Are the wheels about to fall of car finance?
Discussion
DonkeyApple said:
The US is in a genuinely awful state at the moment and this is an interesting article and one which contains many synergies with the South East of the UK.
http://www.marketwatch.com/story/how-you-can-still...
Somewhat misleading - the articel makes it clear that after paying for all their expenses, including child care, student debt, 3 holidays a year, clothes, cars, mortgage etc.. they STILL have $7500 left over as well as having donated $18k to charity! Hardly broke, by anyones standards.http://www.marketwatch.com/story/how-you-can-still...
So I've just arrived in the PCP market a month or so back. Never had PCP before, always preferred owning my cars via bank loans or savings etc. Preferred PCP over lease though.
2016 Scirocco R - £26K, 7800 miles. £5K deposit, 298(ish) monthly payments over 4 years with a £10K(ish) final settlement. This was at 5.9% APR on 15K miles per year. Am basically waiting a few months (for credit check reasons) and am planning to get a loan (at around 3-4% APR to pay off to reduce monthly payments to ~£49 (which apparent is VW finance's lower limit before they ask for full settlement), then carry on paying a lower interest rate on the loan (think it works out to roughly 240-260pm) saving around £40pm over 4 years.
Now, the finance guys phoned me and said that they will probably phone me up after 2 1/2 years and ask if I want to change my car. So far, so standard it seems.
What does it mean by 'building equity' in your car? Why should I not chop the car in after a couple of years?
2016 Scirocco R - £26K, 7800 miles. £5K deposit, 298(ish) monthly payments over 4 years with a £10K(ish) final settlement. This was at 5.9% APR on 15K miles per year. Am basically waiting a few months (for credit check reasons) and am planning to get a loan (at around 3-4% APR to pay off to reduce monthly payments to ~£49 (which apparent is VW finance's lower limit before they ask for full settlement), then carry on paying a lower interest rate on the loan (think it works out to roughly 240-260pm) saving around £40pm over 4 years.
Now, the finance guys phoned me and said that they will probably phone me up after 2 1/2 years and ask if I want to change my car. So far, so standard it seems.
What does it mean by 'building equity' in your car? Why should I not chop the car in after a couple of years?
RDMcG said:
Very nasty US news today , and there have been many recent signs....sounds like the US housing crash again, and that sort of problem spreads across the globe in terms of recession:
https://www.bloomberg.com/news/articles/2017-03-28...
I don't know if it still is, but leasing used to be staggeringly cheap in the US - I recall seeing BMW 328i's aimed at college kids for $249/mth, and there's no massive upfront payment.https://www.bloomberg.com/news/articles/2017-03-28...
A business associate got a Cayenne for his missus for $599 and he had an E63 that wasn't much dearer.
Bear in mind this was when the dollar was much lower against the £, so in £ they'd be little more than half those amounts.
Building Equity is the same concept as a mortgage. You've borrowed £X for a thing, and you sell it for £Y. If Y > X then you "have equity" which can be used to offset the upsell when they try and flog you another one.
The trick is this. Sensible people will over pay and thus may be attracted by "I can put you in a <insert model here> for only £50 a month more", as they don't realise that all the overpayment they made 2 years ago is being consumed. A mate of mine progressed through the Audi range to an A8 by doing this - then he suddenly added up what he had spent with Audi over the last 7 years and nearly died.
The inverse is what happens in the US. Payments are low, you don't build equity. After 2 years, they phone up and say, 2I can put you in a new one of what you have for no more money". People take it, not realising that the deal has now been extended to 5 years.
Though the concept of "building equity" in a depreciating asset does stick in my throat a bit. Basically the product to be sold is finance, not the car.
The trick is this. Sensible people will over pay and thus may be attracted by "I can put you in a <insert model here> for only £50 a month more", as they don't realise that all the overpayment they made 2 years ago is being consumed. A mate of mine progressed through the Audi range to an A8 by doing this - then he suddenly added up what he had spent with Audi over the last 7 years and nearly died.
The inverse is what happens in the US. Payments are low, you don't build equity. After 2 years, they phone up and say, 2I can put you in a new one of what you have for no more money". People take it, not realising that the deal has now been extended to 5 years.
Though the concept of "building equity" in a depreciating asset does stick in my throat a bit. Basically the product to be sold is finance, not the car.
Tonsko said:
So I've just arrived in the PCP market a month or so back. Never had PCP before, always preferred owning my cars via bank loans or savings etc. Preferred PCP over lease though.
2016 Scirocco R - £26K, 7800 miles. £5K deposit, 298(ish) monthly payments over 4 years with a £10K(ish) final settlement. This was at 5.9% APR on 15K miles per year. Am basically waiting a few months (for credit check reasons) and am planning to get a loan (at around 3-4% APR to pay off to reduce monthly payments to ~£49 (which apparent is VW finance's lower limit before they ask for full settlement), then carry on paying a lower interest rate on the loan (think it works out to roughly 240-260pm) saving around £40pm over 4 years.
Now, the finance guys phoned me and said that they will probably phone me up after 2 1/2 years and ask if I want to change my car. So far, so standard it seems.
What does it mean by 'building equity' in your car? Why should I not chop the car in after a couple of years?
The point is you at no time will have paid the car off nor it's replacement. 2016 Scirocco R - £26K, 7800 miles. £5K deposit, 298(ish) monthly payments over 4 years with a £10K(ish) final settlement. This was at 5.9% APR on 15K miles per year. Am basically waiting a few months (for credit check reasons) and am planning to get a loan (at around 3-4% APR to pay off to reduce monthly payments to ~£49 (which apparent is VW finance's lower limit before they ask for full settlement), then carry on paying a lower interest rate on the loan (think it works out to roughly 240-260pm) saving around £40pm over 4 years.
Now, the finance guys phoned me and said that they will probably phone me up after 2 1/2 years and ask if I want to change my car. So far, so standard it seems.
What does it mean by 'building equity' in your car? Why should I not chop the car in after a couple of years?
As long as you know that is the case and it is a costlier way than say a banger /you know the pros and cons. If you don't realise that or somehow the sales guys mislead you then there is an issue.
I couldn't care less how often someone changes a vehicle be it brand new be it loads of bangers or anywhere in between. I couldn't care less how they paid for it
I do however take interest in someone owning nice performance cars, nothing to do with how they can afford it (or not) but instead if it's a car I'd consider as a future buy to know what it's like to actually own
DA - as always, insightful stuff from you.
So if I understand what you're saying, what's happened over the past few years is that the middle-classes have used what cash they had to, ironically, increase their own leverage? This meaning that the middle-classes have been able to live a lifestyle that previously was out of reach to many, increasing the profit of these markets and, consequently, allowing more and more people to join in on the fun.
Two examples which perhaps spring to mind are...
1. In 2016, Bob had a house that was worth £300k; a house he'd owned since 1995 and one which he had £200k of equity in. In 2016, Bob decided to sell his house to upgrade to a bigger house. He used a combination of his £200k equity and a much larger mortgage to buy a £650k house.
2. In November 2016, Bob also had a nice car worth £10k that he owned outright, having paid off the loan he purchased the car with since 2012. However, Bob got bored of said car and decided to use the £10k he had in the car and £40k worth of finance to buy a really nice car worth £50k.
Now, Bob has a really nice house and a really nice car and Bob has become acclimatised to living the kind of life he does now. However, Bob could also be really f
ked if interest rates rise significantly, in comparison with his potential to be fked in 2013.
For clarity, I'm not saying Bob has made bad financial decisions. I'm just trying to imagine DA's explanation of how the middle-classes' financial situations have changed over the past few years.
ETA: I accept my two examples are quite extreme and in reality what's actually happened is a more gradual increase in people's leverage.
So if I understand what you're saying, what's happened over the past few years is that the middle-classes have used what cash they had to, ironically, increase their own leverage? This meaning that the middle-classes have been able to live a lifestyle that previously was out of reach to many, increasing the profit of these markets and, consequently, allowing more and more people to join in on the fun.
Two examples which perhaps spring to mind are...
1. In 2016, Bob had a house that was worth £300k; a house he'd owned since 1995 and one which he had £200k of equity in. In 2016, Bob decided to sell his house to upgrade to a bigger house. He used a combination of his £200k equity and a much larger mortgage to buy a £650k house.
2. In November 2016, Bob also had a nice car worth £10k that he owned outright, having paid off the loan he purchased the car with since 2012. However, Bob got bored of said car and decided to use the £10k he had in the car and £40k worth of finance to buy a really nice car worth £50k.
Now, Bob has a really nice house and a really nice car and Bob has become acclimatised to living the kind of life he does now. However, Bob could also be really f
ked if interest rates rise significantly, in comparison with his potential to be fked in 2013.For clarity, I'm not saying Bob has made bad financial decisions. I'm just trying to imagine DA's explanation of how the middle-classes' financial situations have changed over the past few years.
ETA: I accept my two examples are quite extreme and in reality what's actually happened is a more gradual increase in people's leverage.
Edited by MrBarry123 on Tuesday 28th March 23:30
Welshbeef said:
The point is you at no time will have paid the car off nor it's replacement.
As long as you know that is the case and it is a costlier way than say a banger /you know the pros and cons. If you don't realise that or somehow the sales guys mislead you then there is an issue.
I couldn't care less how often someone changes a vehicle be it brand new be it loads of bangers or anywhere in between. I couldn't care less how they paid for it
I do however take interest in someone owning nice performance cars, nothing to do with how they can afford it (or not) but instead if it's a car I'd consider as a future buy to know what it's like to actually own
Yeh, I said to the salesman that I know that they're not in the business of selling cars any more - they're a finance reseller who also happen to shift cars. He actually seemed relieved. I went into it treating the agreement like an extended hire. It might not be exactly the right way to think about it, but it's probably 'more' right than thinking that I own it.As long as you know that is the case and it is a costlier way than say a banger /you know the pros and cons. If you don't realise that or somehow the sales guys mislead you then there is an issue.
I couldn't care less how often someone changes a vehicle be it brand new be it loads of bangers or anywhere in between. I couldn't care less how they paid for it
I do however take interest in someone owning nice performance cars, nothing to do with how they can afford it (or not) but instead if it's a car I'd consider as a future buy to know what it's like to actually own
Was also planning to overpay. Am aware that at no point do I 'own' the vehicle unless I choose to go with that final payment of 10K. Tbh, I could afford the car with savings, but as someone else mentioned, the loss of liquidity worries me more than anything else.
I do treat it like I 'own' it - always waiting until engine & oil are at temp before giving it a thrash, and allowing things to cool down before switching off. Intend to follow the servicing schedule too - not least because it's still in warranty.
The one freedom that it has given me is that I don't worry about it as much... For instance, I'd only had it two weeks and some kind soul put a chip in the paintwork at an airport carpark. I will get it sorted, but it's released any pressure that I may have form owning it to some degree. Or it maybe because I'm a bit older.
In other news, it's totally different from my old car - 2WD vs AWD, Turbo vs NA, DSG vs manual. Went to a rally day in South Shropshire the other day, and the trip down there and back was the icing on the cake from a great day. Was able to really drive the thing properly, not just sit in it on the way to work and back, or going to the shops or whatever. I really like the DSG box, seems to queue the gears up nicely, surprises me with how hard it pulls if you really try (far far more than the golf, and ostensibly only another 20 or so brake, but the torque is probably nearly 50% better). The handling seems good too, although not given it too much as I'm still getting used to all the differences. That said, I think I understand what car journos mean when they say 'a disconnect' with the steering feel. I had my old car nearly 10 years, so knew it inside out.
mikey P 500 said:
Also how do people go about modifications on PCP or leased cars or even using them on track days, as both are common, but surely must be a grey area when it's not really your car. This would be large part of what keeps me from PCP or leasing.
The car is really yours under a PCP, in much the same way as with HP. If you decide at the outset of a PCP that you want to keep the car at the end by paying the final balloon payment, then you are free to do what you want with the car, in the same way if you had bought it on HP or even outright with cash.
Substantially modding a car that you will want to hand back at the end of the term will be a different matter, as there will be return T&C's to consider.
not only the wheels are about to fall off 
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.
Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares... 
I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.
Jokes on you all, if s
t hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and w
k over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares... I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.
Stormfly1985 said:
My partner and I are in our 40's and used to "own" a house - sold it, paid the mortgage off and will rent for the rest of our lives. Why? We don't have kids and why should we lock up our money in an asset that will just go to the state when we die. Renting gives us the flexibility and freedom to move easily, to have a bigger house than we could get a mortgage on and no running costs. Of course there are downsides to renting however there are downsides to getting a mortgage too. I remember when interest rates for mortgages were 17%!
We earn good money between us, have £70k in the bank and enjoy life. We leased a new car (Octavia VRS) last year and consider the cost no differently than someone who spends £80 a week on fags and booze.
If people want to save every penny for their kids, or for "a rainy day", or they are just fking tight, that's up to them. Money is only useful if you exchange it for goods or services. We are going to die penniless but having had a great life full of amazing experiences! You can't take it with you!
I have wondered about taking that course, but we are probably opposite to you in reality, asset rich and income poor, well pretty average anyway. The problem is we are both careful with money, even if we sold up we probably wouldn't/couldn't spend it all, so we're going to build a house instead which will release cash into the economy while still gaining us a useful asset. We earn good money between us, have £70k in the bank and enjoy life. We leased a new car (Octavia VRS) last year and consider the cost no differently than someone who spends £80 a week on fags and booze.
If people want to save every penny for their kids, or for "a rainy day", or they are just f
king tight, that's up to them. Money is only useful if you exchange it for goods or services. We are going to die penniless but having had a great life full of amazing experiences! You can't take it with you!Not directly PCP related but I'm in the market for an expensive piece of work equipment to the tune of about £5k.
I was planning to pay cash but wanted advice on if the VAT was claimable on the VAT Flat Rate Scheme. I spoke to my accountant who advised me that yes the VAT was claimable so long as the receipt is for more than £2000. They also said to buy it in my personal name on 0% finance or 0% credit card and keep the cash in hand in the business account so I didn't reduce my cash funds and just pay for it monthly over a year by transferring funds from business to personal account to cover the costs.
It means I'm only spending £400 in any one month instead of nearly £5k in one go if I did it over 12 months or £200 over 24 months. I can see how it could be good advise but can't help but think paying it all off in one go is better as its then not an extra monthly bill.
I was planning to pay cash but wanted advice on if the VAT was claimable on the VAT Flat Rate Scheme. I spoke to my accountant who advised me that yes the VAT was claimable so long as the receipt is for more than £2000. They also said to buy it in my personal name on 0% finance or 0% credit card and keep the cash in hand in the business account so I didn't reduce my cash funds and just pay for it monthly over a year by transferring funds from business to personal account to cover the costs.
It means I'm only spending £400 in any one month instead of nearly £5k in one go if I did it over 12 months or £200 over 24 months. I can see how it could be good advise but can't help but think paying it all off in one go is better as its then not an extra monthly bill.
Gee....the world has been in a "Creative Credit" fueled bubble most of my life and certainly the last 45 years of it. Dodgy debt had been held as "assets" on bank balance sheets for years and a lot of it got transferred to Governments in the 2008 GFC. There are no chairs left when the music stops next time. It's over. It's "global financial system reset" time when GFC2 happens.
When will GFC2 happen? Consider this. Deutsche Bank alone is currently sitting on a derivatives (the stuff that caused GFC1) exposure of 42 trillion euro. It's market cap is about 16 billion euro. It's leveraged over 2,600 times its market cap on "investments" that are basically a confidence trick. If it fails, nobody can bail it out, It's debt will be 14 times Germany's GDP and 5 times Europe's. This will make Lehman Bros. look like a mere blip. And God knows what's hiding on the murky balance sheets of the Chinese banking industry....but I bet it wouldn't stand up to Western GAAP (as dodgy as that is).
So enjoy yourselves now, 'cause basically we're all f#cked.
When will GFC2 happen? Consider this. Deutsche Bank alone is currently sitting on a derivatives (the stuff that caused GFC1) exposure of 42 trillion euro. It's market cap is about 16 billion euro. It's leveraged over 2,600 times its market cap on "investments" that are basically a confidence trick. If it fails, nobody can bail it out, It's debt will be 14 times Germany's GDP and 5 times Europe's. This will make Lehman Bros. look like a mere blip. And God knows what's hiding on the murky balance sheets of the Chinese banking industry....but I bet it wouldn't stand up to Western GAAP (as dodgy as that is).
So enjoy yourselves now, 'cause basically we're all f#cked.
Edited by RBH58 on Wednesday 29th March 01:56
Edited by RBH58 on Wednesday 29th March 01:58
Edited by RBH58 on Wednesday 29th March 05:35
bagusbagus said:
not only the wheels are about to fall off
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.
Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares...
I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.
Impressive storyThanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.
Jokes on you all, if s
t hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and w
k over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares... I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.
Good for you , stick it to the man .....
novus said:
bagusbagus said:
not only the wheels are about to fall off
Thanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.
Jokes on you all, if st hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.
Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and wk over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares...
I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.
Impressive storyThanks to all the wise Pensioner Decisions the housing market is about to hit some very very rough times even if the Media says it will blossom...This country has no resources whatsoever, and everything is based on housing bubble.
I have sold and cashed in on 3 of my properties which I had and currently fixing up my own house to put it on market in a couple of weeks.
Jokes on you all, if s
t hits the fan I'm out of this dump till the market hits rock bottom and I can re-buy.Meanwhile... Keep working hard all your life away and Keep buying your depreciating metal boxes and w
k over them while having nothing to show for in the end. A 500pound reliable used car with fresh Mot does the same job and you can DIY fix almost anything on a car for close to nothing + You don't have any liability!, It's very hard anyways to impress someone with your car unless you have a Lambo/ferrari because everyone has a 20-30k new/newish car on lease/pcp so what's the point? no1 really cares... I will keep putting in my money in property instead of throwing it away on new cars / £5 convenience lunches from tesco /latest iphones and 80inch tv's on creditcards, oh wait I haven't even had a creditcard before... so in maybe 10years I can retire while most of the population will still be deep in debt over a stupid things such as brand new shiny cars on lease every 2years.
Good for you , stick it to the man .....
king dialogue.Ignore all the crap and there is actually a lot of sense in what he's saying though.
lord trumpton said:
I thought that too, mainly because the post is full of smug, self wking dialogue.
Ignore all the crap and there is actually a lot of sense in what he's saying though.
Sure...but it's so boring being sensible and you may not live long enough to spend all your loot anyway. Carpe diem.king dialogue.Ignore all the crap and there is actually a lot of sense in what he's saying though.
mondeoman said:
DonkeyApple said:
The US is in a genuinely awful state at the moment and this is an interesting article and one which contains many synergies with the South East of the UK.
http://www.marketwatch.com/story/how-you-can-still...
Somewhat misleading - the articel makes it clear that after paying for all their expenses, including child care, student debt, 3 holidays a year, clothes, cars, mortgage etc.. they STILL have $7500 left over as well as having donated $18k to charity! Hardly broke, by anyones standards.http://www.marketwatch.com/story/how-you-can-still...
The purpose of the article is to highlight that the middle classes (defined by income) who used to build investment portfolios and have total security from market fluctuations as well as prudent attitudes to consumption are living more as wage earners than salary earners. A poor person has very little to lose from spending everything they earn but a wealthy person has much to lose.
It is very similar in London. Up until a few years ago I was a partner in a niche lending business where we made bridging loans to to people who were spending their bonuses ahead of earning them. People on £200k+ basics but spending 2-3 times that living la vida loca. And if that wasn't crazy enough the number who were unable to collateralise was amazing.
In my core line of work we are essentially lending quite large sums to people and so we carry out credit checks etc on customers as well as specific suitability questions. We've seen directly, the level of wealth plummet over the last decade. Same post codes, same careers and incomes but we've genuinely gone from the norm of huge property equity, healthy pensions, big portfolios and cash reserves to a norm of very little property equity, often no pension or portfolio and low cash reserves. It's really been quite interesting to watch this massive increase in consumption.
RBH58 said:
Consider this. Deutsche Bank alone is currently sitting on a derivatives (the stuff that caused GFC1) exposure of 42 trillion euro. It's market cap is about 16 billion euro. It's leveraged over 2,600 times its market cap on "investments" that are basically a confidence trick. If it fails, nobody can bail it out, It's debt will be 14 times Germany's GDP and 5 times Europe's. This will make Lehman Bros. look like a mere blip. And God knows what's hiding on the murky balance sheets of the Chinese banking industry....but I bet it wouldn't stand up to Western GAAP (as dodgy as that is).
So enjoy yourselves now, 'cause basically we're all f#cked.
As soon as I read that paragraph about derivative exposure I knew you were talking out your arse - you obviously don't understand banking so best to keep wearing your tin foil hat and pretending you do!!!So enjoy yourselves now, 'cause basically we're all f#cked.
Edited by RBH58 on Wednesday 29th March 05:35
ashleyman said:
Not directly PCP related but I'm in the market for an expensive piece of work equipment to the tune of about £5k.
I was planning to pay cash but wanted advice on if the VAT was claimable on the VAT Flat Rate Scheme. I spoke to my accountant who advised me that yes the VAT was claimable so long as the receipt is for more than £2000. They also said to buy it in my personal name on 0% finance or 0% credit card and keep the cash in hand in the business account so I didn't reduce my cash funds and just pay for it monthly over a year by transferring funds from business to personal account to cover the costs.
It means I'm only spending £400 in any one month instead of nearly £5k in one go if I did it over 12 months or £200 over 24 months. I can see how it could be good advise but can't help but think paying it all off in one go is better as its then not an extra monthly bill.
This is where finance is a positive thing. It's about investing not consuming. It sounds like your accountant is suggesting that taking £5k out of your company may leave it more exposed to revenue fluctuations? Ie the business isn't awash with excess cash. So spreading the burden of the cost over 12 months is better for the business. I was planning to pay cash but wanted advice on if the VAT was claimable on the VAT Flat Rate Scheme. I spoke to my accountant who advised me that yes the VAT was claimable so long as the receipt is for more than £2000. They also said to buy it in my personal name on 0% finance or 0% credit card and keep the cash in hand in the business account so I didn't reduce my cash funds and just pay for it monthly over a year by transferring funds from business to personal account to cover the costs.
It means I'm only spending £400 in any one month instead of nearly £5k in one go if I did it over 12 months or £200 over 24 months. I can see how it could be good advise but can't help but think paying it all off in one go is better as its then not an extra monthly bill.
I'm guessing he is still saying that the business is to buy the equipment from you so that it is in the company accounts and being written down etc. And I'm guessing you buying it directly on a zero interest card doesn't change the purchase price?
BigLion said:
As soon as I read that paragraph about derivative exposure I knew you were talking out your arse - you obviously don't understand banking so best to keep wearing your tin foil hat and pretending you do!!!
So you are denying that this is true? This was pointed out to me by a friend who is an investment banker for a large international bank. It's sounds terrifying but strangely believable. And Deutsche Bank made no effort to conceal it on their 2016 Annual Report BTW. If it's only 25% as bad as "the smoke" would indicate, it's enough to bring on GFC2.Oh and nobody knows how banking works. That's part of the problem.
Edited by RBH58 on Wednesday 29th March 08:07
Edited by RBH58 on Wednesday 29th March 10:22
Welshbeef said:
Tonsko said:
So I've just arrived in the PCP market a month or so back. Never had PCP before, always preferred owning my cars via bank loans or savings etc. Preferred PCP over lease though.
2016 Scirocco R - £26K, 7800 miles. £5K deposit, 298(ish) monthly payments over 4 years with a £10K(ish) final settlement. This was at 5.9% APR on 15K miles per year. Am basically waiting a few months (for credit check reasons) and am planning to get a loan (at around 3-4% APR to pay off to reduce monthly payments to ~£49 (which apparent is VW finance's lower limit before they ask for full settlement), then carry on paying a lower interest rate on the loan (think it works out to roughly 240-260pm) saving around £40pm over 4 years.
Now, the finance guys phoned me and said that they will probably phone me up after 2 1/2 years and ask if I want to change my car. So far, so standard it seems.
What does it mean by 'building equity' in your car? Why should I not chop the car in after a couple of years?
The point is you at no time will have paid the car off nor it's replacement. 2016 Scirocco R - £26K, 7800 miles. £5K deposit, 298(ish) monthly payments over 4 years with a £10K(ish) final settlement. This was at 5.9% APR on 15K miles per year. Am basically waiting a few months (for credit check reasons) and am planning to get a loan (at around 3-4% APR to pay off to reduce monthly payments to ~£49 (which apparent is VW finance's lower limit before they ask for full settlement), then carry on paying a lower interest rate on the loan (think it works out to roughly 240-260pm) saving around £40pm over 4 years.
Now, the finance guys phoned me and said that they will probably phone me up after 2 1/2 years and ask if I want to change my car. So far, so standard it seems.
What does it mean by 'building equity' in your car? Why should I not chop the car in after a couple of years?
As long as you know that is the case and it is a costlier way than say a banger /you know the pros and cons. If you don't realise that or somehow the sales guys mislead you then there is an issue.
http://www.thecalculatorsite.com/finance/calculato...
If you complete the term and pay the final value, you will have paid around £29k for the car, which includes £3.5k for interest.
The GMFV is usually 80% of the trade in value so at that point it will be worth around £12.5k. So the cost to own will be £ £16,500. That is £4,125 per year and if you bought cash you could have saved £875 a year.
The big point is that you should ALWAYS buy the car. Either at the end of the term or early as the settlement value will usually be more than it is worth. Handing back the car after 4 years or early is more expensive for the buyer. The earlier you pay of the loan, the more interest you save.
I generally take a 4 year PCP with as big a deposit as I can get away with and pay off in full after 2-3 years. I always own the car at that point.
The idea that PCP leads to you not buying the car is a myth. You should never ever look at it that way.
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