Are the wheels about to fall of car finance?
Discussion
daemon said:
The finance companies have nothing to fear. Period.
People need to prove they were mis sold the product.
Have a read at what they are trying to make stick - people may "lose their deposit"
IF people were genuinely mis sold a particular product then fine, but imagine the bandwagon that people will jump on to here if they think there's a few £ in it for them - rallied of course by law firm vultures to believe they are victims
If you're driving around in a Vauxhall its an open and shut case that your were mis sold! People need to prove they were mis sold the product.
Have a read at what they are trying to make stick - people may "lose their deposit"
IF people were genuinely mis sold a particular product then fine, but imagine the bandwagon that people will jump on to here if they think there's a few £ in it for them - rallied of course by law firm vultures to believe they are victims
Meanwhile in the US...
Debt pile-up in US car market sparks subprime fear
https://www.ft.com/content/bab49198-3f98-11e7-9d56...
“It’s a new mini-Big Short,”
Auto Lender Santander Checked Income on Just 8% in Subprime ABS
https://www.bloomberg.com/news/articles/2017-05-22...
Santander to pay $26m to settle subprime auto-loan case
https://www.bostonglobe.com/business/2017/03/29/sa...
Debt pile-up in US car market sparks subprime fear
https://www.ft.com/content/bab49198-3f98-11e7-9d56...
“It’s a new mini-Big Short,”
Auto Lender Santander Checked Income on Just 8% in Subprime ABS
https://www.bloomberg.com/news/articles/2017-05-22...
Santander to pay $26m to settle subprime auto-loan case
https://www.bostonglobe.com/business/2017/03/29/sa...
Edited by ReverseTriker on Tuesday 30th May 22:11
Edited by ReverseTriker on Tuesday 30th May 22:22
frisbee said:
daemon said:
The finance companies have nothing to fear. Period.
People need to prove they were mis sold the product.
Have a read at what they are trying to make stick - people may "lose their deposit"
IF people were genuinely mis sold a particular product then fine, but imagine the bandwagon that people will jump on to here if they think there's a few £ in it for them - rallied of course by law firm vultures to believe they are victims
If you're driving around in a Vauxhall its an open and shut case that your were mis sold! People need to prove they were mis sold the product.
Have a read at what they are trying to make stick - people may "lose their deposit"
IF people were genuinely mis sold a particular product then fine, but imagine the bandwagon that people will jump on to here if they think there's a few £ in it for them - rallied of course by law firm vultures to believe they are victims
Possibly mis-sold the car, but not necessarily the finance deal....
"It is an unsatisfactory situation, says Chris Kukla, an executive vice-president at the Center for Responsible Lending in Durham, North Carolina.
He notes that Dodd-Frank required mortgage lenders to take specific steps to determine that home buyers can actually handle their payments. If they do not take those steps, homeowners can sue and potentially win big damages."
https://www.ft.com/content/bab49198-3f98-11e7-9d56...
I sold cars between 2004-2008 and I feel that PCP was handled poorly, both by the manufacturer and the customer.
We got 100's of people through the door with no idea what finance package they were on, what their GFV was and what it actually meant for them. Most were upside down and required further finance to get themselves out of their current 'hole' and into a newer, deeper one.
People genuinely though the GFV was their equity to roll into a new vehicle. Saab and Volvo owners had it the worst, generally speaking.
We got 100's of people through the door with no idea what finance package they were on, what their GFV was and what it actually meant for them. Most were upside down and required further finance to get themselves out of their current 'hole' and into a newer, deeper one.
People genuinely though the GFV was their equity to roll into a new vehicle. Saab and Volvo owners had it the worst, generally speaking.
SpeedBash said:
"It takes just minutes to fill in the forms for a new kind of loan that cuts the cost of financing to levels that allow people on modest incomes to show up at the supermarket on a Saturday in the latest SUV. "And thats the problem right there - people get too excited and sign before they think it through.
I do question the checks that the finance companies run - i am sure they are extensive based on the twenty minute turn arounds.. The problems are that checks are limited - (Experian credit check and some basic maths based on income versus outgoings (defined by the buyer, via the seller, to the finance company)).
As long as you treat PCP as renting and are willing to write off the deposit, and the monthlies, and happy to hand the car back.. then it works well.
Problems occur when you a) can not afford it b) want out of it early c) damage it d) want to keep it e) go outside the contract (mileage) or servicing
The problem i imagine we will see is if we see another recession leading to people unable to pay, this is all attached to the sub-prime markets.
Edited by BobSaunders on Sunday 11th June 09:16
BobSaunders said:
"It takes just minutes to fill in the forms for a new kind of loan that cuts the cost of financing to levels that allow people on modest incomes to show up at the supermarket on a Saturday in the latest SUV. "
And thats the problem right there - people get too excited and sign before they think it through.
I do question the checks that the finance companies run - i am sure they are extensive based on the twenty minute turn arounds.. The problems are that checks are limited - (Experian credit check and some basic maths based on income versus outgoings (defined by the buyer, via the seller, to the finance company)).
As long as you treat PCP as renting and are willing to write off the deposit, and the monthlies, and happy to hand the car back.. then it works well.
Problems occur when you a) can not afford it b) want out of it early c) damage it d) want to keep it e) go outside the contract (mileage) or servicing
The problem i imagine we will see is if we see another recession leading to people unable to pay, this is all attached to the sub-prime markets.
Why is it a problem if you want to keep it ? Ideally the GFV is less than the car is worth meaning you just pay that amount to keep the car , if the GFV is less than the car is worth you can hand it back , this is a big plus in my book And thats the problem right there - people get too excited and sign before they think it through.
I do question the checks that the finance companies run - i am sure they are extensive based on the twenty minute turn arounds.. The problems are that checks are limited - (Experian credit check and some basic maths based on income versus outgoings (defined by the buyer, via the seller, to the finance company)).
As long as you treat PCP as renting and are willing to write off the deposit, and the monthlies, and happy to hand the car back.. then it works well.
Problems occur when you a) can not afford it b) want out of it early c) damage it d) want to keep it e) go outside the contract (mileage) or servicing
The problem i imagine we will see is if we see another recession leading to people unable to pay, this is all attached to the sub-prime markets.
Edited by BobSaunders on Sunday 11th June 09:16
liner33 said:
Why is it a problem if you want to keep it ? Ideally the GFV is less than the car is worth meaning you just pay that amount to keep the car , if the GFV is less than the car is worth you can hand it back , this is a big plus in my book
You'd need finance to be able to do this ergo all it takes is a very very gentle persuasion by the salesman to just pay THE finance on a brand new car again. Come on, it's wide open to a scandal.
Loads of people were miss sold ppi. It's not rocket science to see there are numerous points where car finance can be next.
TBH I say fair game. Maybe then we'll have a sensible car industry without massive dealer rrp prices and shady dealers and salesmen.
Edited by Sa Calobra on Sunday 11th June 11:54
Sa Calobra said:
You'd need finance to be able to do this ergo all it takes is a very very gentle persuasion by the salesman to just pay THE finance on a brand new car again.
Come on, it's wide open to a scandal.
Thats "selling", not "mis-selling".Come on, it's wide open to a scandal.
Sa Calobra said:
Loads of people were miss sold ppi. It's not rocket science to see there are numerous points where car finance can be next.
They were genuinely mis-sold that product, often with little or no paperwork to back it up.Say what you like about PCP and PCH deals but its all there in the paperwork - if people chose not to read it because they're too focused on getting a new car, then its very hard to feel sympathy later when they bleat on about being "mis-sold" something.
Its not difficult - deposit + monthly payment and options at the end of the term.
BobSaunders said:
SpeedBash said:
"It takes just minutes to fill in the forms for a new kind of loan that cuts the cost of financing to levels that allow people on modest incomes to show up at the supermarket on a Saturday in the latest SUV. "And thats the problem right there - people get too excited and sign before they think it through.
Bankers and finance salesmen have known people do this for centuries, just as I know if I throw a dog a nice tasty drugged steak I can blame it for eating the steak and passing out as much as I want, but it doesn't make it the dogs fault.
If people thought things through the world would be a very different place indeed, but they don't and it isn't.
In my view the salesman has more product knowledge and therefore more responsibility than the victim: in regular crimes the question of 'intent' is quite important, no customer intends to get stitched up, but many salesmen must know they are doing the stitching. He is also in a position of trust - not so much like a teacher and pupil - but still he puts himself out there as an authority.
It appears the 'blame the victim' method of absolving responsibility didn't work out too well for PPI plans and I suspect it will be the same with these complex car loans. I see rain on the horizon and possibly a few manufacturers going bust as the level of new sales could well drop off a cliff without the dodgy finance.
Good time to buy a 2nd hand car when it happens though, we'll have to rename the Bargain Barge thread...
The customer wants to get the best car that they can that's new. The dealer helps them do this. Does the dealer say 'i need to ensure you can repay, can you fill out all these forms and we'll get back to you in a few days'? If you borrowed 5k from say Sainsburys Bank you wouldn't get an quick decision.
Is it a quick decision at the dealership?
Someone's upselling and/or cutting corners
Is it a quick decision at the dealership?
Someone's upselling and/or cutting corners
daemon said:
Its not difficult - deposit + monthly payment and options at the end of the term.
Is it a deposit? Like when you bought drink in glass bottles back in the day and you got it back when you returned the bottles? I think not. With PCP, is it not just an initial (non refundable) payment? Lawyers love ambiguity......
Sa Calobra said:
The customer wants to get the best car that they can that's new. The dealer helps them do this. Does the dealer say 'i need to ensure you can repay, can you fill out all these forms and we'll get back to you in a few days'? If you borrowed 5k from say Sainsburys Bank you wouldn't get an quick decision.
Is it a quick decision at the dealership?
Someone's upselling and/or cutting corners
nowadays both kyc and underwriting decisions can and often are made sub-second using only the lender's softwareIs it a quick decision at the dealership?
Someone's upselling and/or cutting corners
the dealer, even their finance guy upstairs, serves little more than an admin role
OddCat said:
daemon said:
Its not difficult - deposit + monthly payment and options at the end of the term.
Is it a deposit? Like when you bought drink in glass bottles back in the day and you got it back when you returned the bottles? I think not. With PCP, is it not just an initial (non refundable) payment? Lawyers love ambiguity......
Nothing about the word deposit implies you will get it back.
OddCat said:
Is it a deposit? Like when you bought drink in glass bottles back in the day and you got it back when you returned the bottles? I think not. With PCP, is it not just an initial (non refundable) payment?
Lawyers love ambiguity......
Deposit; a sum payable as a first instalment on the purchase of something or as a pledge for a contract, the balance being payable later. Lawyers love ambiguity......
E.g. paying a deposit on a house or car purchase.
My wife just bought a car on PCP, despite me swearing blind we never would.
0% APR and, if you took it on finance, a £1000 dealer contribution towards the deposit. No discount approaching that available for cash.
So we maxed out the term, maxed out the mileage per year allowance (just in case we decide to hand it back at any point) and chose a final payment to buy of £500. Basically a 3.5 year interest free loan.
A Skoda Citigo SEL, in case you're interested.
We did go shopping for a second hand one really, at about £6k (she would have taken the lump from her savings and "paid herself back" over 2 or 3 years anyway), but as my better half keeps her cars for years and years (previous car an '07 Aygo bought new (which we're actually hanging onto as our daughter will be driving in a year or so)) it seemed just as sensible to to go for the new one, includes warranty, we'll know it's been treated and serviced properly, etc, etc.
0% APR and, if you took it on finance, a £1000 dealer contribution towards the deposit. No discount approaching that available for cash.
So we maxed out the term, maxed out the mileage per year allowance (just in case we decide to hand it back at any point) and chose a final payment to buy of £500. Basically a 3.5 year interest free loan.
A Skoda Citigo SEL, in case you're interested.
We did go shopping for a second hand one really, at about £6k (she would have taken the lump from her savings and "paid herself back" over 2 or 3 years anyway), but as my better half keeps her cars for years and years (previous car an '07 Aygo bought new (which we're actually hanging onto as our daughter will be driving in a year or so)) it seemed just as sensible to to go for the new one, includes warranty, we'll know it's been treated and serviced properly, etc, etc.
OddCat said:
daemon said:
Its not difficult - deposit + monthly payment and options at the end of the term.
Is it a deposit? Like when you bought drink in glass bottles back in the day and you got it back when you returned the bottles? I think not. With PCP, is it not just an initial (non refundable) payment? Lawyers love ambiguity......
Is there a huge massive mortgage mis-selling scandal coming too?
The issues are fairly obvious
Deposit: Its far from that, its an upfront pre-payment that you will not get back.
GFV: Lots of manufacturers bend the figures to make the payments cheaper at the front end. At the end of the term many are in neg equity.
GFV v actual end value. If you are in positive equity eg the car is up in value you usually don't get the extra. So the finance co's are profiting not the customer.
Then you have the insurance products & polishes of which don't get done at some dealerships!
I also think there will some comeback on manufacturers discounting only when "their" finance is offered, essentially locking the customer into their finance deals.
Deposit: Its far from that, its an upfront pre-payment that you will not get back.
GFV: Lots of manufacturers bend the figures to make the payments cheaper at the front end. At the end of the term many are in neg equity.
GFV v actual end value. If you are in positive equity eg the car is up in value you usually don't get the extra. So the finance co's are profiting not the customer.
Then you have the insurance products & polishes of which don't get done at some dealerships!
I also think there will some comeback on manufacturers discounting only when "their" finance is offered, essentially locking the customer into their finance deals.
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