To think car payments and pcp’s will be the next crisis to hit the U.K. and the world

[Lardlizard]

Yes or no

What schoolcats said is very true; but how many people do it.
We all want something a little better.

Umm, we are on the brink of nuclear war so..... ummm... no

PCP seems to have encouraged people to buy cars that they would not have been previously able to afford. All well and good but many of my neighbours now have two enormous SUVs on their drives - not very environmentally friendly.

@titchy

Nail on head

Why don't you just buy a £600-£1k second hand car? Easy, no finance payments.

you always have to be saving up for your next deposit or saving up to buy out right at the end of the pcp ON TOP of meeting your expensive monthly payments

No you don’t. The old car is the deposit on the new one.

What's a pcp?...Just off to google

What's a pcp?...Just off to google

The equivalent of crack cocaine. Once you're used to having a brand new car every 3 years, especially an expensive model you couldn't otherwise afford it becomes a hard habit to break and in the long term an expensive one!

PCP deals have been around a long time. The knock on effect has been a glut of fairly ‘young’ cars and higher rates of depreciation on same.
It can lead to some pretty wasteful behaviour - but it can also lead to more efficient and safer cars on the road.
Of course like any finance product it doesn’t suit everyone.

In my mind the next miss-selling scandal will be around equity release, over 50s funeral plans, and self managed pensions

Is this really what you're worried about when we're on the verge of total runaway climate change?

Absolutely.

Those questioning use of the word “crisis” - considering last time shitty loans (mortgages in that case) were securitised and came crumbling down thousands of people lost their jobs and houses...sounds like a crisis to me, at least to those hit...

PCP has been a massive boon to the car industry, it has massively propped up values and hugely boosted sales of luxury marques like Audi, BMW, range rover etc.

I never understand why people commit so much monthly income on a car

In 2012 ex had been
Made redundant, the pcp balloon payment was due. We told them we didn’t have it, they took the car back. End of the matter, no drama

Alsohuman
There's a time bomb with even this. Car manufacturers need people to afford the monthly payments, so they play around with what they offer up to keep the monthly amounts "affordable". Many people are finding they don't actually have enough equity on the old vehicle for a decent deposit on the next... this is where the house of cards collapses

No I wouldn't class it as a crisis, fires in Australia, nuclear war, famine I would.

If people get into trouble, the finance company take the car back, they don't lose out as much as they would if you defaulted on a loan, and you end up with a shite credit rating. Hardly rocket science.

Crisis seems like a bit of an over reaction!

FWIW I’ve never taken a PCP deal unless it was at 0% which has been easy to obtain with a minimal deposit/exchange with my manufacturer of choice. It works for me, I like to have something reliable and with a manufacturers warranty. Horses for courses.

Many people are finding they don't actually have enough equity on the old vehicle for a decent deposit on the next... this is where the house of cards collapses

Then they’re idiots. You know before you sign on the dotted line what the minimum value of the car will be when you return it.

I guess this is what idiots thought about sub prime mortgages 💁🏻‍♀️

Is this what you worry about, I worry about the climate, Brexit, the NHS and the nutters we have leading us who love to war.

Sub prime lending on mortgages was a totally different beast imo and not really comparable

• in a mortgage situation the fall in house prices is the homeowner's problem unless they end up getting repossessed. The risk to the borrower is much higher. Pcp has a guaranteed future value so if the arse falls out the second hand car market the impact on individuals with pcp is minimized
• but more importantly the bigger problem with sub prime was the securitisation of the mortgages which were packaged up and resold as aaa investments to other banks and insurance companies amongst others. This meant that as house prices fell the impact spread beyond the banks who had engaged in sub prime. They were also able to expand their lending more than they otherwise would because they were constantly securitising. This doesn't happen to the same extent with car finance.
• the individual car finance deals are much smaller.

There is a feeling in the economic world that car finance will be the cause of the next financial crisis, much like the collapse of the subprime mortgage in the US. Like mortgates, PCPs are fine for people with good credit and secure income, however they are frequently given to people who can't really afford them. It has the potential to lead to a global economic crash and that shouldn't be underestimated.

People who can’t really afford it are the ones most likely to move heaven and earth to pay it.

I use a car for my job. I need a reliable car. But I also do about 15000 miles a year. PCP would not work at all.
Instead I have a 11 year old Honda Jazz - it works fine. I do want to upgrade - but will look for 2nd hand and pay cash if possible.

And if you want a brand new car - there are lots of "pre-registered" cars out there, which have already had the initial depreciation factored in the price.

Used PCP for my last motrobike, no problems or complaints from me, terms were explained, costs shown, and told what wold happen at the end, paid the final payment and own the bike now outright.

in a financial scandal not country scandal like with Iran ect, No deffo not.
I have heard that this taking money out of property will be the next "thing" that they currently push for over 55,s.