Are the wheels about to fall of car finance?
Discussion
gizlaroc said:
Bill said:
I understand, and even agree, with you. But that's not the point I am making.
£300 pcm leaves the loan taker with a car worth circa £5k after three years, but the PCP user has nothing.
A buyer who can afford a loan costing £300 pcm can have a used car that he will own outright after 3 years, or a new one he gives back after three years. The trick the car trade has pulled off is persuading people that £300 pcm is the important number, rather than the actual cost of ownership (Which is the bit you are talking about...)
Similarly "cost to change" is just a fudge to make the numbers look smaller.
Even though I am against PCP on used cars with sky high interest rates, how old a car do you have to buy to be able to do what you are suggesting? £300 pcm leaves the loan taker with a car worth circa £5k after three years, but the PCP user has nothing.
A buyer who can afford a loan costing £300 pcm can have a used car that he will own outright after 3 years, or a new one he gives back after three years. The trick the car trade has pulled off is persuading people that £300 pcm is the important number, rather than the actual cost of ownership (Which is the bit you are talking about...)
Similarly "cost to change" is just a fudge to make the numbers look smaller.
I would say these days it is probably 5-7 years old with 80k miles on it.
Run that for another 4-5 years and it could throw up some pretty big bills.
If you want a newish car with no expected bills Contract Hire is generally the cheapest way of doing it.
£300 a month would get you in to a brand new Golf R.
£300 loan over 3 years gets you £10K if you're lucky. Thats going to get you a 10 year old R32.
djc206 said:
There will come a point where people buying 5/6/8/10 year old performance cars particularly automatics like the RS4 find themselves with 5 figure repair bills that write off the car. There's so much tech and stuff to go wrong on new cars that the more than lightly used market will be a minefield in years to come.
Most recent cars are going to be a nightmare at 10yrs old. How much are things like LCD dashboards going to cost, for example?I pay 211 for a Fiesta St-3, each month. On a 2 year PCP with no deposit.
I knew when signing up for such a "cheap" monthly, I was committing to the full 2 years and hand back at the end.
People get really shafted when they think they can go for the lowest monthlies and swap whenever they like.
I think its because the majority of people are morons and are easily parted with their money.
And yes Il have nothing to show after 2 years but 211x24=5,064 and difn't fancy driving around in a 150,000mile+ golf gti etc
You make your choice, pay your monies and thats that but you have to be sensible about it, which most people are not.
I knew when signing up for such a "cheap" monthly, I was committing to the full 2 years and hand back at the end.
People get really shafted when they think they can go for the lowest monthlies and swap whenever they like.
I think its because the majority of people are morons and are easily parted with their money.
And yes Il have nothing to show after 2 years but 211x24=5,064 and difn't fancy driving around in a 150,000mile+ golf gti etc
You make your choice, pay your monies and thats that but you have to be sensible about it, which most people are not.
Sheepshanks said:
That seems common with VW - same happened to us when we wanted a Tiguan. Dealer group, Inchcape had over 100 nearly new ones that were dearer than discounted new - you had to go back to a year old before they were cheaper. They wouldn't move on the used prices either.
The salesman we bought off said some people come in fixated on getting a nearly-new one and don't do the comparision, and it's different sales teams so they don't encourage people to look at new.
A more cynical way of looking at it, if what people here are saying is true about stockpiling of used cars, is that they are trying to dissuade many people from buying used so they can stick their stockpile on their balance sheet, marked to market, albeit an essentially fictional market. The salesman we bought off said some people come in fixated on getting a nearly-new one and don't do the comparision, and it's different sales teams so they don't encourage people to look at new.
That should be a great big warning sign to regulators, but they won't do anything
Somewhatfoolish said:
Sheepshanks said:
That seems common with VW - same happened to us when we wanted a Tiguan. Dealer group, Inchcape had over 100 nearly new ones that were dearer than discounted new - you had to go back to a year old before they were cheaper. They wouldn't move on the used prices either.
The salesman we bought off said some people come in fixated on getting a nearly-new one and don't do the comparision, and it's different sales teams so they don't encourage people to look at new.
A more cynical way of looking at it, if what people here are saying is true about stockpiling of used cars, is that they are trying to dissuade many people from buying used so they can stick their stockpile on their balance sheet, marked to market, albeit an essentially fictional market. The salesman we bought off said some people come in fixated on getting a nearly-new one and don't do the comparision, and it's different sales teams so they don't encourage people to look at new.
That should be a great big warning sign to regulators, but they won't do anything
Granfondo said:
I think it's safe to say that finance is here to stay!
And there is nothing wrong with this providing its lent responsiblyLooking at the US article it looks like they have started lending to all and sundry again regardless of ability to pay, like they did with the houses
Dave Hedgehog said:
Granfondo said:
I think it's safe to say that finance is here to stay!
And there is nothing wrong with this providing its lent responsiblyLooking at the US article it looks like they have started lending to all and sundry again regardless of ability to pay, like they did with the houses
Welshbeef said:
People will simply go for non AIC warranties to de risk the key parts of the car.
Gearboxes can be repaired not needing to be replaced.
Also you might find it's more often than not modified examples pumping out more than std power and torque which increases wear and tear.
Are auto boxes consumable parts? Does anyone change the gearbox oil?
Mine was not modified, gearbox oil is changed every 2 years or 20k whichever is sooner if memory serves on the RS4. Apparently the gearbox could not be repaired, a replacement was immediately authorised and ordered by Audi and they seemed to treat it as a sealed item meaning outside warranty period you'd have to go third party to get a repair and even then you could spend thousands trying to get it repaired only to find you end up needing a replacement anyway if they can't fix it. Even a fix because of the labour will run you several thousand. Yes you can buy a warranty but on something like an RS4 that will normally cost you about £1k/year, if they start failing often the insured warranties will just go up in price, they need to make money at the end of the day. Gearboxes can be repaired not needing to be replaced.
Also you might find it's more often than not modified examples pumping out more than std power and torque which increases wear and tear.
Are auto boxes consumable parts? Does anyone change the gearbox oil?
philmots said:
I personally think owing a 10/15 year old current car could be hugely ruinous, and financing will only get more common.
This is it. Most BMW's at 10 years old can be absolute money pits - the ease with which a 5-10 yo E90 can generate a £1500 bill is scary. Higher mileage F10's can generate bills nearly 50% of their actual value. I'm not in the motor trade anymore but I have colleagues who work at a local Sytners - none of them would countenance a BMW outside of warranty. Sure, they don't all go wrong but many do, and the Russian Roulette of an enormous bill is depressing values to the point where I could only just get £2000 for a nine year old 100'000 mile 320i. In nine years, this 'prestige' heap of s
t lost £23'000 plus the not inconsiderable cost of keeping it going.Thankfully I saw sense after 4 months and f
ked it off, returning once more to my ageing yet trusty BMW stter with it's air conditioned leather trimmed cocoon and ageing - yet entirely acceptable - level of technology for what a car is actually meant to do.Sheepshanks said:
Most recent cars are going to be a nightmare at 10yrs old. How much are things like LCD dashboards going to cost, for example?
A small fortune!There was a thread in here not long ago, a guy had an X5 or 6 series (can't remember which) that was just out of warranty. One of its led headlights failed, iirc he was quoted well over a grand for its replacement, which is just ludicrous!
But no one repairs them yet to my knowledge? I mean, wtf do you do?
iSore said:
.... and the Russian Roulette of an enormous bill is depressing values to the point where I could only just get £2000 for a nine year old 100'000 mile 320i. In nine years, this 'prestige' heap of st lost £23'000 plus the not inconsiderable cost of keeping it going.
....that's what supports the argument for PCPing or leasing a new car for 2-3 years, and them moving on to the next one.t lost £23'000 plus the not inconsiderable cost of keeping it going.Your figures are just the same for my C Class - except it was 5mths old when I paid £23,500 for it. New (and there weren't the massive discounts then) is was £35K. I might get £2K for it now, but it's carrying at least that in "needed" work, big chunks of which aren't feasible for most DIY mechanics.
katz said:
slightly off tangent... does all this mean that in say 10 years time there will be very little market for 15 year old performance cars?
Cars being built now are almost certainly sold via PCP, designed to last for 10 years max? also very complicated electronics. Currently if I want to buy a 20 year old performance motor I have a range of choices, most of which i can keep in tune/ in decent nick. If manufacturers are thinking there is no point in building cars to last as the finance model requires dumping or scrapping after 8-10 years, where do the good used motor deals come in for those of us who pay cash for cars?
Don't think so. Cars being built now are almost certainly sold via PCP, designed to last for 10 years max? also very complicated electronics. Currently if I want to buy a 20 year old performance motor I have a range of choices, most of which i can keep in tune/ in decent nick. If manufacturers are thinking there is no point in building cars to last as the finance model requires dumping or scrapping after 8-10 years, where do the good used motor deals come in for those of us who pay cash for cars?
People are asking where the bargain used cars are - well they're everywhere. Maybe not a year or two old, but you can pick up a working, decent car with an MOT for a few hundred quid very easily. All of my LHD mates are amazed at the sort of metal that you can get for buttons in this country.
And I don't buy the "oooh, cars are so complex these days". They are complex now, but won't be viewed as complex or scary in 10 years time. The regular problems will be fixed, just as they are on cars that are now 15 year old, but where viewed as technically complex back in the day.
My speciality is Alfa 156s, which back in the late 90s were viewed as fearsomely complex, with new fangled ECUs, body computers (in the GT....), difficult suspension, the ABS was going to be unfixable in 5 years etc etc..... Now, as a complete amateur, I can have one fully in pieces in the garage, and get it back together again. I can read all of the ECUs with a EUR 50 bit of software and £10 of cables. If the ABS breaks I can get a new ECU and pump off ebay for £20. Gearbox - £50. If the car is doing something that the ECU cannot diagnose, I can stick an oscilloscope on the sensor or actuator and see precisely what it is doing - you can actually see the movement of an injector pintle (or not) by looking at the current draw. All quite easy. Cause of death of most 156s? Rust, accident damage, belt failure, crappy JTS engines blowing up.
So, yes in 15 years, when your Audi gearbox explodes, you'll get an s/h one off a scrappy and whack it in, re-coding it on your phone, following a guide audiowner.com or whatever. Just like you do today.
iSore said:
Thankfully I saw sense after 4 months and fked it off, returning once more to my ageing yet trusty BMW stter with it's air conditioned leather trimmed cocoon and ageing - yet entirely acceptable - level of technology for what a car is actually meant to do.
Is there an official guide as to "what a car is actually meant to do" or do you mean for your particular needs ? ked it off, returning once more to my ageing yet trusty BMW stter with it's air conditioned leather trimmed cocoon and ageing - yet entirely acceptable - level of technology for what a car is actually meant to do.rxe said:
... And I don't buy the "oooh, cars are so complex these days". They are complex now, but won't be viewed as complex or scary in 10 years time. The regular problems will be fixed, just as they are on cars that are now 15 year old, but where viewed as technically complex back in the day ...
Great post. rxe said:
Don't think so.
And I don't buy the "oooh, cars are so complex these days". They are complex now, but won't be viewed as complex or scary in 10 years time. The regular problems will be fixed, just as they are on cars that are now 15 year old, but where viewed as technically complex back in the day.
So, yes in 15 years, when your Audi gearbox explodes, you'll get an s/h one off a scrappy and whack it in, re-coding it on your phone, following a guide audiowner.com or whatever. Just like you do today.
I'm with you on this one, Ebay is the new scrap yard and you can get the parts you need for good prices.And I don't buy the "oooh, cars are so complex these days". They are complex now, but won't be viewed as complex or scary in 10 years time. The regular problems will be fixed, just as they are on cars that are now 15 year old, but where viewed as technically complex back in the day.
So, yes in 15 years, when your Audi gearbox explodes, you'll get an s/h one off a scrappy and whack it in, re-coding it on your phone, following a guide audiowner.com or whatever. Just like you do today.
Todays mechanics in dealer workshops are just fitters. Modern cars are designed this way, something breaks instead of taking it apart they just replace the whole unit.
There's plenty of indie garages that either fix those parts, or/and work with 3rd party specialist to have them refurbished. They have all the modern technology to repair and fix everything. We're brainwashed in todays society to believe that the main dealer is the only place that has the equipment to repair 'high tech' cars, simply not true.
A cars technology is usually way behind most of todays high street computer gear, there's plenty of places that have been repairing/refurbishing Apple macs for example that are years ahead of all cars archaic operating systems, screens etc.
Edited by johnnnnnnyy on Monday 27th March 10:13
Granfondo said:
Mandat said:
Bill said:
This is true, but they still have nothing to show for it. Unless they took photos.
Someone with a loan over three years will have circa 50% equity to move on with. Someone who has spent the same on PCP doesn't. Hence nothing to show for it despite making the same monthly payment.
You are nearly there, but you need to give it some deeper thought.Someone with a loan over three years will have circa 50% equity to move on with. Someone who has spent the same on PCP doesn't. Hence nothing to show for it despite making the same monthly payment.
What happens when the person who bought the car outright, sells it after a period? They will have paid out a sum of money in that time, and will also seeming have nothing to show for it?
t hits the fan, can sell up to release some money, not sure how that works on PCP if you need to get rid as your situation changes). In my view its all the same though. Take two people, one PCP, one cash buyer.
PCP) buys car, pays a deposit and then pays £x each month for 36 months. Hands car back. Its cost him deposit + 36*£x and has nothing to show for it, but got 3 years driving.
Cash) buys car, pays all upfront; £x, drives it for 3 years, sells it on for £y. Its cost him £x - y for 3 years driving and has nothing to show for it, but got 3 years driving.
End result is the same. Person 1 simply paid the depreciation by paying small upfront and incrementally spreading it out. Person 2 paid the depreciation by paying it all in one go and then getting some back 3 years later. Of course whether deposit + 36*£x is greater or less than £x - y is another discussion, but the end result is the same; You've paid some money to use a car for 3 years.
That is assuming they don't keep you on the treadmill though. As others have alluded to, getting you out of your PCP mid-flight onto another and bumping your total borrowing back up, might not work out for some.
I think Ford have done this to my brother. He had a Fiesta and before they got to the end of that, they sold him on another fiesta in a different spec for lower monthlies. But I assume his total amount borrowed has actually gone up.
Sheepshanks said:
That seems common with VW - same happened to us when we wanted a Tiguan. Dealer group, Inchcape had over 100 nearly new ones that were dearer than discounted new - you had to go back to a year old before they were cheaper. They wouldn't move on the used prices either.
The salesman we bought off said some people come in fixated on getting a nearly-new one and don't do the comparision, and it's different sales teams so they don't encourage people to look at new.
Would the dealer be getting bonuses from VW which would more than offset the opportunity cost of having a large number of used?The salesman we bought off said some people come in fixated on getting a nearly-new one and don't do the comparision, and it's different sales teams so they don't encourage people to look at new.
Chicane-UK said:
Literally just sold my car today, which I'd had on PCP. Went into the deal completely ignorant about car financing, and PCP, etc and got a pretty crap deal and have had the privilege of paying about £7,300 to 'rent' a Ford Fiesta ST for about 2 years which I'd have never owned at the end of the term anyway. What's insane is the first deal they tried to offer me when I first went to buy the car was substantially worse than what I ended up taking after some bartering.. I'm sure some people would have just signed the paperwork.
I'll just chalk it up to life experience I suppose, and I highly doubt I'll touch a PCP deal again.
I've gone back onto the route of bangernomics. Unless I'm catastrophically unlucky, I can't see my replacement car is going to cost me £3,500/year in maintenance so I figure I'll be better off overall, even if the car in the garage on a regular basis.
Forgive me if this sounds harsh and please don't think this is aimed solely at you but ref getting legged over on a pcp I don't understand why people go into negotations with car dealers unable to deal with the basics such as "let's start with how much you are going to sell the car for and then we'll discuss terms". Just because it's a finance agreement why can't people see there is still a base asset cost ???? It's not rocket science.I'll just chalk it up to life experience I suppose, and I highly doubt I'll touch a PCP deal again.
I've gone back onto the route of bangernomics. Unless I'm catastrophically unlucky, I can't see my replacement car is going to cost me £3,500/year in maintenance so I figure I'll be better off overall, even if the car in the garage on a regular basis.
Edited by anonymous-user on Sunday 26th March 17:45
Edited by anonymous-user on Monday 27th March 10:35
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