimistic that it will be the way forward for many motorists: “With the Purple Plan, as with all Personal Contract Plans, you don’t have to worry about depreciation because a minimum hand-back value is fixed at the start, and you’re not tied to buying outright. The end-of-contract balance can be cleared simply by returning the vehicle and starting with a fresh one.
“A PCP is an especially great fit for any driver who likes to change cars every few years and wants the best motoring experience for a reasonable monthly payment. We know our customers value flexibility and value for money, so we tailored the Purple Plan to provide a modest outlay, low interest rates and a generous GFV. This opens up a wider choice in the new and used car markets for Isle of Man residents. In other words, driving your dream car could be closer to a reality than you think!”
Photo - (L-R) Lauren Buchanan, Andy Bass, Ian Drake, Chris Birch.