Are the wheels about to fall of car finance?
Discussion
TA14 said:
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.
There are quite a few pcp deals on new cars at 0-1.5% apr, you can do much better that with a low risk investment, and even with a basic savings account if you shop around . Also at those kind of interest rates a dealer contribution will often cancel out interest charges.
liner33 said:
TA14 said:
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.
There are quite a few pcp deals on new cars at 0-1.5% apr, you can do much better that with a low risk investment, and even with a basic savings account if you shop around . Also at those kind of interest rates a dealer contribution will often cancel out interest charges.
nickfrog said:
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.
If there is any anti-finance sentiment here it is more anti-salesperson sentiment than anti-finance as such. We have had enough examples of people stitched up in unsuitable deals, whether thay can afford them or not, and given inadequate or misleading information, that we don't really need more regulation of the finance industry but perhaps more of the motor trade.It's coming to an end.
Used values tumbling downwards, means PCP payments are just not keeping pace with decreasing value.
It's going to burst as all these cars pour into the market, and nobody wants them (at the price dealers think they are worth)
This industry stitch up is going to shudder to halt. Badly.
Not to mention it will be a PPI style scandal for some...
Used values tumbling downwards, means PCP payments are just not keeping pace with decreasing value.
It's going to burst as all these cars pour into the market, and nobody wants them (at the price dealers think they are worth)
This industry stitch up is going to shudder to halt. Badly.
Not to mention it will be a PPI style scandal for some...
It's coming to an end.
Used values tumbling downwards, means PCP payments are just not keeping pace with decreasing value.
It's going to burst as all these cars pour into the market, and nobody wants them (at the price dealers think they are worth)
This industry stitch up is going to shudder to halt. Badly.
Not to mention it will be a PPI style scandal for some...
Used values tumbling downwards, means PCP payments are just not keeping pace with decreasing value.
It's going to burst as all these cars pour into the market, and nobody wants them (at the price dealers think they are worth)
This industry stitch up is going to shudder to halt. Badly.
Not to mention it will be a PPI style scandal for some...
treetops said:
Used values tumbling downwards, means PCP payments are just not keeping pace with decreasing value.
It's going to burst as all these cars pour into the market, and nobody wants them (at the price dealers think they are worth)
Were you aiming for deliberately wholly wrong just to be ironic? It's going to burst as all these cars pour into the market, and nobody wants them (at the price dealers think they are worth)
I'm counting 4 things there wholly wrong. Thats four out of four statements.
Globs said:
You need to say it twice to be true...Just as with housing, it's ALL about residuals.
It's perfectly OK for an 18 year old on min wage to take out a mortgage on a £1m house with no deposit as long as the market is rising, and can be guaranteed to rise for the duration of the mortgage.
Ditto car finance. As long as dealers can keep the residuals high, then it stacks up. As soon as they can't hold the line, it all falls apart.
The risk here is more systemic and less individual. The loan is secured against an insured asset, and some level of depreciation has been planned in. The individual is not exposed, unless they get into financial distress. When the wheels do come off, the problem will be what to do with the vast industry that has grown up to service this somewhat unsustainable model.
It's perfectly OK for an 18 year old on min wage to take out a mortgage on a £1m house with no deposit as long as the market is rising, and can be guaranteed to rise for the duration of the mortgage.
Ditto car finance. As long as dealers can keep the residuals high, then it stacks up. As soon as they can't hold the line, it all falls apart.
The risk here is more systemic and less individual. The loan is secured against an insured asset, and some level of depreciation has been planned in. The individual is not exposed, unless they get into financial distress. When the wheels do come off, the problem will be what to do with the vast industry that has grown up to service this somewhat unsustainable model.
treetops said:
It's coming. Just wait and watch.
You've seen nothing yet....where a car market has been more rigged than its been for the last 6 years.
I'm not fussed if you have another view, that's cool with me.
I've no issue with you having another view - but try to have one at least based on a semblance of FACT.You've seen nothing yet....where a car market has been more rigged than its been for the last 6 years.
I'm not fussed if you have another view, that's cool with me.
treetops said:
Used values tumbling downwards, - no they're not.
means PCP payments are just not keeping pace with decreasing value. - (a) it doesnt matter even if they didnt. What matters is the GFV at the end. (b) almost invariably they are as manufacturers / finance companies have decades of experience in this.
It's going to burst as all these cars pour into the market - its been happening for decades, why would it burst now?
, and nobody wants them (at the price dealers think they are worth) - and yet dealers are saying good stock is incredibly hard to find, and theres a large turnover of stock on dealers forecourts.
means PCP payments are just not keeping pace with decreasing value. - (a) it doesnt matter even if they didnt. What matters is the GFV at the end. (b) almost invariably they are as manufacturers / finance companies have decades of experience in this.
It's going to burst as all these cars pour into the market - its been happening for decades, why would it burst now?
, and nobody wants them (at the price dealers think they are worth) - and yet dealers are saying good stock is incredibly hard to find, and theres a large turnover of stock on dealers forecourts.
treetops said:
It's coming. Just wait and watch.
You've seen nothing yet....where a car market has been more rigged than its been for the last 6 years.
I'm not fussed if you have another view, that's cool with me.
Do you write for the Daily Fail.You've seen nothing yet....where a car market has been more rigged than its been for the last 6 years.
I'm not fussed if you have another view, that's cool with me.
http://www.dailymail.co.uk/news/article-4638268/Pa...
I do think that the deals wont be as sweet in the future for sure, the manufactures have been bolstering car sales for years through these deals , there is no doubt there is a lot of pressure to sell volume and keep the productions lines running
I guess the main difference is that some people think the whole system will implode on itself causing mass devastation a la 2008 and others think the industry will just evolve slightly to be more flexible to change
I guess the main difference is that some people think the whole system will implode on itself causing mass devastation a la 2008 and others think the industry will just evolve slightly to be more flexible to change
http://www.bbc.co.uk/news/business-40414700
Banks warned on ballooning consumer borrowing. "The fastest growth has been in car financing, with dealers encouraging people to buy new cars by lending at low interest rates and then asking for a "balloon payment" at the end of the loan period to complete the car purchase. Car finance borrowing is rising at 15%."
Banks warned on ballooning consumer borrowing. "The fastest growth has been in car financing, with dealers encouraging people to buy new cars by lending at low interest rates and then asking for a "balloon payment" at the end of the loan period to complete the car purchase. Car finance borrowing is rising at 15%."
liner33 said:
I do think that the deals wont be as sweet in the future for sure, the manufactures have been bolstering car sales for years through these deals , there is no doubt there is a lot of pressure to sell volume and keep the productions lines running
Yes, thats what i think will happen. As values drop gradually, then PCP / PCH deals wont be able to be as sweet.Conversely it will depend what the manufacturers priorities are / how deep their pockets are. If its market share and they're making a lot of money anyway, they may wish to introduce further subsidies to deals to bolster market share.
liner33 said:
I guess the main difference is that some people think the whole system will implode on itself causing mass devastation a la 2008 and others think the industry will just evolve slightly to be more flexible to change
I'm with the latter - the market is nowhere near the size, the manufacturers / manufacturers finance companies / third party funds are carrying the risk, not the end consumer. CivBrum said:
http://www.bbc.co.uk/news/business-40414700
Banks warned on ballooning consumer borrowing. "The fastest growth has been in car financing, with dealers encouraging people to buy new cars by lending at low interest rates and then asking for a "balloon payment" at the end of the loan period to complete the car purchase. Car finance borrowing is rising at 15%."
Very little in that relating to consumers though - other than the sentence at the end - "be careful"Banks warned on ballooning consumer borrowing. "The fastest growth has been in car financing, with dealers encouraging people to buy new cars by lending at low interest rates and then asking for a "balloon payment" at the end of the loan period to complete the car purchase. Car finance borrowing is rising at 15%."
I think its saying the motor manufacturers / lenders need to tread with extreme caution - they cant rely on being able to give cheap loans in the future to be able to maintain sales volumes
liner33 said:
I do think that the deals wont be as sweet in the future for sure
When the market collapses the deals on used car market will be amazing, scrap metal kind of deals - after all they've produced and sold so many cars over the recent years when the sauce runs out and the low end isn't willing to buy overpriced used tat they'll either have to sell them on cheaply, export them, or scrap them. Or store them on huge disused airports waiting for market to pick up, which might take a while reducing the value of held stock even further.Gassing Station | General Gassing | Top of Page | What's New | My Stuff