The economics of new car sales

[Justin Case]

Sorry to spoil thr argument with a few facts but the Bank of England (generally believed to be a more reliable source than the Daily Mail) are of the opinion that interest rates may rise slowly to up to 2 1/2% over the next three years. At the end of 2013, mortgages accounted for nearly 90% of individual debt, and the total amount of unsecured debt (including cars) was about £3,000 per person (hardly a ruinous amount for the economy. As I don't know anyone on a 1/2 % mortgage (even a tracker) even a four-fold rise in interest rates is unlikely to result in the collapse of the economy, although no doubt fewer people will be able to afford (or not afford but still take out;)) a PCP, to the great relief of certain posters.
Pundits predict the main effect of a rate rise would be a slowing down of the housing market, which would of course have the effect for us of a flood of repossessed sign-written, but now stripped, BINIs hitting the market. So it's not all doom and gloom

Edited by Justin Case on Monday 24th November 18:57

[sealtt]

I doubt interest rates are going to make that much difference to PCP affordability, it's the depreciation that's the killer with new cars - and PCP caps that, regardless of interest rates.

Interest rate increases are going to mess with mortgages, not PCP. You are more likely to see people being kicked out of houses they can't afford, but they will still at least have their premium car on PCP to sleep in when the home is gone.

[xRIEx]

Justin Case said:

Sorry to spoil thr argument with a few facts but the Bank of England (generally believed to be a more reliable source than the Daily Mail) are of the opinion that interest rates may rise slowly to up to 2 1/2% over the next three years. At the end of 2013, mortgages accounted for nearly 90% of individual debt, and the total amount of unsecured debt (including cars) was about £3,000 per person (hardly a ruinous amount for the economy. As I don't know anyone on a 1/2 % mortgage (even a tracker) even a four-fold rise in interest rates is unlikely to result in the collapse of the economy, although no doubt fewer people will be able to afford (or not afford but still take out;)) a PCP, to the great relief of certain posters.
Pundits predict the main effect of a rate rise would be a slowing down of the housing market, which would of course have the effect for us of a flood of repossessed sign-written, but now stripped, BINIs hitting the market. So it's not all doom and gloom

Edited by Justin Case on Monday 24th November 18:57

Thanks, that was the sorry of info I was interested to learn

[forzaminardi]

So who can tell me about the economics of new car sales?

[daemon]

r11co said:

daemon said:

r11co said:

The PCP issue is more like aiming the hammer with no training, one eye shut and no safety goggles

How is it?

Work it out yourself - you seem to be the expert on everything so interpreting that little allegory should be a breeze for you.

Well, you're talking nonsense by comparing someone who takes a PCP deal with some inept DIYer.

[daemon]

r11co said:

xRIEx said:

I personally have never had a PCP arrangement, I am currently borrowing but have a liquidity ratio of over 3.1. Am I protesting too much, and what does that sum up?

Bully for you. Shame there aren't more like you, which ultimately is my point.

Rather strange that you are defending something you don't engage in though.....

Nobody is "defending" PCP deals. We objectively view them as an option for someone who is considering a new car.

It doesnt make them stupid
It doesnt mean they "cant afford it"
It doesnt mean that they will face financial ruin

[daemon]

Justin Case said:

Sorry to spoil thr argument with a few facts but the Bank of England (generally believed to be a more reliable source than the Daily Mail) are of the opinion that interest rates may rise slowly to up to 2 1/2% over the next three years. At the end of 2013, mortgages accounted for nearly 90% of individual debt, and the total amount of unsecured debt (including cars) was about £3,000 per person (hardly a ruinous amount for the economy. As I don't know anyone on a 1/2 % mortgage (even a tracker) even a four-fold rise in interest rates is unlikely to result in the collapse of the economy, although no doubt fewer people will be able to afford (or not afford but still take out;)) a PCP, to the great relief of certain posters.
Pundits predict the main effect of a rate rise would be a slowing down of the housing market, which would of course have the effect for us of a flood of repossessed sign-written, but now stripped, BINIs hitting the market. So it's not all doom and gloom

Edited by Justin Case on Monday 24th November 18:57

Well there we go. Thank you.

So not quite the doom and gloom that Grandfondo might have us believe.

[daemon]

sealtt said:

I doubt interest rates are going to make that much difference to PCP affordability, it's the depreciation that's the killer with new cars - and PCP caps that, regardless of interest rates.

Interest rate increases are going to mess with mortgages, not PCP. You are more likely to see people being kicked out of houses they can't afford, but they will still at least have their premium car on PCP to sleep in when the home is gone.

+1

Then they can hand their car back at the end of the term

OR exercise their rights under the Consumer Credit Act to hand it back once they've paid 50% of the total transaction cost.

[r11co]

daemon said:

Well, you're talking nonsense by comparing someone who takes a PCP deal with some inept DIYer.

Fail. You clearly didn't understand the allegory then. Someone who signs a deal that could push them over the brink of financial catastrophe should circumstances they have no direct say in dictate that their disposable income falls overnight, with no consideration for the consequences, is as daft as someone who takes on DIY without possessing the skills and taking the appropriate precautions to ensure they do not injure themselves.

As I said, in both circumstances the carefree may be OK, but being lucky is not the same thing as skilfully avoiding the risk, even though you will argue the end result is the same.

[Grandfondo]

daemon said:

sealtt said:

I doubt interest rates are going to make that much difference to PCP affordability, it's the depreciation that's the killer with new cars - and PCP caps that, regardless of interest rates.

Interest rate increases are going to mess with mortgages, not PCP. You are more likely to see people being kicked out of houses they can't afford, but they will still at least have their premium car on PCP to sleep in when the home is gone.

+1

Then they can hand their car back at the end of the term

OR exercise their rights under the Consumer Credit Act to hand it back once they've paid 50% of the total transaction cost.

Which is when on a PCP deal?

[daemon]

r11co said:

daemon said:

Well, you're talking nonsense by comparing someone who takes a PCP deal with some inept DIYer.

Fail. You clearly didn't understand the allegory then. Someone who signs a deal that could push them over the brink of financial catastrophe should circumstances they have no direct say in dictate that their disposable income falls overnight, with no consideration for the consequences, is as daft as someone who takes on DIY without possessing the skills and taking the appropriate precautions to ensure they do not injure themselves.

As I said, in both circumstances the carefree may be OK, but being lucky is not the same thing as skilfully avoiding the risk, even though you will argue the end result is the same.

Theres an awful lot of IFs in there that have to happen before someone MIGHT be at risk.

Its funny how IF this is happening so prolifically, AND presumably all these people are going to the wall and having to hand their cars back or being repossessed, then how come the car companies are persisting with it if its all round such a bad idea?

Surely all the car companies, according to you, must be creating tens or hundreds of thousands of people every year who "cant afford" the car they were sold, and as such the manufacturer has lost a customer for life - having been left with a bad taste in their mouth as to how they were treated?

OR, as i believe is actually the case, 99.9% of these transactions pass off as planned and people go on to take another car on PCP, finance a car, lease a car, or buy something for cash.

For all your comparing it to someone with an eye patch and drunk or whatever using a hammer, you having actually given us ANY ACTUAL figures on failure / satisfaction rates of PCP deals?

[daemon]

Grandfondo said:

Which is when on a PCP deal?

I've already told you - after 50% of the total transaction cost has been paid.

[daemon]

Justin Case said:

Sorry to spoil thr argument with a few facts but the Bank of England (generally believed to be a more reliable source than the Daily Mail) are of the opinion that interest rates may rise slowly to up to 2 1/2% over the next three years. At the end of 2013, mortgages accounted for nearly 90% of individual debt, and the total amount of unsecured debt (including cars) was about £3,000 per person (hardly a ruinous amount for the economy. As I don't know anyone on a 1/2 % mortgage (even a tracker) even a four-fold rise in interest rates is unlikely to result in the collapse of the economy, although no doubt fewer people will be able to afford (or not afford but still take out;)) a PCP, to the great relief of certain posters.
Pundits predict the main effect of a rate rise would be a slowing down of the housing market, which would of course have the effect for us of a flood of repossessed sign-written, but now stripped, BINIs hitting the market. So it's not all doom and gloom

Edited by Justin Case on Monday 24th November 18:57

I'm going to quote this again, because clearly it suits r11co and grandfondo to ignore it.

Comments gents please?

[daemon]

r11co said:

Fail. You clearly didn't understand the allegory then. Someone who signs a deal that could push them over the brink of financial catastrophe should circumstances they have no direct say in dictate that their disposable income falls overnight, with no consideration for the consequences, is as daft as someone who takes on DIY without possessing the skills and taking the appropriate precautions to ensure they do not injure themselves.

The actual "allegory" would be - 99% of the time using a hammer has a successful outcome, however it is worth bearing in mind there are risks, which should be taken into consideration before starting.

[Grandfondo]

daemon said:

Grandfondo said:

Which is when on a PCP deal?

I've already told you - after 50% of the total transaction cost has been paid.

Almost at the end of the term then?

[Catatafish]

forzaminardi said:

So who can tell me about the economics of new car sales?

What? No enlightenment in 13 pages of tit for tat drivel

[daemon]

Grandfondo said:

Almost at the end of the term then?

It will vary dependant on deposit, amount of manufacturers contribution, residual value, interest rate, etc.

But you're missing the point as usual.

[Grandfondo]

daemon said:

Grandfondo said:

Almost at the end of the term then?

It will vary dependant on deposit, amount of manufacturers contribution, residual value, interest rate, etc.

But you're missing the point as usual.

Isn't it once 50% of the total borrowed is paid?

[Snollygoster]

Grandfondo said:

daemon said:

Grandfondo said:

Almost at the end of the term then?

It will vary dependant on deposit, amount of manufacturers contribution, residual value, interest rate, etc.

But you're missing the point as usual.

Isn't it once 50% of the total borrowed is paid?

No. Half the full invoice price.

[Grandfondo]

Snollygoster said:

Grandfondo said:

daemon said:

Grandfondo said:

Almost at the end of the term then?

It will vary dependant on deposit, amount of manufacturers contribution, residual value, interest rate, etc.

But you're missing the point as usual.

Isn't it once 50% of the total borrowed is paid?

No. Half the full invoice price.

Cheers.