Are the wheels about to fall of car finance?

[Carl_Manchester]

ging84 said:

Even if car finance debt was a big bubble ready to 1 day burst, does the current crisis burst it, or does all the economic stimulus and interest rate cuts give them the cheap money they need to shore everything up?

Unemployment is the problem.

[ging84]

Carl_Manchester said:

Unemployment is the problem.

But is it?
I mean sure if you are in the business of lending money many people not being able to pay is not good, but these are secured loans, they can repo the cars. The question is will these repo cars need to be sold quickly crashing thier values causing a downwards spiral, or can they hold them and get most of their money back over a longer period.

[Deep Thought]

Leon R said:

If you go back to the beginning of this thread you will see it started 3 years ago and apparently it wasn't looking good then.

No, the anti-PCPers were rubbing their hands three years ago, hoping the PCPers would get their comeuppance after the FCA investigation.

Damp squib as many (including myself) predicted, nothing much changed.

Different issue today, but again the car companies are already planning their bounce back with exceptional offers planned.

[Deep Thought]

ging84 said:

Even if car finance debt was a big bubble ready to 1 day burst, does the current crisis burst it, or does all the economic stimulus and interest rate cuts give them the cheap money they need to shore everything up?

It'll not burst. Deflate slightly short term, but not burst.

[Deep Thought]

Justin Case said:

I'm not sure if the wheels have fallen off car finance yet, but they have definitely fallen off the PCP Payment Holiday thread

Have you any recent holiday pictures to prove that?

[Deep Thought]

ging84 said:

Carl_Manchester said:

Unemployment is the problem.

But is it?
I mean sure if you are in the business of lending money many people not being able to pay is not good, but these are secured loans, they can repo the cars. The question is will these repo cars need to be sold quickly crashing thier values causing a downwards spiral, or can they hold them and get most of their money back over a longer period.

Whos repo'ing cars?

Probably lots more VTs but the finance companies need to find ways to resist that - with the likes of payment holidays, etc. A VT or having to repo is bad news for the finance company.

Back in 2009 ish, there was an exponential escalation in VTs and handbacks at the end of terms but the car companies had to find ways to absorb that and recover from it, which they did.

[Butter Face]

Carl_Manchester said:

Time to buckle up the belts on this thread as the answer to the OP is now a big ‘yes’.

And all it took was a worldwide pandemic. Mass unemployment, closure of hundreds of businesses, the almost collapse of many financial systems and complete lockdown of half the worlds population.

Those wheels were deffo ready to fall off eh!

And even after all that, it’ll keep on rolling after this is all over.

[Powerfully Built PSC Director - Outside IR35]

Carl_Manchester said:

Time to buckle up the belts on this thread as the answer to the OP is now a big ‘yes’.

Who’s going to post up their holiday pics first?

[Powerfully Built PSC Director - Outside IR35]

Deep Thought said:

Have you any recent holiday pictures to prove that?

Damn beat me to it lol 😂

[Bob-2146]

Carl_Manchester said:

Time to buckle up the belts on this thread as the answer to the OP is now a big ‘yes’.

Definitely, the whole car finance house of cards is coming down soon.

Lot of people evidently still in denial about it all though... here are the PCPers currently, there’s Brooking and Daemon in the back there:

[Wooda80]

Since this thread has been bumped it might be a good opportunity to ask what "wheels falling off car finance" actually means and then we can look for evidence of it actually happening?

Does it mean lots of people having their cars repossessed because they can no longer afford the payments?

Does it mean finance companies going bankrupt because of the amount of bad debt?

Does it mean the end of 'cheap' deals with big deposit contributions and / or low monthly payments and / or subsidised interest rates?

Or something else?

[Fckitdriveon]

Too early to say as it stands.

Many business / individuals are bouncing off the government safety nets and payment holidays ....give it 3-4 months and it ll be interesting to see that’s for sure.

[Deep Thought]

Bob-2146 said:

Definitely, the whole car finance house of cards is coming down soon.

Lot of people evidently still in denial about it all though... here are the PCPers currently, there’s Brooking and Daemon in the back there:

Why dont you post some pics of your pretend car to inspire us to be as great as you?

[Wooda80]

Holiday snaps seem to be a recurring theme, nice to see Bob joining in - which one is you?

People only go on fancy foreign holidays to impress the neighbours you know. Booked in January on a credit card, gullible people lured in by glitzy adverts around Christmas time.

And have you seen the cost? For the price of some of those you could buy a caravan and have free holiday forever. Maldives, Mediterranean etc have got nothing on Rhyl and Frinton if you know the right places to go.

[Deep Thought]

Wooda80 said:

Since this thread has been bumped it might be a good opportunity to ask what "wheels falling off car finance" actually means and then we can look for evidence of it actually happening?

Does it mean lots of people having their cars repossessed because they can no longer afford the payments?

Does it mean finance companies going bankrupt because of the amount of bad debt?

Does it mean the end of 'cheap' deals with big deposit contributions and / or low monthly payments and / or subsidised interest rates?

Or something else?

Like - when the thread was first started three years ago, and like many threads before it - the wheels wont fall off car finance because finance is used to sell cars. Car manufacturers will use whatever tools they have at their disposal to continue selling cars.

With regards to your three scenarios

- No, though many people may chose to VT their cars or return them at the end of the term instead of trade them in.

- No, because the manufacturers will prop up their finance divisions

- No, because they need to continue selling cars. They may vary the type of deal but they will still used heavily incentivised finance deals to sell new cars.

[lord trumpton]

I actually think cheap finance and cheaper more plentiful pcp deals will be a feature coming soon

People will just move down the scale to leasing and settle for non German brands without the white paint and badass alloys

[djc206]

lord trumpton said:

I actually think cheap finance and cheaper more plentiful pcp deals will be a feature coming soon

People will just move down the scale to leasing and settle for non German brands without the white paint and badass alloys

Given current sales figures I think you’re right. Manufacturers need to shift metal and money is practically free right now.

Leasing seems to be gradually taking over from PCP anyway. I’m sure the Germans will still want to sell cars and make them dirt cheap to finance like they did after the last financial crisis.

[Deep Thought]

lord trumpton said:

I actually think cheap finance and cheaper more plentiful pcp deals will be a feature coming soon

People will just move down the scale to leasing and settle for non German brands without the white paint and badass alloys

I think the german brands will do their damnedest to not lose market share.

I'm expecting some very enticing incentives...

[Sa Calobra]

They may offer enticing deals but people are going to be very cautious until they personally feel like an effective vaccine is out there en masse.

[valiant]

Whilst unemployment will rise, it is fair to point out that there will still be plenty people in jobs and pretty secure ones at that. People will still need cars and will need financing for them and will have no problem meeting those commitments.

Yes, the market will contract but collapse? Not a chance.