HM Treasury written question – answered at on 18 September 2017.
To ask Her Majesty's Government what is their estimate of the number of personal contract purchase plans taken out to finance car purchases over each of the last five years; and what assessment they have made of the potential impact of such loans on (1) the car industry, and (2) the UK economy, if there were to be a widespread failure to repay such loans.
The government established an independent Financial Policy Committee (FPC) and gave the FPC a primary objective to identify, monitor and take action to remove or reduce systemic risks with a view to protecting and enhancing financial stability. The FPC’s June 2017 Financial Stability Report (FSR), assesses recent trends in the consumer credit market, including dealership car finance and personal contract purchase (PCP) agreements. The FSR notes that PCP agreements have been growing rapidly, from around three-fifths of new car purchases financed through dealership car finance in 2011 to four-fifths in 2016, but that arrear rates on dealership car finance are generally lower that other forms of consumer credit.
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