Are the wheels about to fall of car finance?

[VGTICE]

daemon said:

VGTICE said:

He's basically just agreed with what I've been saying from the beginning, dimwit.

I agreed with that little aspect of what you were saying, with a view to allowing the thread to move on rather than descend further into name calling and further nonsense.

I'm all for a debate but when it descends in to name calling and swearing it gets a bit tedious.

I'm happy to draw a line if you are.

I have no axe to grind with you and I didn't pick a fight with you, as can be seen if you look through the subsequent posts. My point from the beginning was that finance is fine as long as it's not abused and in case of car finance this is exactly what's happening, unfortunately.

Anyway. No offense meant and taken, we're both passionate about our point of view and since we're both grown ups I'm sure we can accept the differences and agree on some points.

[daemon]

VGTICE said:

daemon said:

VGTICE said:

He's basically just agreed with what I've been saying from the beginning, dimwit.

I agreed with that little aspect of what you were saying, with a view to allowing the thread to move on rather than descend further into name calling and further nonsense.

I'm all for a debate but when it descends in to name calling and swearing it gets a bit tedious.

I'm happy to draw a line if you are.

I have no axe to grind with you and I didn't pick a fight with you, as can be seen if you look through the subsequent posts. My point from the beginning was that finance is fine as long as it's not abused and in case of car finance this is exactly what's happening, unfortunately.

Anyway. No offense meant and taken, we're both passionate about our point of view and since we're both grown ups I'm sure we can accept the differences and agree on some points.

Agreed!

[Granfondo]

This "line" your talking about is it the dotted one where the debt monkeys sign their life away!

[nickfrog]

[Granfondo]

[otolith]

Everything else apart, I'm intrigued by the idea that having use of a car for a fixed period for a fixed fee and fixed ownership costs is somehow less transparent or more risky than buying something outright with unknown residual value and maintenance risk.

[nickfrog]

otolith said:

Everything else apart, I'm intrigued by the idea that having use of a car for a fixed period for a fixed fee and fixed ownership costs is somehow less transparent or more risky than buying something outright with unknown residual value and maintenance risk.

I think the anti-finance sentiment is borne out of preconceptions, binary thinking (if any thinking at all), reverse snobbery and trollism, as perfectly illustrated by this thread.

[Granfondo]

What about winter tyres Nicky?

[VGTICE]

nickfrog said:

I think (if any thinking at all)

https://www.ft.com/content/92ec8204-4251-11e7-9d56-25f963e998b2?mhq5j=e2
Here's a cached version
https://webcache.googleusercontent.com/search?q=ca...

[daemon]

VGTICE said:

https://www.ft.com/content/92ec8204-4251-11e7-9d56...
Here's a cached version
https://webcache.googleusercontent.com/search?q=ca...

Reading that it still reads like the market making adjustments to reduce exposure.

I dont think theres any banks in big enough that it could "take them down" property crash style, therefore if there is a "crash" it'll be the banks and finance companies that take the pain NOT so much individuals.

Also car loans are at fixed rates. With the mortgage crisis people bought houses on 100% (or greater) mortgages with discounts for the first couple of years - the plan of course being that they would just jump to the next deal two years down the line. Unfortunately the market crashed and people were left with houses worth half what they owed AND more significantly paying full price mortgages out of their discounted term because they couldnt move mortgages. Thus people defaulted in their droves.

With cars its different. Set low interest rates. If it comes to end of term and its worth less than the GFV then hand it back. If its a straight HP loan and its worth less than you owe and you've paid 50% of the total amount, hand it back. If its a PCH deal you hand it back anyway.

Consumers in the car market have an awful lot more protection than they did in the mortgage market.

I think there needs to be a grip on the market which there isnt currently - some deals particularly used car PCP deals are genuinely now taking the piss for example.

I personally think we'll see a move more to PCH deals on new cars (away from PCP deals) whereby its all relatively transparent - you pay an initial payment and then monthly rentals. Currently there is too much scope for unscrupulous dealers to present a low monthly payment and hide the fact that its crap discount, or a crap trade in price, or at a crap interest rate or over an inappropriate term.

[daemon]

nickfrog said:

otolith said:

Everything else apart, I'm intrigued by the idea that having use of a car for a fixed period for a fixed fee and fixed ownership costs is somehow less transparent or more risky than buying something outright with unknown residual value and maintenance risk.

I think the anti-finance sentiment is borne out of preconceptions, binary thinking (if any thinking at all), reverse snobbery and trollism, as perfectly illustrated by this thread.

Agreed. I think there are two camps in the reverse snobbery. The respective camps think :-

(a) "why should poor people drive a new car? They dont deserve it. I work hard and do deserve it. We need to protect the peasants from themselves." That group want strict regulation on finance, but not so strict that it impacts them.

(b) "i (chose to?) drive an older car therefore why should people i perceive as not as well off as me be allowed to drive a new car?" That group want strict regulation on finance, but maybe dont think through the consequences of the higher prices on older used cars (ie, the market point they normally buy at)

I think both camps would be gleeful if there was a crash and people had to give up their PCP / PCH cars in their droves but they havent really thought through the consequences to everyone if that happens.

[daemon]

VGTICE said:

nickfrog said:

I think (if any thinking at all)

https://www.ft.com/content/92ec8204-4251-11e7-9d56-25f963e998b2?mhq5j=e2
Here's a cached version
https://webcache.googleusercontent.com/search?q=ca...

I asked before but we got "distracted" - whats your view of a real world, workable solution to this?

[VGTICE]

daemon said:

VGTICE said:

nickfrog said:

I think (if any thinking at all)

https://www.ft.com/content/92ec8204-4251-11e7-9d56-25f963e998b2?mhq5j=e2
Here's a cached version
https://webcache.googleusercontent.com/search?q=ca...

I asked before but we got "distracted" - whats your view of a real world, workable solution to this?

Not letting people live beyond ones means. Prudence etc. I remember the days when getting a loan meant you were a trust worthy customer who got the loan because they can pay it back (which didn't mean only wealthy people got them). Now people see it as one of their human rights and lenders are happy to oblige with minimal credit checks (if any at all), because they know that if st hits the fan taxpayers will bail them out.

[daemon]

VGTICE said:

daemon said:

VGTICE said:

nickfrog said:

I think (if any thinking at all)

https://www.ft.com/content/92ec8204-4251-11e7-9d56-25f963e998b2?mhq5j=e2
Here's a cached version
https://webcache.googleusercontent.com/search?q=ca...

I asked before but we got "distracted" - whats your view of a real world, workable solution to this?

Not letting people live beyond ones means. Prudence etc. I remember the days when getting a loan meant you were a trust worthy customer who got the loan because they can pay it back (which didn't mean only wealthy people got them). Now people see it as one of their human rights and lenders are happy to oblige with minimal credit checks (if any at all), because they know that if st hits the fan taxpayers will bail them out.

Yes. I think there should be some form of regulation introduced with more stringent checking done. I think manufacturer owned finance companies are a little more gung ho with HP loans against their own cars as they know ultimately they own the car and can repossess the asset if it all goes diddies up.

Also i think finance companies / sales people need to be made to present the information in a more meaningful way. Too many now just roll the new car discount / APR / trade in value / term together and present it as a monthly payment.

Also, the impact of APR needs to be more carefully explained. 10.9% APR doesnt sound like a MASSIVE figure, but when it translates to maybe £10,000 of interest on that used 520d PCP deal, then that needs highlighted.

Edited by daemon on Sunday 25th June 16:00

[Evanivitch]

daemon said:

Also, the impact of APR needs to be more carefully explained. 10.9% APR doesnt sound like a MASSIVE figure, but when it translates to maybe £10,000 of interest on that used 520d PCP deal, then that needs highlighted.

Edited by daemon on Sunday 25th June 16:00

I was buying from a car supermarket the other day, and had to entertain the "business executive" who tried to sell me finance.

When I asked him what the total repayable amount was he actually seemed surprised I asked. Personally, I don't care what the rate is, I want to know the cost.

[Globs]

Evanivitch said:

Personally, I don't care what the rate is, I want to know the cost.

Me too. Then I convert it to 'Days Spent In The Office' (DSO) and look for something cheaper LOL

[nickfrog]

Granfondo said:

What about winter tyres Nicky?

Apologies but I am not gay so you might as well stop following me.

[daemon]

nickfrog said:

Granfondo said:

What about winter tyres Nicky?

Apologies but I am not gay so you might as well stop following me.

[TA14]

daemon said:

Also, the impact of APR needs to be more carefully explained. 10.9% APR doesnt sound like a MASSIVE figure, but when it translates to maybe £10,000 of interest on that used 520d PCP deal, then that needs highlighted

Borrowing money will always cost more than the interest that can be earned on deposit so in a normal market for those with cash an outright purchase would be the best deal. The trouble with today's market is that the manufacturers/dealers have skewed the market by offering incentives on PCP that are not available to the cash buyer (like deposit contributions and GFVs) so that overall even a 10.9% or 20.9% APR may be a good deal overall compared to other forms of purchase.

[Granfondo]

TA14 said:

daemon said:

Also, the impact of APR needs to be more carefully explained. 10.9% APR doesnt sound like a MASSIVE figure, but when it translates to maybe £10,000 of interest on that used 520d PCP deal, then that needs highlighted

Borrowing money will always cost more than the interest that can be earned on deposit so in a normal market for those with cash an outright purchase would be the best deal. The trouble with today's market is that the manufacturers/dealers have skewed the market by offering incentives on PCP that are not available to the cash buyer (like deposit contributions and GFVs) so that overall even a 10.9% or 20.9% APR may be a good deal overall compared to other forms of purchase.

But for those with cash it's not a problem,you just take the incentives and withdraw from the PCP within 14 days and it will only have cost you a few quid in interest but have received all the benefits!
But there is a problem in that sentence for most PCP'ers!

Edited by Granfondo on Monday 26th June 10:12