Are the wheels about to fall of car finance?
Discussion
So if I feel that my lease deal was going to beat depreciation (which it has after 18 months), should I have bought the car cash instead so that I don't lose my home and don't have to borrow to finance my kids' xmas?
Bizarre generalisations and obvious lack of critical thinking here. I don't know why though, it is not THAT complicated.
What do I care if the wheels fall off the car finance ? I have a contract with VW FS, they can't charge me more retrospectively.
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
Bizarre generalisations and obvious lack of critical thinking here. I don't know why though, it is not THAT complicated.
What do I care if the wheels fall off the car finance ? I have a contract with VW FS, they can't charge me more retrospectively.
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
DonkeyApple said:
Here are some fun figures.
25% of Britons have no savings.
60% (which includes that 25%) have savings of less than £1,000.
Now, what you next have to consider is that figure is not net wealth but just the amount of cash available. Almost all of those people will have short term debt obligations that far exceed any cash savings levels. At the same time, we also know that such people don't have viable investments. Finally, you also have to bear in mind that the bulk of the remaining 40% who have savings above £1,000 are pensions.
Ergo, the percentage of wage earners who have savings of less than £1,000 is generally considered to be as high as 75%. A rather startling figure. But the real change has been amonst the middle classes, the majority of whom have monthly financial situations that are more aligned with traditional wage earners, not salary earners.
And this is why the Govt has been working hard to unwind the toxic leverage in the housing market and is also forcing an enormous retail lending review at the FCA because the ability of the majority of residents in the U.K. Have significantly less ability to withstand an economic shock today than they had ten years ago when at least the Govt had the power to slam interest rates down and print money to stave off the total capitulation.
So in short, almost no one in the U.K. can actually afford the lifestyle they are living. Those who genuinely can number just a few percent of the population.
http://www.bbc.co.uk/news/business-3162277225% of Britons have no savings.
60% (which includes that 25%) have savings of less than £1,000.
Now, what you next have to consider is that figure is not net wealth but just the amount of cash available. Almost all of those people will have short term debt obligations that far exceed any cash savings levels. At the same time, we also know that such people don't have viable investments. Finally, you also have to bear in mind that the bulk of the remaining 40% who have savings above £1,000 are pensions.
Ergo, the percentage of wage earners who have savings of less than £1,000 is generally considered to be as high as 75%. A rather startling figure. But the real change has been amonst the middle classes, the majority of whom have monthly financial situations that are more aligned with traditional wage earners, not salary earners.
And this is why the Govt has been working hard to unwind the toxic leverage in the housing market and is also forcing an enormous retail lending review at the FCA because the ability of the majority of residents in the U.K. Have significantly less ability to withstand an economic shock today than they had ten years ago when at least the Govt had the power to slam interest rates down and print money to stave off the total capitulation.
So in short, almost no one in the U.K. can actually afford the lifestyle they are living. Those who genuinely can number just a few percent of the population.
Conversely 2 years ago (so now it's marginally higher) 7.4million people owned their UK homes outright mortgage free.
Let's say average house price is £230k. So I'm struggling with the previous statistics somewhat.
nickfrog said:
So if I feel that my lease deal was going to beat depreciation (which it has after 18 months), should I have bought the car cash instead so that I don't lose my home and don't have to borrow to finance my kids' xmas?
Bizarre generalisations and obvious lack of critical thinking here. I don't know why though, it is not THAT complicated.
What do I care if the wheels fall off the car finance ? I have a contract with VW FS, they can't charge me more retrospectively.
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
No. that's an isolated scenario. It's the big picture that is where the core risk lies. Bizarre generalisations and obvious lack of critical thinking here. I don't know why though, it is not THAT complicated.
What do I care if the wheels fall off the car finance ? I have a contract with VW FS, they can't charge me more retrospectively.
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
The purpose of finance is to sell an inflated number of goods (by expanding the client demographic) and to do so at an inflated profit margin (price by monthly).
In its own right this is of no issue but what you and I know, as does anyone with the most basic inkling of how retail finance works is that the majority do not use it to pay less. Besides, even the tiny number who think they are being smart by fitting into the small pricing gaps are obviously still paying over the odds because the pricing structure they are basing their fair value assumption on is inflated in the first instance as a function of making the finance look more appealing.
nickfrog said:
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
This is one of the reasons I prefer leasing to PCP. I'm risk-averse in general, and by leasing it transfers the risk of the current used car bubble to the leasing company. Once I've got the contract in place I'm happy with, the parent company can fanny about managing that the potential return of the depreciation they predicted.I reckon there is a bubble, on the basis I bought a 5 year old Megane R26 at 5 years old for £6.5k, good luck getting a similar quality RS250 or 265 for that price now!
DonkeyApple said:
nickfrog said:
So if I feel that my lease deal was going to beat depreciation (which it has after 18 months), should I have bought the car cash instead so that I don't lose my home and don't have to borrow to finance my kids' xmas?
Bizarre generalisations and obvious lack of critical thinking here. I don't know why though, it is not THAT complicated.
What do I care if the wheels fall off the car finance ? I have a contract with VW FS, they can't charge me more
retrospectively.
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
No. that's an isolated scenario. It's the big picture that is where the core risk lies. Bizarre generalisations and obvious lack of critical thinking here. I don't know why though, it is not THAT complicated.
What do I care if the wheels fall off the car finance ? I have a contract with VW FS, they can't charge me more
retrospectively.
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
The purpose of finance is to sell an inflated number of goods (by expanding the client demographic) and to do so at an
inflated profit margin (price by monthly).
In its own right this is of no issue but what you and I know, as does anyone with the most basic inkling of how retail finance works is that the majority do not use it to pay less. Besides, even the tiny number who think they are being smart by fitting into the small pricing gaps are obviously still paying over the odds because the pricing structure they are basing their fair value assumption on is inflated in the first instance as a function of making the finance look more appealing.
Welshbeef said:
http://www.bbc.co.uk/news/business-31622772
Conversely 2 years ago (so now it's marginally higher) 7.4million people owned their UK homes outright mortgage free.
Let's say average house price is £230k. So I'm struggling with the previous statistics somewhat.
Err, what age do you suspect the average person is who owns their own home mortgage free? Conversely 2 years ago (so now it's marginally higher) 7.4million people owned their UK homes outright mortgage free.
Let's say average house price is £230k. So I'm struggling with the previous statistics somewhat.
And which demographic is the wealthiest and as of last year is the highest earning demographic?
It's the group that is nearly 20% of the population.
But even that group has an income deficit which is why equity release is one of the fastest growing financial instruments in the U.K.
Granfondo said:
You forgot the "opportunity yield".
I don't think anyone still believes that rubbish. Even on PH it is wheeled out so infrequently these days that I think people have finally realised the lunacy of the concept. But debt isn't bad, it's essential. It's just at a certain level it switches from facilitating the creation of wealth into the destruction of it as it rapidly facilitates the movement of money from the masses to the few. Ergo a burgeoning wealth divide, rise of the super rich, the masses needing more and more debt to maintain the status quo and a rise in civil disobedience as prospects and advancement opportunities dwindle.
Luckily, in the U.K. we are nowhere near the stage at which debt consumption is doing any harm. It's all under control and we aren't seeing any of the side effects of excessive debt consumption.
DonkeyApple said:
Welshbeef said:
http://www.bbc.co.uk/news/business-31622772
Conversely 2 years ago (so now it's marginally higher) 7.4million people owned their UK homes outright mortgage free.
Let's say average house price is £230k. So I'm struggling with the previous statistics somewhat.
Err, what age do you suspect the average person is who owns their own home mortgage free? Conversely 2 years ago (so now it's marginally higher) 7.4million people owned their UK homes outright mortgage free.
Let's say average house price is £230k. So I'm struggling with the previous statistics somewhat.
And which demographic is the wealthiest and as of last year is the highest earning demographic?
It's the group that is nearly 20% of the population.
But even that group has an income deficit which is why equity release is one of the fastest growing financial instruments in the U.K.
As for average age? Well starting age ignoring those who get lucky you could be mortgage free by 45yo assuming a 25yr and you never move up the ladder or if you do you don't extend the term.
http://www.thisismoney.co.uk/money/saving/article-...
So there is £271billion in Cash ISAs. The max ignoring Tessa would be £3k a year from about 2000 to 2015 then it went up to 15k a year. So ignoring interest the max pay in per individual would be about £60k on those assumptions. Now £271billion would mean over 4.5million adults have £60k in cash ready to go that's 1/6th of the UK working population or roughly 10% of the total adult population. I like this stat as you cannot restrict it to only the wealthy due to the investment limits.
Then add in Stocks and shares Premium bonds, unit trusts, I find it exceptionally difficult to accept the stats stated earlier about £1k cash savings. Unless of course there is so much unsecured debt it nets out to that level.
Welshbeef said:
Also what is the stats for those who PCP new cars?80% of all purchases so inclusive of the older folk.
As for average age? Well starting age ignoring those who get lucky you could be mortgage free by 45yo assuming a 25yr and you never move up the ladder or if you do you don't extend the term.
http://www.thisismoney.co.uk/money/saving/article-...
So there is £271billion in Cash ISAs. The max ignoring Tessa would be £3k a year from about 2000 to 2015 then it went up to 15k a year. So ignoring interest the max pay in per individual would be about £60k on those assumptions. Now £271billion would mean over 4.5million adults have £60k in cash ready to go that's 1/6th of the UK working population or roughly 10% of the total adult population. I like this stat as you cannot restrict it to only the wealthy due to the investment limits.
Then add in Stocks and shares Premium bonds, unit trusts, I find it exceptionally difficult to accept the stats stated earlier about £1k cash savings. Unless of course there is so much unsecured debt it nets out to that level.
We've had 18 years of ISAs and before that you had the PEP from 1986. The TESSA was a cash plan in addition to the PEP allowance. Plus, you're calc assumes none of the funds invested have increased in value. The idea of promoting ISAs to lower earners is relatively new. As for average age? Well starting age ignoring those who get lucky you could be mortgage free by 45yo assuming a 25yr and you never move up the ladder or if you do you don't extend the term.
http://www.thisismoney.co.uk/money/saving/article-...
So there is £271billion in Cash ISAs. The max ignoring Tessa would be £3k a year from about 2000 to 2015 then it went up to 15k a year. So ignoring interest the max pay in per individual would be about £60k on those assumptions. Now £271billion would mean over 4.5million adults have £60k in cash ready to go that's 1/6th of the UK working population or roughly 10% of the total adult population. I like this stat as you cannot restrict it to only the wealthy due to the investment limits.
Then add in Stocks and shares Premium bonds, unit trusts, I find it exceptionally difficult to accept the stats stated earlier about £1k cash savings. Unless of course there is so much unsecured debt it nets out to that level.
You can add as many funds, stocks, bonds together that you like but they are still collectives that are held by a very small percentage of the population and mostly over 65. But those aren't cash anyway.
None of the earlier figures take debt into account. They are the stats for cash balances not net wealth, which would be negative for the majority of under 65s.
nct001 said:
This times 1000.
I realise you were being sarcastic, but I was responding to a poster who was saying ... you either lose £2 to £4k on repairs over six years or you spend £20-30k in depreciation every three years.To lose that much in three years you probably need to buy a car that costs twice as much in the first place. To buy a car like that when it is three years old and move it on at nine years, is still going to cost you a shed load in depreciation (comparable to a new or nearly-new 3 Series) - it's certainly not depreciation free, bangernomics material. (And to keep anything comparable to a £50k car going reliably and looking good when it's at the bottom of the depreciation curve, you're going to need more like £3k a year, not £500!)
So if you think you're at risk of losing £25k in depreciation from new in three years, you're going to be engaging in some pretty luxurious motoring to start with! Depreciation isn't reserved only for new cars - and every used part that gets replaced while you have the car did its own, separate depreciation to zero. Of course you can, and in many cases should, choose a cheaper option but it's not like the only alternative to a £2k car that never breaks down is a £25k MG6 that will get scrapped when it's three.
Sa Calobra said:
Oh my , OT is a veritable s
t holeThe worlds gone mad
johnnnnnnyy said:
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
Nowadays, we look up the problem on Google, order the required board from Ebay and swap over using a Youtube tutorial
swanny71 said:
That's what you or I might do but most would probably just bin the TV and buy a newer, bigger, 4K curved screen monster (on a credit card).
So your suggesting we are now at the point where nobody can buy anything without credit of some form, in this case a TV on a credit cardUtter rubbish
IrateNinja said:
nickfrog said:
And if the second hand market collapses and it's reflected on lease prices then I'll buy a 2-year old car, like I would have done if new didn't prove cheaper at the time, also creating an opportunity yield in the process.
This is one of the reasons I prefer leasing to PCP. I'm risk-averse in general, and by leasing it transfers the risk of the current used car bubble to the leasing company. Once I've got the contract in place I'm happy with, the parent company can fanny about managing that the potential return of the depreciation they predicted.novus said:
Sa Calobra said:
Oh my , OT is a veritable st holeThe worlds gone mad
t and a ginger. novus said:
swanny71 said:
That's what you or I might do but most would probably just bin the TV and buy a newer, bigger, 4K curved screen monster (on a credit card).
So your suggesting we are now at the point where nobody can buy anything without credit of some form, in this case a TV on a credit cardUtter rubbish
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