10 years since the start of the financial crisis.

[sidicks]

Brooking10 said:

No but there is decades of precedent to support the view that in the vast majority of cases on any given consumer credit product the majority of customers do not default.

You obviously think the the ‘decades of experience’ (which is based on different types of borrowing through very different economic environments) is much more relevant than I do, in this context...

[stongle]

Brooking10 said:

There is a certain type of pher who has convinced himself that;

A) PCP customers are collectively a ticking default time bomb

B) When the bomb goes off “we” will all suffer the repercussions

C) it is therefore analogous to 2008 and sub-prime

In the main it's just a few vocal wally's sneering down their nose on others due to their self perceived economic genius.

The fact they neither understand the risks or problems with PCP is comedy and exposes their ignorance.

It's not the product, but how it's sold. Concentrating on monthlies allows higher ticket price /less discounting. You end up paying more finance charges due to a higher base cost.

The extra upfront margin hedges (some) of the risk of a future collapse in car values at VT / handback point. If the car is worth over the GFV the customer should either pay it and sell on open market or rollover the equity. If the car is worth below the GFV hand it back and walk away. If if weren't for the sharp practice selling it, it's less risky than any other form of car credit or even buying (new) vehicles for cash.

If you can't see that, or think it's an excessive systemic risk (outside black swan or external event), then they really aren't as smart as they think they are.

Edited by stongle on Thursday 20th September 09:48

[anonymous-user]

sidicks said:

Brooking10 said:

No but there is decades of precedent to support the view that in the vast majority of cases on any given consumer credit product the majority of customers do not default.

You obviously think the the ‘decades of experience’ (which is based on different types of borrowing through very different economic environments) is much more relevant than I do, in this context...

Fair enough. Yes I am taking a rather helicopter view but am quite happy that the pattern of precedent is that consumers don’t majority default across retail credit products in periods of economic downturn. As I have also explained I am equally confident that even if they did, in the case of auto credit the risk posed doesn’t bear direct correlation to 2008.

[anonymous-user]

Behemoth said:

Brooking10 said:

Mis-selling I agree with and I honestly thought this was going to come to a head this year in the UK but the FCA decided not to show their teeth. That said a mis-selling intervention wouldn’t precipate mass hand backs.

I’ve looked into the packaging of auto credit in a work capacity and simply could not find enough of it in quantum or concentrated exposure that compares remotely to 2008. Whilst the total
volumes are significant it’s still a long way off the property backed stuff of 2008 spread around more places including large chunks being held on manufacturer balance sheets.

That's interesting, thank you.

No worries - it’s an interesting market for lots of reasons.