Are the wheels about to fall of car finance?
Discussion
johnnnnnnyy said:
Thats the game of chess we all play in the second hand market, risk buying a used year car enjoy another 5/7 years from it with a potential bills of £2000 - £4000 along the way with a few days faffing, or change your car when the warranty runs out every 3 years at a cost of £20,000 - £30,000 each time (if looking at more expensive metal) suddenly the used car doesn't look so expensive to run, cos changing twice in that same period could be as much as £60,000! (yes worst extreme). Same story adding up those big lease payments over 6 years.
You're stepping outside the parameters we were discussing though - if you can PCP / PCH a car for £200-£300 a month, then its not necessarily that much more expensive than running its older counterpart. The example i used was a new GolF R at maybe £250 a month versus running say a 10 year old R32 for three years, having financed it with a £10K loan. Edited by johnnnnnnyy on Monday 27th March 13:40
Clearly running say, a 2007 AM Vantage is going to work out a lot cheaper than suffering the depreciation on a new one.
Audemars said:
Most people can not negotiate a decent mobile phone deal. How do you expect them to negotiate one for a big ticket item such as a car.
Despite all the leasing/PCP going on, used car prices across the board are about 50% overpriced.
There is definitely a bubble.
50% Overpriced?? So you're saying this Galaxy for example 2014 done 63k should be a smidge over £5500? http://www.autotrader.co.uk/classified/advert/2017...Despite all the leasing/PCP going on, used car prices across the board are about 50% overpriced.
There is definitely a bubble.
I don't think so somehow..
Leon R said:
I don't really understand why people care if a car is financed by someone who isn't them. If it goes wrong for them it isn't going to hurt you.
It's more of an philosophical/psychology interest to me. You could easily say I don't understand why you care about some people caring about if a car is financed by someone!? Let's face it we all think we are 'right' or doing things the best way, if you lease etc then in this thread you are going to potentially more defensive, just like some that have bought outright are possibly then seen as somewhat smug/condescending, then some of those are labelled jealous of those in newer financed cars etc etc etc and it all goes round and can become a thread of "I'm right, you're wrong" often drifting into personal insults/upset.
If you sit back and listen to the evidence of people buying new/nearly new cars, finance is sold to you, therefore it certainly is not at a detriment to the dealer/manufacturer, so it's a way of them making an expensive decision for you that bit easier to go for, it's also a good way to continue contact thereafter and sell again in a set time period. It's a marketing ploy/sales technique to encourage more take up and more repeat business and it's working. Good/bad? I'm not sure, good for lots I'd imagine, bad for a few, but then motoring costs quite a lot even at the bare minimum of bangernomics with a very competent hands on owner, so over years it's expensive for all just to varying degrees.
Audemars said:
Most people can not negotiate a decent mobile phone deal. How do you expect them to negotiate one for a big ticket item such as a car.
Most people are paying for a full-price Sky package, despite an almost fool-proof and 100% risk free way of getting a huge reduction (50-60%) for the cost of 20 minutes on the phone to them asking to cancel.On the flipside, presumably business models factor in that a certain percentage will be content with whatever they're initially offered. If everyone pushed for the best deal/asked to cancel Sky etc, those deals would become a lot less beneficial to the customer.
ukaskew said:
I've bought all but one of my cars with cash and it's becoming increasingly like jumping through flaming hoops to do so at a main dealership.
My last one (£7k nearly new) was painful. Think I spent an hour once I'd already said I'd buy the car and agreed a price having to listen to finance deals (all of which got a blunt no from me). It then seemed like it was genuinely an issue for them to accept that much money in one hit.
Because that £7K car that you bought probably made them £100 net profit. They make their money these days on the finance, tyre insurance, servicing packs, etc.My last one (£7k nearly new) was painful. Think I spent an hour once I'd already said I'd buy the car and agreed a price having to listen to finance deals (all of which got a blunt no from me). It then seemed like it was genuinely an issue for them to accept that much money in one hit.
Your £7K cash purchase to them was probably verging on not worth the effort.
Sheepshanks said:
I didn't know they were that low - can you point me towards one, please? We've got a mk6 in the family that was £13K which seemed amazing at the time (2011). Match model was nudging £20K.
Heres your starter for 10. New golf £14,900. I'd imagine check around the brokers and you'll get someone who'll beat thathttps://broadspeed.com/new_cars/Volkswagen/Golf/Ch...
daemon said:
Because that £7K car that you bought probably made them £100 net profit. They make their money these days on the finance, tyre insurance, servicing packs, etc.
Your £7K cash purchase to them was probably verging on not worth the effort.
Which is probably why, on a £7250 sticker price, the 'best deal' they could offer me when I initially sat down and after they'd popped off to 'see the manager' was over £8k (seriously) with a completely straight face. It included various protection packages, and yes, tyre insurance (which I didn't even know existed).Your £7K cash purchase to them was probably verging on not worth the effort.
Fastchas said:
I think the thing to bear in mind would be where would you be if you lost your job/income. With a PCP you'd have to hand it back, and luckily you might not be in debt.
If you had a loan, you would own the car. You could sell it to cover the finance and more than likely be able to buy a cheap used car to get back on the road.
Your image would suffer though (but only in your mind).
Why would you have to hand the car back? Are you assuming people who PCP / lease cars have no savings?If you had a loan, you would own the car. You could sell it to cover the finance and more than likely be able to buy a cheap used car to get back on the road.
Your image would suffer though (but only in your mind).
If someone is made redundant chances are they will be in another job in a couple of months. Handing a car back or immediately selling a car would be a daft knee jerk reaction.
daemon said:
If someone is made redundant chances are they will be in another job in a couple of months. Handing a car back or immediately selling a car would be a daft knee jerk reaction.
But if they were daft enough to fall into the lease/pcp trap in the first place, they're probably daft enough to do just that too. ;-)
daemon said:
Why would you have to hand the car back? Are you assuming people who PCP / lease cars have no savings?
If someone is made redundant chances are they will be in another job in a couple of months. Handing a car back or immediately selling a car would be a daft knee jerk reaction.
4941cc told us that they had no savings to cover the shortfall and you agreed with him on page1.If someone is made redundant chances are they will be in another job in a couple of months. Handing a car back or immediately selling a car would be a daft knee jerk reaction.
I've just started a 2 year PCH deal for a BMW. It took me a while to get my head around this option to be honest. Previously I'd only ever bought second hand and always paid cash (I don't like paying interest and I don't like depreciation).
I genuinely don't see how PCH is much worse than buying a brand new car once you factor depreciation in. It's still not as good a deal as buying a good second hand car and running it into the ground over 10 years but I'll only live once and having reached 35 and mostly got my mortgage paid off I thought why not.
I genuinely don't see how PCH is much worse than buying a brand new car once you factor depreciation in. It's still not as good a deal as buying a good second hand car and running it into the ground over 10 years but I'll only live once and having reached 35 and mostly got my mortgage paid off I thought why not.
93DW said:
50% Overpriced?? So you're saying this Galaxy for example 2014 done 63k should be a smidge over £5500? http://www.autotrader.co.uk/classified/advert/2017...
I don't think so somehow..
Wouldn't that be 100% over priced??I don't think so somehow..
ie. £5500 + 100% = £11,000
50% overpriced would mean he thinks it should be about £7300 by my maths
gizlaroc said:
I have been one of the biggest advocates of financing cars, and still am, however, the PCP deals are bordering on a scam and mis selling imho, especially on used cars where the APR is sky high.
I just borrowed £30k from Hitachi Capital Finance for 2.89% at £537 a month.
BMW wanted me to borrow from them at only £527 a month.
He said that ''We Guarantee your car will be worth £13000 at the end of the term."
I kept saying "No, you guarantee that if I want to keep my car at the end of the term I will have to give you an additional £13,000 for the privilege."
Considering this guy was selling finance it was scary the fact he simply didn't get what I was saying.
Currently people are paying the equivalent in extra interest to the balloon at the end, and that is why I think car finance will be the new PPI, it is bordering on mis selling.
It's not bordering on, it has very clearly been manifestly miss sold for decades. If the Govt wishes to inject further M0 into the hands of fast spenders then once the effects of PPI fall sufficiently then tapping the overseas finance arms of car manufacturers and white goods vendors is the next step. I just borrowed £30k from Hitachi Capital Finance for 2.89% at £537 a month.
BMW wanted me to borrow from them at only £527 a month.
He said that ''We Guarantee your car will be worth £13000 at the end of the term."
I kept saying "No, you guarantee that if I want to keep my car at the end of the term I will have to give you an additional £13,000 for the privilege."
Considering this guy was selling finance it was scary the fact he simply didn't get what I was saying.
Currently people are paying the equivalent in extra interest to the balloon at the end, and that is why I think car finance will be the new PPI, it is bordering on mis selling.
fivepointnine said:
Used cars in the UK are among the cheapest in the world. Take a look at the used car market in the US.
Doesn't mean they are fair value though. The used market is a rigged market as manufacturers use the debt contracts to assist in managing supply, thus holding values artificially above where a true market would price them. The funding of purchases should be centralised away from manufacturers and to professional finance entities who are more remote from the vendors and offer a range of deals from multiple suppliers.
If car debt was sold in a genuinely competitive environment, dislocated from control by the manufacturer you would see the cost of debt fall strongly and the price of used cars also fall.
Tied finance arms are a scam to inflate profits at to complete expense of the consumer.
CYMR0 said:
My numbers *are* off but not by that much. £21k/72 months (not 60 as I used) = £291/month or £10,500 for a three-year lease. So that is more like £238 per month on a 9+35 - not enough for an E-Class but it does get you an Audi A4, Passat or CC, 318i, Volvo S60, etc., and within spitting distance of an Audi A6. That even assumes that fuel, tax and insurance (as opposed to 'just' depreciation and repairs) will be the same between different cars. You could probably make an argument for another £30 a month on fuel and tax alone between a new E-Class or XF vs. an older XJ.
Get rid of the Jag after five years (versus six) and £3k of bills and the cost is comparable to leasing an E-Class. Keep it nine years with no major problems and you're comfortably ahead.
I spent months doing all this number crunching and looking at lease deals, I like big luxury cars and have just bought one outright. While those lease deal numbers you quoted look attractive you get a new car in two classes lower. Dig deeper, these fantastic quoted lease numbers are for base cars, start adding the options for the spec you'd like and those monthly figures quickly rise.Get rid of the Jag after five years (versus six) and £3k of bills and the cost is comparable to leasing an E-Class. Keep it nine years with no major problems and you're comfortably ahead.
Edited by CYMR0 on Monday 27th March 14:06
Edited by CYMR0 on Monday 27th March 14:10
They maybe a comparison of numbers like for like, but not a car like for like, including spec.
As I've found out, there's still a case for buying savvy and why the dealers try and sway you away from this. I bought my big German luxury car full spec after it did a big chunk of it depreciation (almost 50%!) when it was 11 months old, the lease figures would have been more than double what we're talking about if I got a new one and why I'm happy to take a risk something will go wrong in a few years time and when out of warranty get my indie to repair it, as I have done in the past.
I want to sit in a car that I really want, not one thats dictated by numbers just because its new + its cheaper for me in the long run and I actually own it.
Edited by johnnnnnnyy on Monday 27th March 18:18
People have become accustomed to life in debt. It's just a number, meaningless to them. I've said this countless times on here people of the previous generation said don't buy on the never ever or live life on 'tick. Never a bigger or a borrower be.
Yet fast forward we've learnt nothing. Nothing from the 2008 crash. Afterall it was the fault of the bankers not the people who took out loans and lived way beyond their means..
In my area people are offering 20-50k over asking prices for houses. It's just a grim suburb of Manchester.
Soon there'll be a crash again. Yet.....
It'll be blamed on Brexit. Not the people.
Yet fast forward we've learnt nothing. Nothing from the 2008 crash. Afterall it was the fault of the bankers not the people who took out loans and lived way beyond their means..
In my area people are offering 20-50k over asking prices for houses. It's just a grim suburb of Manchester.
Soon there'll be a crash again. Yet.....
It'll be blamed on Brexit. Not the people.
Bought a pre reg 911 in 2010 , sold it in 2014 and I lost £13 k in depreciation.
I bought it knowing that I'd have a bit of fun and when I came to sell it I'd lose a few bob and I was quite happy with that in mind when I bought it.
£13 k in four years is not an insubstantial sum of money , I can't remember the exact figures but if I'd done a lease deal on the same car it would have cost me over £40 k over the three years
No brainier if you can afford it.
I bought it knowing that I'd have a bit of fun and when I came to sell it I'd lose a few bob and I was quite happy with that in mind when I bought it.
£13 k in four years is not an insubstantial sum of money , I can't remember the exact figures but if I'd done a lease deal on the same car it would have cost me over £40 k over the three years
No brainier if you can afford it.
Sa Calobra said:
People have become accustomed to life in debt. It's just a number, meaningless to them. I've said this countless times on here people of the previous generation said don't buy on the never ever or live life on 'tick. Never a bigger or a borrower be.
Yet fast forward we've learnt nothing. Nothing from the 2008 crash. Afterall it was the fault of the bankers not the people who took out loans and lived way beyond their means..
In my area people are offering 20-50k over asking prices for houses. It's just a grim suburb of Manchester.
Soon there'll be a crash again. Yet.....
It'll be blamed on Brexit. Not the people.
Rule 1 of governance: Always blame the Jews. Yet fast forward we've learnt nothing. Nothing from the 2008 crash. Afterall it was the fault of the bankers not the people who took out loans and lived way beyond their means..
In my area people are offering 20-50k over asking prices for houses. It's just a grim suburb of Manchester.
Soon there'll be a crash again. Yet.....
It'll be blamed on Brexit. Not the people.
iSore said:
Hmmm, not so sure. 8 speed ZF boxes need to be decoded using software with the donor car running before removal. If not, they cannot be coded to the recipient car and are therefore scrap. Given that the increasing majority of BMW's, Audis etc are autos that's going to be a biggie.
I started off on Alfasuds, 116 Giuliettas etc nearly 100 years ago. They were considered complex but only compared to the knife and fork engineering on a Mark 2 Escort that my Mum could fix. It's not about the ability to fix stuff, it's 'can I be arsed?' 9 year old 520d worth £35600 where the timing chain has left the building and a £3000 bill to fix it? It's scrap. Could be fixed, but simply not worth it.
So your car that has died of chain failure will yield a gearbox to someone who needs one. And, someone is going to break that coding quite quickly when real money is at stake. No one is bothering now because the cars are under warranty and no one cares. If loads start being scrapped then it will happen. I started off on Alfasuds, 116 Giuliettas etc nearly 100 years ago. They were considered complex but only compared to the knife and fork engineering on a Mark 2 Escort that my Mum could fix. It's not about the ability to fix stuff, it's 'can I be arsed?' 9 year old 520d worth £35600 where the timing chain has left the building and a £3000 bill to fix it? It's scrap. Could be fixed, but simply not worth it.
Granfondo said:
daemon said:
Why would you have to hand the car back? Are you assuming people who PCP / lease cars have no savings?
If someone is made redundant chances are they will be in another job in a couple of months. Handing a car back or immediately selling a car would be a daft knee jerk reaction.
4941cc told us that they had no savings to cover the shortfall and you agreed with him on page1.If someone is made redundant chances are they will be in another job in a couple of months. Handing a car back or immediately selling a car would be a daft knee jerk reaction.
On that note - can i draw a line in the sand here? You ALWAYS snipe at me on these threads and end up derailing them. Can you just ignore me, as i have been doing with you so that the rest of us can continue having an interesting discussion.
Thanks and Regards.
Edited by daemon on Monday 27th March 19:53
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