When To Use PCP For Near-Prime Customers

Why PCP Can Be Effective For Near-Prime Customers

Near-prime customers often sit on the edge of affordability, where monthly payments can become an issue. PCP helps reduce monthly payments by deferring part of the cost to the end of the agreement through a balloon payment.

Providing PCP to a near-prime customer can help keep the deal alive, which, for many near-prime customers, can be the difference between a decline and an approval.

Understanding The Near-Prime Customer

Near-prime customers fall just short of top-lending criteria and have average credit scores. In saying that, these customers don’t tend to be high-risk borrowers, but struggle to meet tight prime criteria due to factors such as:

• Slightly lower credit score (but still not poor).
• Past missed payments.
• Limited credit history.
• Recent financial or employment change.
• External factors like the cost-of-living crisis.

These customers are well placed for finance, provided they are paired with the right lender.

When Should Dealers Use PCP For Near-Prime Customers?

Use PCP When Monthly Affordability Is The Main Barrier

Near-prime customers struggling with monthly payments may be better suited to PCP over HP. PCP reduces monthly cost, helping near-prime customers get car finance.

Use PCP When The Customer Is Stretching On Vehicle Choice

If the customer is interested in a higher-value car, PCP can make that achievable. However, PCP should not be used to allow customers to stretch themselves too thin financially and leave themselves short down the line.

Use PCP When The Customer Is Likely To Part Exchange

If the customer isn’t interested in eventual ownership and instead wants flexibility at the end of the term, PCP is the best option.

Why PCP Works Well In The Near-Prime Space

Lower monthly payments improve affordability, helping more customers meet lending criteria.

Flexible end-of-term options also appeal to customers who are unsure about long-term ownership. For near-prime customers, PCP can help keep them within lending criteria, increasing conversions. In many cases, PCP allows you to structure deals that would not be possible under HP.

What To Watch Out For

Customers should clearly understand the balloon payment and the options available at the end of the agreement. Setting expectations early helps avoid confusion later in the term.

As with any finance product, affordability must remain appropriate. PCP should not be used to place customers into vehicles beyond their means.

How This Fits Into Your Sales Process

Using PCP for near-prime customers doesn’t require a complete change to your sales approach; it’s about making better use of the options available at the right time.

In practice, this typically looks like:

Identify potential near-prime customers early. Look for indicators such as borderline credit, affordability constraints, or hesitation around monthly payments. This helps your team position the right solution from the outset.

Start with the most suitable product and lender. Where appropriate, present PCP as a way to reduce monthly payments and keep the deal within reach, rather than defaulting straight to higher monthly HP options.

Reposition after a prime decline. If a customer is declined by a prime lender, PCP through a near-prime lender can provide an alternative route to approval, allowing you to keep the conversation moving.

Use PCP to maintain momentum. Lower monthly payments and flexible end-of-term options help keep customers engaged, reducing the likelihood of drop-off during the finance stage.

Set clear expectations throughout. As with any finance product, it’s important that the customer understands how the agreement works, particularly the optional final payment and end-of-term options.

Integrated into your process in this way, PCP becomes more than just a product, it becomes a practical tool to help your team convert more near-prime customers and reduce lost deals.

How Marsh Finance Supports Near-Prime PCP

Marsh Finance supports near-prime PCP through:

• Access to near-prime PCP solutions not widely available across the market
• Flexible underwriting across a broader range of credit profiles
• Fast, consistent decisioning

This allows your dealership to structure deals more effectively and convert customers who may otherwise be declined.

Turn More Near-Prime Customers Into Sales

PCP is a highly effective tool for improving conversion rates. Near-prime customers represent a significant and often underutilised segment of the market. Combining these two together means more sales.

Start Structuring More Near-Prime PCP Deals

Partner with Marsh Finance and reach a large customer base. Near-prime PCP can be a great tool to grow sales and boost conversions.