The economics of new car sales

[Grandfondo]

UK personal debt stands at £1.4 trillion which is being artificially maintained by historically low interest rates which if the BoE put them to a more realistic level 3.5-5.0% would put "some" people into big problems.
The fixation with forward spending is going to come to an abrupt end if interest rates shoot up leaving "some" people wishing they had paid down debt instead of accumulating it.

If people can't see this they are part of the problem not the solution!

P.S I stand by my statement wholeheartedly.

Edited by Grandfondo on Sunday 23 November 13:18

[xRIEx]

Grandfondo said:

historically low interest rates ... a more realistic level ...

This makes no sense - are the rates "fictional" at the moment? Are we imagining them?

If you know something the BoE doesn't, why are you not offering them your services? I'm sure there's a lot of money in it for you if you can help rescue the UK economy.

[Grandfondo]

xRIEx said:

Grandfondo said:

historically low interest rates ... a more realistic level ...

This makes no sense - are the rates "fictional" at the moment? Are we imagining them?

If you know something the BoE doesn't, why are you not offering them your services? I'm sure there's a lot of money in it for you if you can help rescue the UK economy.

Oh dear!

[xRIEx]

Grandfondo said:

xRIEx said:

Grandfondo said:

historically low interest rates ... a more realistic level ...

This makes no sense - are the rates "fictional" at the moment? Are we imagining them?

If you know something the BoE doesn't, why are you not offering them your services? I'm sure there's a lot of money in it for you if you can help rescue the UK economy.

Oh dear!

So you don't have any relevant knowledge in the area. Thanks for clearing that up

[daemon]

xRIEx said:

Grandfondo said:

xRIEx said:

Grandfondo said:

historically low interest rates ... a more realistic level ...

This makes no sense - are the rates "fictional" at the moment? Are we imagining them?

If you know something the BoE doesn't, why are you not offering them your services? I'm sure there's a lot of money in it for you if you can help rescue the UK economy.

Oh dear!

So you don't have any relevant knowledge in the area. Thanks for clearing that up

Yup.

Hes googled that to try to maintain his feeble position on the subject.

[EK993]

Grandfondo said:

I want to change my mind and the statement that gets "some" people a bit angry and defensive!

Nobody that has PCP/lease can't afford to "Own" their cars!

Sorry for upsetting some people!

Then you lose credibility with any of your previous arguments for making this clearly stupid, uninformed and designed to be inflammatory statement. I would have agreed with at least some of your thinking up until you said this.

[daemon]

Grandfondo said:

UK personal debt stands at £1.4 trillion which is being artificially maintained by historically low interest rates which if the BoE put them to a more realistic level 3.5-5.0% would put "some" people into big problems.
The fixation with forward spending is going to come to an abrupt end if interest rates shoot up leaving "some" people wishing they had paid down debt instead of accumulating it.

If people can't see this they are part of the problem not the solution!

P.S I stand by my statement wholeheartedly.

Edited by Grandfondo on Sunday 23 November 13:18

Out of curiosity, how is this relevant to PCP or lease deals?

IF interest rates go up, PCP deals are at a set interest rate and lease deals will be unaffected. Once those people come to the end of the term they then hand their car back, buy a car or PCP / Lease a cheaper one.

It unlikely to result in a massive "crash" in the UK car market, and even if it does, it'll be the people who have paid cash for their cars that suffer the most as their cars will have depreciated more than they'd hoped.

A PCP deal is a secured debt against an asset. Unsecured debt is where you really have problems - credit cards, personal loans, overdrafts, etc. But we're not talking about that, we're talking about new car purchases.

[Grandfondo]

xRIEx said:

Grandfondo said:

xRIEx said:

Grandfondo said:

historically low interest rates ... a more realistic level ...

This makes no sense - are the rates "fictional" at the moment? Are we imagining them?

If you know something the BoE doesn't, why are you not offering them your services? I'm sure there's a lot of money in it for you if you can help rescue the UK economy.

Oh dear!

So you don't have any relevant knowledge in the area. Thanks for clearing that up

What I do know about IR is that they will be going up at some point, I hope that helps?

[daemon]

Grandfondo said:

What I do know about IR is that they will be going up at some point, I hope that helps?

And how will that affect people who have current PCP or lease deals?

[xRIEx]

Grandfondo said:

xRIEx said:

Grandfondo said:

xRIEx said:

Grandfondo said:

historically low interest rates ... a more realistic level ...

This makes no sense - are the rates "fictional" at the moment? Are we imagining them?

If you know something the BoE doesn't, why are you not offering them your services? I'm sure there's a lot of money in it for you if you can help rescue the UK economy.

Oh dear!

So you don't have any relevant knowledge in the area. Thanks for clearing that up

What I do know about IR is that they will be going up at some point, I hope that helps?

Hahaha, thanks Mystic Meg. Any other predictions? E.g. it's going to rain then be sunny, sometime?

[Justin Case]

The comparisons between cars and houses are spurious. I can rent a flat locally for £550 per month, or buy a flat in the same block for £120k. I imagine the mortgage payments would be about the same, so not so different from the cash or PCP realtive costs. However, the flat is likely to appreciate in value, the car depreciate, and you are essentially paying for you or the landlord to borrow the money and not to fund the asset. A bit like comparing apples and toasters
I believe that you can only make financial decisions on financial criteria and not snobbery; the idea of the 'deserving poor' and the 'undeserving poor' went out with the workhouse*

• Unless of course you watch certain shock horror 'documentaries' on the telly

[Grandfondo]

EK993 said:

Then you lose credibility with any of your previous arguments for making this clearly stupid, uninformed and designed to be inflammatory statement. I would have agreed with at least some of your thinking up until you said this.

Did you miss the smiley?

[Grandfondo]

daemon said:

Grandfondo said:

What I do know about IR is that they will be going up at some point, I hope that helps?

And how will that affect people who have current PCP or lease deals?

Are you being serious?
Did you sleep through 2008-10?
New car sales plummeted ,why?
Why did repossessions soar?

It all affects people with fixed rate PCP deals when their disposable income reduces!

I hope that's not to complicated for you?

[xRIEx]

Grandfondo said:

Are you being serious?
Did you sleep through 2008-10?
New car sales plummeted ,why?
Why did repossessions soar?

It all affects people with fixed rate PCP deals when their disposable income reduces!

I hope that's not to complicated for you?

So why would the BoE put interest rates up if it would cause another credit crunch?

[Grandfondo]

xRIEx said:

Grandfondo said:

Are you being serious?
Did you sleep through 2008-10?
New car sales plummeted ,why?
Why did repossessions soar?

It all affects people with fixed rate PCP deals when their disposable income reduces!

I hope that's not to complicated for you?

So why would the BoE put interest rates up if it would cause another credit crunch?

BoE use interest rates to control inflation and equally as bad stagflation so at some point they will put IR up.

[xRIEx]

Grandfondo said:

xRIEx said:

Grandfondo said:

Are you being serious?
Did you sleep through 2008-10?
New car sales plummeted ,why?
Why did repossessions soar?

It all affects people with fixed rate PCP deals when their disposable income reduces!

I hope that's not to complicated for you?

So why would the BoE put interest rates up if it would cause another credit crunch?

BoE use interest rates to control inflation and equally as bad stagflation so at some point they will put IR up.

Yes, economics 101. However "at some point" is vague to the point of being completely useless.

Excessive increases in interest rates create negative equity, consumers are better off defaulting, they do, credit crunch. So it will happen when the economy can support it, which means not screwing the majority of people.

[daemon]

Grandfondo said:

daemon said:

Grandfondo said:

What I do know about IR is that they will be going up at some point, I hope that helps?

And how will that affect people who have current PCP or lease deals?

Are you being serious?
Did you sleep through 2008-10?
New car sales plummeted ,why?
Why did repossessions soar?

It all affects people with fixed rate PCP deals when their disposable income reduces!

I hope that's not to complicated for you?

Rising interest rates didnt cause the credit crunch

Your problem (well one of them) is you're assuming that people are using ALL their expendible income on a £200 or £300 PCP deal. Certainly for anyone i know, thats not the case.

Most PCP / lease deals are over 2-4 years. People would just chop their car in for something cheaper or go out and buy something if they were really up against it.

Maybe if you've only a small amount of disposable income, or a heavy mortgage then interest rates will affect you, but dont assume thats the case for everyone.

[Grandfondo]

xRIEx said:

Grandfondo said:

xRIEx said:

Grandfondo said:

Are you being serious?
Did you sleep through 2008-10?
New car sales plummeted ,why?
Why did repossessions soar?

It all affects people with fixed rate PCP deals when their disposable income reduces!

I hope that's not to complicated for you?

So why would the BoE put interest rates up if it would cause another credit crunch?

BoE use interest rates to control inflation and equally as bad stagflation so at some point they will put IR up.

Yes, economics 101. However "at some point" is vague to the point of being completely useless.

Excessive increases in interest rates create negative equity, consumers are better off defaulting, they do, credit crunch. So it will happen when the economy can support it, which means not screwing the majority of people.

That is why it's is being kept at an unrealistically low rate to protect the "majority" of credit monkeys!

[daemon]

xRIEx said:

So it will happen when the economy can support it, which means not screwing the majority of people.

You mean Grandfondos feeble attempt to relate the potential of rising interest rates to people who lease / PCP cars as "not being able to afford them" doesnt really hold water?

Not having much luck today Grandfondo?

[daemon]

Grandfondo said:

That is why it's is being kept at an unrealistically low rate to protect the "majority" of credit monkeys!

Thats it, you keep clutching that straw



Time for another name change?