Will Coronavirus hit used car prices? (Vol 2)

[nickfrog]

Teebs said:

It's going to be a bloodbath.

For run of the mill cars, what are you predicting compared to pre Covid values for cars of the same age and mileage then?

-20%? -40%?

And when are you predicting this to happen?

[carparkno1]

Auto810graphy said:

carparkno1 said:

It literally states in the article you posted "as CAP values continue to fall"...

... Although to be fair it was a part of the article that you didn't include.

CAP prices have been dropping the past few months but pre covid most car values nearly always dropped in CAP as they depreciated. My point is that dealers seem to have more confidence and are now buying again this week at current prices, maybe a few have cleared out some stock and just reloading their stocking facilities.

Thanks. I wasn't debating your point to be fair, I appreciate boots on the ground views and if things are getting better then that's good for traders so it's an interesting insight! It was more the conflicting views Av was giving.

[ghost83]

MaxFromage said:

For what it's worth (as an accountant), I have quite a few very successful business owners as clients. Over the last few weeks/months they have been planning for harder times and house/asset purchases are on hold until 'bargains can be had'. They've done it many times before and see this time as no different. Personally new money buys shiny things, not old. And if things turn out as predicted, the new money may dry up for a while.

One of my friends who is a financial advisor has said exactly the same! We are currently at the start of the fall the nightmare comes this winter! He reckons by September 2023 a lot will have been defaulting on mortgages and repossessions will start, he told me at the minute clear as much off the mortgage as you can! Forget cars buy a flask and forget spending £30 a week at costa stick that on the mortgage! Every little helps

[av185]

ghost83 said:

Forget cars buy a flask

Sounds fun.

[sat1983]

So much doom and gloom on this thread!

[av185]

sat1983 said:

So much doom and gloom on this thread!

Yep but some clearly love to be over pessimistic and wallow in others misfortune.

As ever those who have overstretched themselves and have become highly leveraged with high levels of debt during the good times perhaps in an attempt to impress others are the ones who will find things increasingly hard.

As for anyone stupid enough to spend £30 a week on stty coffee in Costa frankly deserves everything they get.

Twas ever thus.

Edited by av185 on Friday 13th May 11:16

[AlexNJ89]

ghost83 said:

One of my friends who is a financial advisor has said exactly the same! We are currently at the start of the fall the nightmare comes this winter! He reckons by September 2023 a lot will have been defaulting on mortgages and repossessions will start, he told me at the minute clear as much off the mortgage as you can! Forget cars buy a flask and forget spending £30 a week at costa stick that on the mortgage! Every little helps

Could someone explain why paying off more of your mortgage helps?

In my mind, having cash in the bank to ensure you can make those monthly payments while times are tough would be a better strategy?

Where am I going wrong?

[av185]

As inflation rises it will erode your cash pile sitting in the bank which will be earning next to nothing anyway.

So pay off any debts including reducing your mortgage.

[SteBrown91]

AlexNJ89 said:

Could someone explain why paying off more of your mortgage helps?

In my mind, having cash in the bank to ensure you can make those monthly payments while times are tough would be a better strategy?

Where am I going wrong?

The more mortgage you pay off the less overheads you have on interest payments. A 200k mortgage at 25 years at 2.7% is over £320k total cost.

Reduce the amount as much as possible in to good times, so in bad times you are paying much less in interest payments.

[Tomanybikes]

SteBrown91 said:

AlexNJ89 said:

Could someone explain why paying off more of your mortgage helps?

In my mind, having cash in the bank to ensure you can make those monthly payments while times are tough would be a better strategy?

Where am I going wrong?

The more mortgage you pay off the less overheads you have on interest payments. A 200k mortgage at 25 years at 2.7% is over £320k total cost.

Reduce the amount as much as possible in to good times, so in bad times you are paying much less in interest payments.

But surely the PH investing gurus who beat the markets by multiple % will just borrow more and invest it?

[jimPH]

Crikey

I thought I was going to regret paying my mortgage down and missing some investment opportunities/inflating away the balance.

Turns out being stupid is actually quite smart.

[av185]

Tomanybikes said:

But surely the PH investing gurus who beat the markets by multiple % will just borrow more and invest it?

Sounds like you strayed from the pcp threads.

[Fusion777]

jimPH said:

Crikey

I thought I was going to regret paying my mortgage down and missing some investment opportunities/inflating away the balance.

Turns out being stupid is actually quite smart.

Ultimately, you're never going to go far wrong by either investing sensibly/paying off debt/saving, even if it is just cash. Worst case is you make a bit less money than you otherwise might have done. Inflation may be rising, but we're hardly likely to enter a Weimar Germany type situation of kids pushing round wheelbarrows packed full of bank notes for a laugh.

[Casa1862]

Get an offset mortgage, load up the saving side to reduce or pay no interest when saving and mortgage balanced, best of both worlds, low or no interest and instant access to cash should to run into a sticky patch. Releasing funds from a paid off house in a downturn won't be fun.

[nickfrog]

jimPH said:

Crikey

I thought I was going to regret paying my mortgage down and missing some investment opportunities/inflating away the balance.

Turns out being stupid is actually quite smart.

That's always been a regret of mine paying off the mortgage early. I would have been much better off in the long term keeping it.

[time waster]

Casa1862 said:

Get an offset mortgage, load up the saving side to reduce or pay no interest when saving and mortgage balanced, best of both worlds, low or no interest and instant access to cash should to run into a sticky patch. Releasing funds from a paid off house in a downturn won't be fun.

depends upon what the charge is for the facility.

[mk1coopers]

SteBrown91 said:

The more mortgage you pay off the less overheads you have on interest payments. A 200k mortgage at 25 years at 2.7% is over £320k total cost.

Reduce the amount as much as possible in to good times, so in bad times you are paying much less in interest payments.

This ^^^, the more you can get rid of when the going is good the less it effects you when the rates start to rise, I have no control over the overall price rises we are all facing, but have manged to build in a buffer on the mortgage interest by paying off as much as we could without taking from other investments.

Edited by mk1coopers on Friday 13th May 14:48

[Macron]

Tomanybikes said:

But surely the PH investing gurus who beat the markets by multiple % will just borrow more and invest it?

Yup, the clever s amongst us loaded up on 3-5 year old Astra’s late in 2019. They’re loaded.

Those who bought crypto may or may not be underwater, frankly the quicker that distributed pyramid scheme folds the better. Those who wanted FIRE may have a smaller pot to take their 4% from this year. Those with property may have seen a big jump in recent years, but they forget the graph on the prev page suggests they may get some delinquent tenants soon.

[ghost83]

AlexNJ89 said:

Could someone explain why paying off more of your mortgage helps?

In my mind, having cash in the bank to ensure you can make those monthly payments while times are tough would be a better strategy?

Where am I going wrong?

It mainly affects those on variable mortgages like myself, so as the rates rise your mortgage payments go up so if you pay off what you can it lowers your monthly outgoing,

When I took my mortgage on back in 2013 it was £600 a month, and now it’s down at £405 a month and even though I took out a 35yr mortgage back in 2013 it will be paid off at the end of 2024, which will ultimately save me a lot of money that I won’t have to pay in interest,

So at the end of 2024 I can use my money on enjoying myself and the businesses money is used in investing on properties and other businesses

[av185]

Even low rent new gas guzzlers continue their upward trajectory, in this case up a whopping 7 percent.