Are the wheels about to fall of car finance?
Discussion
Harris_I said:
You might want to read up on tulip mania.
...or more recently the dot-com boom. People were paying insane prices for essentially worthless stocks simply because if everybody's paying a ludicrous price today, then other people will surely pay an even more ludicrous price tomorrow, right? You can't lose! Except of course at some point you run out of greater fools, sentiment turns and the nineties s
theap you paid ten grand for becomes just a nineties stheap again. Roger Irrelevant said:
Harris_I said:
You might want to read up on tulip mania.
...or more recently the dot-com boom. People were paying insane prices for essentially worthless stocks simply because if everybody's paying a ludicrous price today, then other people will surely pay an even more ludicrous price tomorrow, right? You can't lose! Except of course at some point you run out of greater fools, sentiment turns and the nineties stheap you paid ten grand for becomes just a nineties stheap again. If people accept this and still desire them for a nostalgic hit I get it. The point at which however people start to allow the nostalgia to gloss over and in some cases rewrite the quality of the car things get dangerous. When people then enter the market who don't even have the nostalgic desire for an item they just want what others do things looks very wobbly.
HedgeyGedgey said:
I'm gonna buy a Vauxhall nova gte and store it away, or a Cavalier Turbo and do the same. I can guarantee the values will increase significantly soon
Having owned both of those cars when they were current I'd be surprised if any half decent ones were left by now as they seemed to decompose from new quite quickly CS Garth said:
Roger Irrelevant said:
Harris_I said:
You might want to read up on tulip mania.
...or more recently the dot-com boom. People were paying insane prices for essentially worthless stocks simply because if everybody's paying a ludicrous price today, then other people will surely pay an even more ludicrous price tomorrow, right? You can't lose! Except of course at some point you run out of greater fools, sentiment turns and the nineties stheap you paid ten grand for becomes just a nineties stheap again. If people accept this and still desire them for a nostalgic hit I get it. The point at which however people start to allow the nostalgia to gloss over and in some cases rewrite the quality of the car things get dangerous. When people then enter the market who don't even have the nostalgic desire for an item they just want what others do things looks very wobbly.
s m said:
CS Garth said:
Roger Irrelevant said:
Harris_I said:
You might want to read up on tulip mania.
...or more recently the dot-com boom. People were paying insane prices for essentially worthless stocks simply because if everybody's paying a ludicrous price today, then other people will surely pay an even more ludicrous price tomorrow, right? You can't lose! Except of course at some point you run out of greater fools, sentiment turns and the nineties stheap you paid ten grand for becomes just a nineties stheap again. If people accept this and still desire them for a nostalgic hit I get it. The point at which however people start to allow the nostalgia to gloss over and in some cases rewrite the quality of the car things get dangerous. When people then enter the market who don't even have the nostalgic desire for an item they just want what others do things looks very wobbly.
Oscar had it spot on, to misquote somewhat people know the price of everything and the value of nothing
Cold said:
A good article. The UK is very much US Lite when it comes to consumption. We are definitely consuming in the same way but a much lesser form of it.
For the UK on its own I don't see car debt as a short term risk. The way the debt is structured, the size of it and who holds the end risk all makes it look pretty manageable and unlikely to trip over into other areas.
The two concerns are firstly the long term risk of supporting a system which is very clearly making people poorer and less able to look after themselves at a time when the State has too many costs already. And secondly, how manufacturers might cope with a huge change in demand in the face of rising rates. But the latter is arguably not Britains problem.
Roger Irrelevant said:
...or more recently the dot-com boom. People were paying insane prices for essentially worthless stocks simply because if everybody's paying a ludicrous price today, then other people will surely pay an even more ludicrous price tomorrow, right? You can't lose! Except of course at some point you run out of greater fools, sentiment turns and the nineties stheap you paid ten grand for becomes just a nineties stheap again.
Well I was right about the 205 gti's, I was right about series 1 rs turbos soaring in value, I was right about Mitsubishi Evo tommi going up (a few recently exchanged hands for £40k+) so why should I be wrong. I'm holding my words here that those cars are going to go soar in valuetheap you paid ten grand for becomes just a nineties stheap again. HedgeyGedgey said:
Well I was right about the 205 gti's, I was right about series 1 rs turbos soaring in value, I was right about Mitsubishi Evo tommi going up (a few recently exchanged hands for £40k+) so why should I be wrong. I'm holding my words here that those cars are going to go soar in value
With that much certainty you should borrow as much as you can and buy as many as you can. 
HedgeyGedgey said:
Well I was right about the 205 gti's, I was right about series 1 rs turbos soaring in value, I was right about Mitsubishi Evo tommi going up (a few recently exchanged hands for £40k+) so why should I be wrong. I'm holding my words here that those cars are going to go soar in value
You're what, 19 now? So for those "predictions" to have been meaningful, you'd need to have made them say, 10+ years ago? mk1 RS Turbos have been heading steadily north for at least that time)That would have made you 9 when you started making predictions about car values?
I genuinely feel blessed to be in the presence of someone so great and yet so young.
Edited by daemon on Monday 3rd April 09:45
LeoSayer said:
HedgeyGedgey said:
Well I was right about the 205 gti's, I was right about series 1 rs turbos soaring in value, I was right about Mitsubishi Evo tommi going up (a few recently exchanged hands for £40k+) so why should I be wrong. I'm holding my words here that those cars are going to go soar in value
With that much certainty you should borrow as much as you can and buy as many as you can. If he can widen his predictions to stocks and shares we could all be on to a winner here.....
What they're saying, HedgeyGedgey, is hang around for a few economic cycles like us old farts. Hell, make it to at least your first one! 205 GTis are special little things as are the Evo VI Makinen, but the time will come when they too will flatten off and then drop. Calibra turbos and Nova GTEs? Intrinsic worth = not far off the square root of foxtrot alpha.
Harris_I said:
What they're saying, HedgeyGedgey, is hang around for a few economic cycles like us old farts. Hell, make it to at least your first one! 205 GTis are special little things as are the Evo VI Makinen, but the time will come when they too will flatten off and then drop. Calibra turbos and Nova GTEs? Intrinsic worth = not far off the square root of foxtrot alpha.
+1The 205GTI is widely accepted as being "the best of" of its time. People who maybe never even owned one but who want to buy a "classic" know that and will be happy to part their hard earned.
Same with pretty much any RS.
Or the more "special" editions of Subaru / Mitsubishis.
Nova GTE that was an "also ran" at the time? Not so much....
Rarity value might help the value creep up - as will one thats ultra low miles / full history, but its by no means a certainty that they will surge in value.
And predicting values will go up of almost dead certs like RS's in an already rising market, doesnt make you the Warren Buffet of classic car values.
Edited by daemon on Monday 3rd April 10:23
Cold said:
Had an email the other day from my ISA provider. My savings interest rate is dropping again, from .8% to .5% (it's been dropping a lot over the last three years).I keep an ISA as a safety net. It would be nice if it actually earned some decent interest.
Unfortunately, it seems that people like me who try to be careful with money are in the minority and we ultimately lose out.
funkyrobot said:
Had an email the other day from my ISA provider. My savings interest rate is dropping again, from .8% to .5% (it's been dropping a lot over the last three years).
I keep an ISA as a safety net. It would be nice if it actually earned some decent interest.
Unfortunately, it seems that people like me who try to be careful with money are in the minority and we ultimately lose out.
"Lose out"?I keep an ISA as a safety net. It would be nice if it actually earned some decent interest.
Unfortunately, it seems that people like me who try to be careful with money are in the minority and we ultimately lose out.
What you're losing out on is the potential rewards that can be generated from risk-taking. Remember you're also "losing out" on the potential costs, too.
BigLion said:
Skynews article saying car finance could go pear shaped...86% of cars bought on finance and the big hope is that cars will be worth more than their GFV otherwise problems could arise in the finance arms.
Isnt this literally the exact same pattern as Mortgage bonds/CDO market? How can lenders not see this coming? Or don't they care?BigLion said:
Skynews article saying car finance could go pear shaped...86% of cars bought on finance and the big hope is that cars will be worth more than their GFV otherwise problems could arise in the finance arms.
The GMFV's are usually 80% of trade in, so you will need to see at least a 20% fall in used prices before lenders security is eroded. KarlMac said:
BigLion said:
Skynews article saying car finance could go pear shaped...86% of cars bought on finance and the big hope is that cars will be worth more than their GFV otherwise problems could arise in the finance arms.
Isnt this literally the exact same pattern as Mortgage bonds/CDO market? How can lenders not see this coming? Or don't they care?Theres little risk to the finance company and little risk to the purchaser (?) as they can hand the car back and move on to the next, best deal from a manufacturer / finance company / leasing company wanting to gain market share.
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