Talk Morgan Forums Community The Malvern Arms PCP Car Finance Future Problems

Last week the Bank of England said they were worried about the debt held by car manufacturer’s as cars came off PCP deals back into the manufacturers stock that could not be resold at anywhere near the book value advised by the manufacturer.

Now another angle to the PCP effect is noted here.

Worth a read.

http://www.telegraph.co.uk/news/2017/04/...nancial-crisis/

I read that this morning.

Yes, this is a mess in the making.

I am getting angry about the way the finance sector looks for more and complex ways to fleece people from their money.

When we took out a PCP on the AMG there was no check on our ability to pay. OK, we chose a PCP as we didn't want to use capital, but that isn't the point.

No one should be given credit, for anything, without an affordability check.

I'd apply the same test used for mortgages to credit cards, overdrafts, payday loans, store cards, everything. I'd apply it retrospectively and for all loans deemed "unaffordable" force the lender to wipe off the debt. That would take the smile of the greedy loansharks faces.

I have a BA AMEX Card, all my work expenses go on it. Over the years the available credit limit has been pushed up by AMEX, without me asking, and now stands at 50% of my annual salary. OK, as a % of my expenses and salary it is much more realistic, but that isn't the point. I have access to credit that is way beyond my ability to pay it back.

Thanks for the link/ I'd read plenty about this situation in the US, but not so much about the UK. I was still pretty worried about the UK though. Especially the residual values that some of the premium marques command - these lead to relatively low monthly rates (when coupled with low interest rates) that it is almost as expensive to take on a new car as it is to buy used. Nuts.

On the other hand, one could argue that no one should apply for credit of any description unless one is absolutely sure one will be able to pay it back. Whatever happened to personal responsibility?

[Rant Mode = On]

If you want something, save up for it. Simple. Nobody needs to drive a flash car, a £200 shed is fine to get to work. Being in debt is the absolute pits, you sacrifice your freedom in return for an illusory sense of 'wealth', and stuffing yourself financially for the sake of a depreciating asset is just plain bonkers in my view.

I concede that it might make financial sense to borrow money rather than use capital to finance a purchase, but in that case if it all goes Pete Tong you can buy off the loan with the capital, so my first principle is valid. But many of these daft sods are getting themselves in trouble because they think that other people are going to be impressed by their choice of car.

Rich people stay rich by behaving as if they are poor. Poor people stay poor by behaving as if they are rich.

[/Rant]

I was at a Subaru dealer, who had been offered a £65k Audi list when new at one year old as a trade as the owner "did not like the car". The Subaru dealer phoned an Audi Dealer they deal with and asked them if they wanted the car at that price as they were unsure of retailing it.

The Audi dealer said with the PCP offers they had on that model at that moment that as you said Joe, the HP payments on the second hand car would be more than th PCP payments for a new car and the up front deposit would be higher for the second hand car.

In the Audi dealers opinion the punters would want a new car on PCP. Therefore they did not want the car and the Subaru dealer in the end said they were not interested in the car as a trade in.

I have no problem with PCP or any other form of credit if it is competitive and like Peter we took out a 3% loan via Sainsburys Bank as the other way to get the money was to take it out of my company and pay 40% tax on the lump sum rather than pay the monthly payments out of our salry within the 20% tax band.

In that case the interest was a lower cost than paying the extra tax at40% tax.

I have also seen friends who are not well off who basically could afford a £12k car doing PCP on a £22k car and I do not think all the people who I see in Range Rovers and BMW X5's all have a large disposable income but if every one was like me it would be boring big time!!!!!!

Rich people stay rich by behaving as if they are poor. Poor people stay poor by behaving as if they are rich.

Tim

You have hit the nail on the head.

Abso-bloody-lutely. The only loan I have ever taken out was the mortgage (long-forgotten now). I don't understand all this PCP stuff and, frankly, I don't want to.

And another thing...

...who decreed I should have a credit score? Everything I hear implies I have one, but I don't want one, never asked for one and never gone looking for it. They can all mind their own business.

One of our daughters walked out of a Fiat garage with a new 500 after paying no deposit and £170 per month. I was amazed; it costs that to hire a car for 3 days. It will surely end in tears.

I bought my wife's car on a contract. £200 a month including all servicing, tyres etc. A 2 year contract which I could pay off at any time, but it seemed an efficient way of not using capital. Everything else I own outright.

I'm not sure exactly what PCP is but I was offered a deal with 50% down payment and 50% after 2 years with zero interest on the new Jag. Strange to say they seemed more interested in that than an outright cash payment.

Perhaps they think that I am more likely to buy a new car at the end of the 2 years with that deal.