Will Coronavirus hit used car prices? (Vol 2)

Will Coronavirus hit used car prices? (Vol 2)

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Discussion

AlexNJ89

967 posts

56 months

Friday 13th May
quotequote all
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

15,837 posts

104 months

Friday 13th May
quotequote all
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

1,717 posts

106 months

Friday 13th May
quotequote all
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

172 posts

3 months

Friday 13th May
quotequote all
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

3,776 posts

57 months

Friday 13th May
quotequote all
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

15,837 posts

104 months

Friday 13th May
quotequote all
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

588 posts

25 months

Friday 13th May
quotequote all
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

974 posts

142 months

Friday 13th May
quotequote all
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

16,764 posts

194 months

Friday 13th May
quotequote all
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

557 posts

218 months

Friday 13th May
quotequote all
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

754 posts

129 months

Friday 13th May
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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

7,574 posts

143 months

Friday 13th May
quotequote all
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

4,874 posts

167 months

Friday 13th May
quotequote all
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

15,837 posts

104 months

Friday 13th May
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Even low rent new gas guzzlers continue their upward trajectory, in this case up a whopping 7 percent.

JAMSXR

649 posts

24 months

Friday 13th May
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We’re overdue a financial crisis. It will be another blip in the grand scheme of things. Calm down dear.

AlexNJ89

967 posts

56 months

Friday 13th May
quotequote all
JAMSXR said:
We’re overdue a financial crisis. It will be another blip in the grand scheme of things. Calm down dear.
As much as it would cause me a lot of pain, I'd welcome one to cut a lot of the extra fat we have around.

My mates work in marketing and spend most of their time doing social causes campaigns and chasing awards than actually creating marketing strategies which actually sell the product. People have all felt very comfortable this last few years.

ghost83

4,874 posts

167 months

Saturday 14th May
quotequote all
Also don’t forget what will happen to values as more manufacturers turn to electric only! A lot of manufacturers are going full electric by 2024/2025 so those getting into 3/4/5yr finance now! As electric takes over values are going to clearly plunge anyway on “mainstream” cars

The next 3yrs are going to be very interesting to watch imo!


Backtobasics

1,176 posts

160 months

Saturday 14th May
quotequote all
av185 said:
Even low rent new gas guzzlers continue their upward trajectory, in this case up a whopping 7 percent.
Russian car sales down 78% in April - where do those cars now go? 1.57 million cars pa

All electric sales up 60% in the US (tesla makes up a lot of that and have largely avoided supply chain issues but Tesla’s prices have gone up around 33% in 12 months)

Average Uk prices in Q1 -4% in the used market. Focus / Fiesta down nearly 10% - why is that ?

Average people will just get priced out of the market it’s that simple, especially when inflation really kicks in during Oct-Apr So prices have to drop.

People with money will always be fine.


av185

15,837 posts

104 months

Saturday 14th May
quotequote all
ghost83 said:
Also don’t forget what will happen to values as more manufacturers turn to electric only! A lot of manufacturers are going full electric by 2024/2025 so those getting into 3/4/5yr finance now! As electric takes over values are going to clearly plunge anyway on “mainstream” cars

The next 3yrs are going to be very interesting to watch imo!
You clearly still don't understand the market you have been saying this ad infinitum since the start of this thread and the opposite has happened.

Its like those repeatedly banging on about and always predicting the stock market or housing crash its bound to happen at some point but the majority of times they are wrong.

I've mentioned this before look at dieselgate many predicted the crash of used diesel values ££ but exactly the opposite happened the number of new diesels ordered fell which throttled used diesel supplies and caused residuals to rise. Many diesels still outsell their petrol equivalents on the used car market.

Exactly the same will broadly happen as increasing numbers of new hybrids then electric cars replace new ICE. As usual some cars will do better than others residually.

Try and understand new car demand is not the same as used car demand.




jimPH

3,776 posts

57 months

Saturday 14th May
quotequote all
Backtobasics said:
av185 said:
Even low rent new gas guzzlers continue their upward trajectory, in this case up a whopping 7 percent.
Russian car sales down 78% in April - where do those cars now go? 1.57 million cars pa

All electric sales up 60% in the US (tesla makes up a lot of that and have largely avoided supply chain issues but Tesla’s prices have gone up around 33% in 12 months)

Average Uk prices in Q1 -4% in the used market. Focus / Fiesta down nearly 10% - why is that ?

Average people will just get priced out of the market it’s that simple, especially when inflation really kicks in during Oct-Apr So prices have to drop.

People with money will always be fine.
People with more money just have more to lose.