The economics of new car sales
Discussion
Grandfondo said:
Time will tell.
But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
That wasn't my argument, I'm not sure where you got that idea from.But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
Grandfondo said:
3% base rate IMO is very "realistic" and to be honest it's on the low side!
So to clarify, by your reasoning:- increasing rates will put a large amount of the population into extreme hardship
and by the article you're quoting:
- increasing rates would create a strong likelihood of the UK falling into recession
you want interest rates to increase?
Talk me through that.
r11co said:
Ahhh, daemon - the champion of the 'never never'.
No. Being "objective". There are various options for people buying cars. Because someone has chosen one over another doesnt make them wrong.r11co said:
It will only take a small shift in interest rates to tip a number of people into unmanageable debt servicing situations. These are the sorts of people who right now think 'I can afford 'X' per month' and leave themselves little or no leeway.
Yes. And in no way am i condoning lending money / giving cars to people who cant afford them.People need to borrow responsibly.
r11co said:
They are exactly the sorts of people that the 'from £xxx per month' lease deal adverts are pitched at.
I dont agree. Credit checks are done and the last thing car finance companies want is a trail of repossessions or accusations of mis-lending.r11co said:
Not everyone is in this category, but then again not everyone who signed up for payment protection insurance was mis-sold either.
Very few are in this category. And i dont see the relevance of PPI. People arent being "mis sold" cars.Grandfondo said:
Ah. A Daily Mail reader. Who'd have guessed. 
Grandfondo said:
Time will tell.
But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
3% base rate IMO is very "realistic" and to be honest it's on the low side!
Whos recommending borrowing more and more?But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
3% base rate IMO is very "realistic" and to be honest it's on the low side!
daemon said:
I dont agree. Credit checks are done and the last thing car finance companies want is a trail of repossessions or accusations of mis-lending.
My point is that you can't say how many are in this category, and the lesson from PPI mis-selling is that it is very easy to pretend that there is nothing wrong until after the fact.r11co said:
Not everyone is in this category, but then again not everyone who signed up for payment protection insurance was mis-sold either.
Very few are in this category. And i dont see the relevance of PPI.Credit checks and other procedures have proven very fallible in the past, usually because of the target/bonus chasing individuals who will not be held personally responsible for the financial fallout afterwards.
daemon said:
People arent being "mis sold" cars.
That is a straw man argument. Symantically you are correct, but it is not the issue at stake here. What they are being mis-sold is the belief the car/financial package is the right one for them.r11co said:
daemon said:
People arent being "mis sold" cars.
That is a straw man argument. Symantically you are correct, but it is not the issue at stake here. What they are being mis-sold is the belief the car/financial package is the right one for them.There's a massive assumption that PCP is always wrong - that is not true. It is the right choice for some. There is no need to vilify PCP (and the people who take it) because it doesn't work for everyone. It is a valid option. PCP is not an automatic indicator that someone can't afford the car in question.
Why do some people find it impossible to understand that other people have different experiences. I have never bought a car on a secured financial product nor leased, but that doesn't mean I have to slag off those who do. I've done what has worked for me - there are another 60+ million people in this country who have the option to do something different to me - good for them.
Why does everyone have to be a carbon copy of your decisions?
r11co said:
My point is that you can't say how many are in this category, and the lesson from PPI mis-selling is that it is very easy to pretend that there is nothing wrong until after the fact.
Your "argument" seems to be that "some" people may over stretch themselves, therefore all PCP / lease deals are bad.PCP deals have been around since the 1980s. I remember Ford had them with the mk2 fiesta. They are coming into their own even more now as manufacturers try to win custom.
They are short term (relatively) loans secured against an asset. If you took on a PCP deal and it wasnt right for you - dont do it again. Simples. Its not a lifetime commitment. Its works for the vast majority of people and its becoming the de facto choice for the "top layer" of purchases - new cars - with the second layer - 3+ years then being resold under predominantly HP or cash deals.
r11co said:
That is a straw man argument. Symantically you are correct, but it is not the issue at stake here. What they are being mis-sold is the belief the car/financial package is the right one for them.
How do you know its not right for them? Who are you to decide, just because you've decided its not right for you?xRIEx said:
Why isn't it?
There's a massive assumption that PCP is always wrong - that is not true. It is the right choice for some. There is no need to vilify PCP (and the people who take it) because it doesn't work for everyone. It is a valid option. PCP is not an automatic indicator that someone can't afford the car in question.
Why do some people find it impossible to understand that other people have different experiences. I have never bought a car on a secured financial product nor leased, but that doesn't mean I have to slag off those who do. I've done what has worked for me - there are another 60+ million people in this country who have the option to do something different to me - good for them.
Why does everyone have to be a carbon copy of your decisions?
Totally agree, however i dont expect you'll get a direct answer.There's a massive assumption that PCP is always wrong - that is not true. It is the right choice for some. There is no need to vilify PCP (and the people who take it) because it doesn't work for everyone. It is a valid option. PCP is not an automatic indicator that someone can't afford the car in question.
Why do some people find it impossible to understand that other people have different experiences. I have never bought a car on a secured financial product nor leased, but that doesn't mean I have to slag off those who do. I've done what has worked for me - there are another 60+ million people in this country who have the option to do something different to me - good for them.
Why does everyone have to be a carbon copy of your decisions?
Ozzie Osmond said:
Government: base rate below inflation = a tax on savings.
Banks: savings rates below inflation = substantial boost for profits.
Borrower: still paying interest rates above inflation = business as usual.
Saver: utterly shafted.
Saver (Especially business which are hoarding record amount of money) needs to find profitable investments, which is good for the economy.Banks: savings rates below inflation = substantial boost for profits.
Borrower: still paying interest rates above inflation = business as usual.
Saver: utterly shafted.
daemon said:
xRIEx said:
Why isn't it?
There's a massive assumption that PCP is always wrong - that is not true. It is the right choice for some. There is no need to vilify PCP (and the people who take it) because it doesn't work for everyone. It is a valid option. PCP is not an automatic indicator that someone can't afford the car in question.
Why do some people find it impossible to understand that other people have different experiences. I have never bought a car on a secured financial product nor leased, but that doesn't mean I have to slag off those who do. I've done what has worked for me - there are another 60+ million people in this country who have the option to do something different to me - good for them.
Why does everyone have to be a carbon copy of your decisions?
Totally agree, however i dont expect you'll get a direct answer.There's a massive assumption that PCP is always wrong - that is not true. It is the right choice for some. There is no need to vilify PCP (and the people who take it) because it doesn't work for everyone. It is a valid option. PCP is not an automatic indicator that someone can't afford the car in question.
Why do some people find it impossible to understand that other people have different experiences. I have never bought a car on a secured financial product nor leased, but that doesn't mean I have to slag off those who do. I've done what has worked for me - there are another 60+ million people in this country who have the option to do something different to me - good for them.
Why does everyone have to be a carbon copy of your decisions?
thelawnet said:
Whether these deals are actually good for the consumer is going to be a mystery to most people, and I doubt they care. Certainly 'personal finance education' is not really something the government wants to encourage when those millions of new cars a year are pumping billions into the economy....
It's not 'finance education' it's that assets like housing have risen far ahead of rises in income in real terms. This means real income actually falls despite theoretical income rising. I know this has been happening in the USA since the seventies and here since the eighties (I think).I think one reason is the following:
An asset growth ahead of rises in wages due to the wealthiest individuals investing in housing due to the 'magic' of compound interest and investing on the stock market, etc. This creates a bubble of wealth for those at the top of the tree not related to economic growth, that means people feel forced into finance after taking on a relatively more expensive than ever mortgage on a relatively low income. The Conservatives call it a 'cost of living crisis' but it's an asset crisis fuelled by the richest individuals and businesses avoiding taxes, plus a lack of low income housing. People are also forced into working on zero hours, flexible or temporary contracts just to get an income. That's a bonus for the government though who can say that unemployment is falling, neglecting to mention that real incomes are falling as well.
This was all implied in a recent 'Channel 4' show but many other media experts suggest a similar problem is happening right now.
If the pound was kept at a higher rate of inflation I think it would only devalue savings for the richest if there money is invested in UK pounds and not in an offshore tax haven in US dollars! The other problem is that wealth creation for bank lending and investing isn't tied to a physical system any more. If it were there would be less money to go around fuelling cheaper credit, etc. Also I think it's much more profitable for the banks to keep everybody in debt paying interest to them rather than pay interest on savings. Therefore assets rising ahead of wages is a benefit to them, and only government regulation and taxation is able to help the poorest.
Saving money and being careful not to get into uncontrolled debt is important, but implying that people are ignorant of money or don't value it is crazy. Those that value money the most are the poorest, and those that value it the least are the wealthiest. This is simple for anybody who understands that a homeless person values £10 much more than a billionaire does!
xRIEx said:
Grandfondo said:
Time will tell.
But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
That wasn't my argument, I'm not sure where you got that idea from.But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
Grandfondo said:
3% base rate IMO is very "realistic" and to be honest it's on the low side!
So to clarify, by your reasoning:- increasing rates will put a large amount of the population into extreme hardship
and by the article you're quoting:
- increasing rates would create a strong likelihood of the UK falling into recession
you want interest rates to increase?
Talk me through that.
There's none so blind as them that won't listen!
Grandfondo said:
xRIEx said:
Grandfondo said:
Time will tell.
But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
That wasn't my argument, I'm not sure where you got that idea from.But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
Grandfondo said:
3% base rate IMO is very "realistic" and to be honest it's on the low side!
So to clarify, by your reasoning:- increasing rates will put a large amount of the population into extreme hardship
and by the article you're quoting:
- increasing rates would create a strong likelihood of the UK falling into recession
you want interest rates to increase?
Talk me through that.
There's none so blind as them that won't listen!
xRIEx said:
Grandfondo said:
xRIEx said:
Grandfondo said:
Time will tell.
But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
That wasn't my argument, I'm not sure where you got that idea from.But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
Grandfondo said:
3% base rate IMO is very "realistic" and to be honest it's on the low side!
So to clarify, by your reasoning:- increasing rates will put a large amount of the population into extreme hardship
and by the article you're quoting
- increasing rates would create a strong likelihood of the UK falling into recession
you want interest rates to increase?
Talk me through that.
There's none so blind as them that won't listen!
Are we (the country) over borrowed ? Yes/no answer
Do PCPs put SOME people into cars they can't afford to own? Yes/no answer
Would an IR rise put SOME people into financial repayment difficulties ? Yes/no answer
Are IR at a historic low to protect the economy from the fallout from the Over borrowed? Yes/no.
I doubt we will get 4 word answers which is all that's needed!
xRIEx said:
Grandfondo said:
xRIEx said:
Grandfondo said:
Time will tell.
But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
That wasn't my argument, I'm not sure where you got that idea from.But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
Grandfondo said:
3% base rate IMO is very "realistic" and to be honest it's on the low side!
So to clarify, by your reasoning:- increasing rates will put a large amount of the population into extreme hardship
and by the article you're quoting
- increasing rates would create a strong likelihood of the UK falling into recession
you want interest rates to increase?
Talk me through that.
There's none so blind as them that won't listen!
Are we (the country) over borrowed ? Yes/no answer
Do PCPs put SOME people into cars they can't afford to own? Yes/no answer
Would an IR rise put SOME people into financial repayment difficulties ? Yes/no answer
Are IR at a historic low to protect the economy from the fallout from the Over borrowed? Yes/no.
I doubt we will get 4 word answers which is all that's needed!
Edited by Grandfondo on Monday 24th November 15:41
daemon said:
Grandfondo said:
Time will tell.
But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
3% base rate IMO is very "realistic" and to be honest it's on the low side!
Whos recommending borrowing more and more?But the argument that if we keep borrowing more and more they won't put interest rates up because another recession is not "realistic" is a very dangerous gamble to take!
3% base rate IMO is very "realistic" and to be honest it's on the low side!
So you are!
Grandfondo said:
Are we (the country) over borrowed ? Yes/no answer
Grandfondo said:
Do PCPs put SOME people into cars they can't afford to own? Yes/no answer
Yes.Grandfondo said:
Would an IR rise put SOME people into financial repayment difficulties ? Yes/no answer
Yes.Grandfondo said:
Are IR at a historic low to protect the economy from the fallout from the Over borrowed? Yes/no.
I don't know. They are at an historic low, never disputed that. I see you've changed from "unrealistic" to "historic". Are you changing your argumentGrandfondo said:
I doubt we will get 4 word answers which is all that's needed!
Nice false dichotomies. What point(s) are you making?Try harder: how about an appeal to authority, circular reasoning or go back to ad hominems?
Thank you xRIEx that's all I needed to hear!
"PCPs get some people into cars they can't afford to own" which is what got all the irate posters all hot and sweaty over a statement of fact!
My point I am trying to make is that as a country as a whole we should be borrowing less not more!
For a country with "one of the better economies in Europe" why have Wonga and the like flourished over the last few years?
"PCPs get some people into cars they can't afford to own" which is what got all the irate posters all hot and sweaty over a statement of fact!
My point I am trying to make is that as a country as a whole we should be borrowing less not more!
For a country with "one of the better economies in Europe" why have Wonga and the like flourished over the last few years?
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