Are the wheels about to fall of car finance?

[bagusbagus]

not only the wheels are about to fall off
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.

Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares...

I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.

[Toltec]

Stormfly1985 said:

My partner and I are in our 40's and used to "own" a house - sold it, paid the mortgage off and will rent for the rest of our lives. Why? We don't have kids and why should we lock up our money in an asset that will just go to the state when we die. Renting gives us the flexibility and freedom to move easily, to have a bigger house than we could get a mortgage on and no running costs. Of course there are downsides to renting however there are downsides to getting a mortgage too. I remember when interest rates for mortgages were 17%!

We earn good money between us, have £70k in the bank and enjoy life. We leased a new car (Octavia VRS) last year and consider the cost no differently than someone who spends £80 a week on fags and booze.

If people want to save every penny for their kids, or for "a rainy day", or they are just fking tight, that's up to them. Money is only useful if you exchange it for goods or services. We are going to die penniless but having had a great life full of amazing experiences! You can't take it with you!

I have wondered about taking that course, but we are probably opposite to you in reality, asset rich and income poor, well pretty average anyway. The problem is we are both careful with money, even if we sold up we probably wouldn't/couldn't spend it all, so we're going to build a house instead which will release cash into the economy while still gaining us a useful asset.

[ashleyman]

Not directly PCP related but I'm in the market for an expensive piece of work equipment to the tune of about £5k.

I was planning to pay cash but wanted advice on if the VAT was claimable on the VAT Flat Rate Scheme. I spoke to my accountant who advised me that yes the VAT was claimable so long as the receipt is for more than £2000. They also said to buy it in my personal name on 0% finance or 0% credit card and keep the cash in hand in the business account so I didn't reduce my cash funds and just pay for it monthly over a year by transferring funds from business to personal account to cover the costs.

It means I'm only spending £400 in any one month instead of nearly £5k in one go if I did it over 12 months or £200 over 24 months. I can see how it could be good advise but can't help but think paying it all off in one go is better as its then not an extra monthly bill.

[RBH58]

Gee....the world has been in a "Creative Credit" fueled bubble most of my life and certainly the last 45 years of it. Dodgy debt had been held as "assets" on bank balance sheets for years and a lot of it got transferred to Governments in the 2008 GFC. There are no chairs left when the music stops next time. It's over. It's "global financial system reset" time when GFC2 happens.

When will GFC2 happen? Consider this. Deutsche Bank alone is currently sitting on a derivatives (the stuff that caused GFC1) exposure of 42 trillion euro. It's market cap is about 16 billion euro. It's leveraged over 2,600 times its market cap on "investments" that are basically a confidence trick. If it fails, nobody can bail it out, It's debt will be 14 times Germany's GDP and 5 times Europe's. This will make Lehman Bros. look like a mere blip. And God knows what's hiding on the murky balance sheets of the Chinese banking industry....but I bet it wouldn't stand up to Western GAAP (as dodgy as that is).

So enjoy yourselves now, 'cause basically we're all f#cked.

Edited by RBH58 on Wednesday 29th March 01:56

Edited by RBH58 on Wednesday 29th March 01:58

Edited by RBH58 on Wednesday 29th March 05:35

[novus]

bagusbagus said:

not only the wheels are about to fall off
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.

Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares...

I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.

Impressive story

Good for you , stick it to the man .....

[lord trumpton]

novus said:

bagusbagus said:

not only the wheels are about to fall off
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.

Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares...

I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.

Impressive story

Good for you , stick it to the man .....

I thought that too, mainly because the post is full of smug, self wking dialogue.

Ignore all the crap and there is actually a lot of sense in what he's saying though.

[RBH58]

lord trumpton said:

I thought that too, mainly because the post is full of smug, self wking dialogue.

Ignore all the crap and there is actually a lot of sense in what he's saying though.

Sure...but it's so boring being sensible and you may not live long enough to spend all your loot anyway. Carpe diem.

[DonkeyApple]

mondeoman said:

DonkeyApple said:

The US is in a genuinely awful state at the moment and this is an interesting article and one which contains many synergies with the South East of the UK.

http://www.marketwatch.com/story/how-you-can-still...

Somewhat misleading - the articel makes it clear that after paying for all their expenses, including child care, student debt, 3 holidays a year, clothes, cars, mortgage etc.. they STILL have $7500 left over as well as having donated $18k to charity! Hardly broke, by anyones standards.

It's not saying they are broke though is it? It's highlighting that the lifestyle is leaving infinitely less wealth than you'd expect given the gross incomes. Also the charity stuff is insane in places like NY, it can damage your career prospects if you aren't buying tables at functions and they are all the bloody time.

The purpose of the article is to highlight that the middle classes (defined by income) who used to build investment portfolios and have total security from market fluctuations as well as prudent attitudes to consumption are living more as wage earners than salary earners. A poor person has very little to lose from spending everything they earn but a wealthy person has much to lose.

It is very similar in London. Up until a few years ago I was a partner in a niche lending business where we made bridging loans to to people who were spending their bonuses ahead of earning them. People on £200k+ basics but spending 2-3 times that living la vida loca. And if that wasn't crazy enough the number who were unable to collateralise was amazing.

In my core line of work we are essentially lending quite large sums to people and so we carry out credit checks etc on customers as well as specific suitability questions. We've seen directly, the level of wealth plummet over the last decade. Same post codes, same careers and incomes but we've genuinely gone from the norm of huge property equity, healthy pensions, big portfolios and cash reserves to a norm of very little property equity, often no pension or portfolio and low cash reserves. It's really been quite interesting to watch this massive increase in consumption.

[BigLion]

RBH58 said:

Consider this. Deutsche Bank alone is currently sitting on a derivatives (the stuff that caused GFC1) exposure of 42 trillion euro. It's market cap is about 16 billion euro. It's leveraged over 2,600 times its market cap on "investments" that are basically a confidence trick. If it fails, nobody can bail it out, It's debt will be 14 times Germany's GDP and 5 times Europe's. This will make Lehman Bros. look like a mere blip. And God knows what's hiding on the murky balance sheets of the Chinese banking industry....but I bet it wouldn't stand up to Western GAAP (as dodgy as that is).

So enjoy yourselves now, 'cause basically we're all f#cked.

Edited by RBH58 on Wednesday 29th March 05:35

As soon as I read that paragraph about derivative exposure I knew you were talking out your arse - you obviously don't understand banking so best to keep wearing your tin foil hat and pretending you do!!!

[DonkeyApple]

ashleyman said:

Not directly PCP related but I'm in the market for an expensive piece of work equipment to the tune of about £5k.

I was planning to pay cash but wanted advice on if the VAT was claimable on the VAT Flat Rate Scheme. I spoke to my accountant who advised me that yes the VAT was claimable so long as the receipt is for more than £2000. They also said to buy it in my personal name on 0% finance or 0% credit card and keep the cash in hand in the business account so I didn't reduce my cash funds and just pay for it monthly over a year by transferring funds from business to personal account to cover the costs.

It means I'm only spending £400 in any one month instead of nearly £5k in one go if I did it over 12 months or £200 over 24 months. I can see how it could be good advise but can't help but think paying it all off in one go is better as its then not an extra monthly bill.

This is where finance is a positive thing. It's about investing not consuming. It sounds like your accountant is suggesting that taking £5k out of your company may leave it more exposed to revenue fluctuations? Ie the business isn't awash with excess cash. So spreading the burden of the cost over 12 months is better for the business.

I'm guessing he is still saying that the business is to buy the equipment from you so that it is in the company accounts and being written down etc. And I'm guessing you buying it directly on a zero interest card doesn't change the purchase price?

[RBH58]

BigLion said:

As soon as I read that paragraph about derivative exposure I knew you were talking out your arse - you obviously don't understand banking so best to keep wearing your tin foil hat and pretending you do!!!

So you are denying that this is true? This was pointed out to me by a friend who is an investment banker for a large international bank. It's sounds terrifying but strangely believable. And Deutsche Bank made no effort to conceal it on their 2016 Annual Report BTW. If it's only 25% as bad as "the smoke" would indicate, it's enough to bring on GFC2.

Oh and nobody knows how banking works. That's part of the problem.

Edited by RBH58 on Wednesday 29th March 08:07

Edited by RBH58 on Wednesday 29th March 10:22

[Elysium]

Welshbeef said:

Tonsko said:

So I've just arrived in the PCP market a month or so back. Never had PCP before, always preferred owning my cars via bank loans or savings etc. Preferred PCP over lease though.

2016 Scirocco R - £26K, 7800 miles. £5K deposit, 298(ish) monthly payments over 4 years with a £10K(ish) final settlement. This was at 5.9% APR on 15K miles per year. Am basically waiting a few months (for credit check reasons) and am planning to get a loan (at around 3-4% APR to pay off to reduce monthly payments to ~£49 (which apparent is VW finance's lower limit before they ask for full settlement), then carry on paying a lower interest rate on the loan (think it works out to roughly 240-260pm) saving around £40pm over 4 years.

Now, the finance guys phoned me and said that they will probably phone me up after 2 1/2 years and ask if I want to change my car. So far, so standard it seems.

What does it mean by 'building equity' in your car? Why should I not chop the car in after a couple of years?

The point is you at no time will have paid the car off nor it's replacement.
As long as you know that is the case and it is a costlier way than say a banger /you know the pros and cons. If you don't realise that or somehow the sales guys mislead you then there is an issue.

This is a flawed view. If you want to understand the implications of the loan plug the details in here:

http://www.thecalculatorsite.com/finance/calculato...

If you complete the term and pay the final value, you will have paid around £29k for the car, which includes £3.5k for interest.

The GMFV is usually 80% of the trade in value so at that point it will be worth around £12.5k. So the cost to own will be £ £16,500. That is £4,125 per year and if you bought cash you could have saved £875 a year.

The big point is that you should ALWAYS buy the car. Either at the end of the term or early as the settlement value will usually be more than it is worth. Handing back the car after 4 years or early is more expensive for the buyer. The earlier you pay of the loan, the more interest you save.

I generally take a 4 year PCP with as big a deposit as I can get away with and pay off in full after 2-3 years. I always own the car at that point.

The idea that PCP leads to you not buying the car is a myth. You should never ever look at it that way.

[DonkeyApple]

RDMcG said:

Very nasty US news today , and there have been many recent signs....sounds like the US housing crash again, and that sort of problem spreads across the globe in terms of recession:

https://www.bloomberg.com/news/articles/2017-03-28...

It's hard to see the packaged debt of US retail car purchases being of the same systemic risk to the system as the US housing market was.

The US consumer is a massive debt junky. Now rates are on the up millions of consumers are going to fry. They will have their cars, furniture and homes taken away. So their debt costs are spiking to reflect this risk growth and the risk of the existing books of crap debt to crap people is obviously spiking. But, what's the actual size of this arse end car debt and more importantly are the holders of it a counterparty risk to the issuer as a result?

What's really important to note is that the majority of US citizens over consume via debt and as rates continue to rise they will be crushed and as they lose their spending power the businesses that exist as a result of the excess spending power will fail. If rates rise quickly enough then an awful lot of US cities will go the way of Detroit.

[Buster73]

bagusbagus said:

not only the wheels are about to fall off
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.

Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares...

I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.

Coffins don't have pockets .

[Tonsko]

Elysium said:

This is a flawed view. If you want to understand the implications of the loan plug the details in here:

http://www.thecalculatorsite.com/finance/calculato...

If you complete the term and pay the final value, you will have paid around £29k for the car, which includes £3.5k for interest.

The GMFV is usually 80% of the trade in value so at that point it will be worth around £12.5k. So the cost to own will be £ £16,500. That is £4,125 per year and if you bought cash you could have saved £875 a year.

The big point is that you should ALWAYS buy the car. Either at the end of the term or early as the settlement value will usually be more than it is worth. Handing back the car after 4 years or early is more expensive for the buyer. The earlier you pay of the loan, the more interest you save.

I generally take a 4 year PCP with as big a deposit as I can get away with and pay off in full after 2-3 years. I always own the car at that point.

The idea that PCP leads to you not buying the car is a myth. You should never ever look at it that way.

Yeh I think I arrived at a figure of around 29K total repayments when I was looking at it.I suppose I was treating that (should no overpayments be made) as the cost of keeping liquidity, as I felt uncomfortable at raiding my savings to such an extent.

[Bill]

daemon said:

Bill said:

Protesteth much?!?

Obviously it isn't the only way, but you'll forgive me being concerned that a significant proportion of mine and my kids' generation will approach retirement without a pot to piss in and expect those of us that do to pick up the bill.

Why, if you were retired by that stage anyway would you be expected to pay for someone elses upkeep?

Lots of hand wringing on this thread...

Er, really? If I'm retired by then then any effects will be reduced for me personally, but there's still the knock on to my kids and society as a while.

Anyway, why are you so bothered? You're​ using PCP sensibly in which case we're not talking about you, no?

Or not...

[ashleyman]

DonkeyApple said:

ashleyman said:

Not directly PCP related but I'm in the market for an expensive piece of work equipment to the tune of about £5k.

I was planning to pay cash but wanted advice on if the VAT was claimable on the VAT Flat Rate Scheme. I spoke to my accountant who advised me that yes the VAT was claimable so long as the receipt is for more than £2000. They also said to buy it in my personal name on 0% finance or 0% credit card and keep the cash in hand in the business account so I didn't reduce my cash funds and just pay for it monthly over a year by transferring funds from business to personal account to cover the costs.

It means I'm only spending £400 in any one month instead of nearly £5k in one go if I did it over 12 months or £200 over 24 months. I can see how it could be good advise but can't help but think paying it all off in one go is better as its then not an extra monthly bill.

This is where finance is a positive thing. It's about investing not consuming. It sounds like your accountant is suggesting that taking £5k out of your company may leave it more exposed to revenue fluctuations? Ie the business isn't awash with excess cash. So spreading the burden of the cost over 12 months is better for the business.

I'm guessing he is still saying that the business is to buy the equipment from you so that it is in the company accounts and being written down etc. And I'm guessing you buying it directly on a zero interest card doesn't change the purchase price?

Exactly. Although £5k isn't a lot of money when it comes to the business I guess he's trying to help us keep cash in hand instead of being down on funds.

It's 0% and the purchase price doesn't change at all if it's done on finance scheme. Not sure about credit cards as I don't have one not even a personal one.

[J4CKO]

bagusbagus said:

not only the wheels are about to fall off
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.

Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares...

I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.

In part I agree, but £500 reliable car ? living the dream there mate, do you eat value beans from the can by the light of a candle as well, do you shop in the charity shop sales ?

You can live frugally and efficiently but with half decent stuff and not feel the need to stick it to the rest of humanity.

[DonkeyApple]

ashleyman said:

Exactly. Although £5k isn't a lot of money when it comes to the business I guess he's trying to help us keep cash in hand instead of being down on funds.

It's 0% and the purchase price doesn't change at all if it's done on finance scheme. Not sure about credit cards as I don't have one not even a personal one.

What you'd want to check is whether you can buy it for less without their 'house' 0% scheme as obviously the real cost of funding is being hidden from you.

[ashleyman]

DonkeyApple said:

ashleyman said:

Exactly. Although £5k isn't a lot of money when it comes to the business I guess he's trying to help us keep cash in hand instead of being down on funds.

It's 0% and the purchase price doesn't change at all if it's done on finance scheme. Not sure about credit cards as I don't have one not even a personal one.

Luckily the place that offers the 0% Finance is selling it for the same price as everywhere else. I could get it on Amazon cheaper but I have a feeling it would be Grey goods which I don't want.

Just thought it was interesting how an accountant was pushing finance when most in this thread seems to think it's a bad thing.

What you'd want to check is whether you can buy it for less without their 'house' 0% scheme as obviously the real cost of funding is being hidden from you.