Reply to: PCP the next toxic debt threat or is it?

[Hobosapien]

It's not going to be the debt that ****s them. It's going to be the new PPI scandal that is on its way once the FCA opens an enquiry that can prove the financial houses knowingly gave over optimistic final values to vehicles on the basis that the shortfall would make the punters give the cars back and buy new vehicles rather than being in the position to refinance the car at a fair book value.

Not sure of that logic. The punter would have to pay the overall amount regardless of how it was broken down across the two loan cycles if they wanted to keep it after the first cycle. The financiers would argue that by giving high GFV they're helping those who are not interested in entering second cycle, only want a new vehicle every 2/3 years so only ever go through the first cycle.

As for toxic debt problem, maybe the manufacturers who are also offering in house finance, know the true cost of manufacture and their profit margin is within tolerance of the seeming poor residual value. After all they're mostly robot built so only costs are the materials and leccy.

[bobspud]

Thanks for the replies I am still none the wiser re if the world is going to end but perhaps PCP won't be the initiator after all

Thinks, better recheck the WW3 imminent thread......

It's not going to be the debt that ****s them. It's going to be the new PPI scandal that is on its way once the FCA opens an enquiry that can prove the financial houses knowingly gave over optimistic final values to vehicles on the basis that the shortfall would make the punters give the cars back and buy new vehicles rather than being in the position to refinance the car at a fair book value.

[greenlake]

Good stuff that angel dust.

mellow, man, really really mellow.

[DallasDad]

Thanks for the replies I am still none the wiser re if the world is going to end but perhaps PCP won't be the initiator after all

Thinks, better recheck the WW3 imminent thread......

[BrilloPad]

19 posts on this thread, and only one feeble attempt to change it to another bl**dy boring brexit thread ! there's hope for this forum yet!

There really does need to be a b***t forum.....

[BR14]

astounding

19 posts on this thread, and only one feeble attempt to change it to another bl**dy boring brexit thread ! there's hope for this forum yet!

[ASB]

PCP is more of a systemic risk to the banks - everybody's roof threatened.

Yes and no.

The banks are directly very minor players in that market. The vast majority comes from manufacturers captive finance arms. The obvious questio n of course is where their finan e comes fro. And the terms.

The manufacturers took a big bit in 08/09 with residuals much less than gfvs which caused some very limited problems. At that time pcp represented about 10pc of the market not the 70 odd it does now. Lenders also seem more agressive with gfvs rather than less.

[bobspud]

I have rented cars, bought them for cash and used PCP loans over the years. PCP is by far the most efficient way to do it because at the end of the lease you have two more options open to you than a straight rental agreement.

Like rentals, the only risk to the punter is not having enough control of your annual mileage and ending up with additional charges you were not expecting.

I think there is most definitely a storm coming as the new hostilities toward diesel cars are going to make swathes of them worthless and the second hand market will distort as a result.

But the biggest problem for dealers is the sheer number of cars that were bought on cheap money that have to come back to the market in the next 12 months while diesels are tanking already. No one will buy their car from the financial team when it's cheaper to find one just like it on the BCA auction site.

I'm not keeping my Mercedes this year as it missed its target value spectacularly. So now I'm cheerfully handing back a high mileage convertible in the middle of winter. (Thrashed it to bits as well) and my next car has been ordered from a different supplier so not even repeat business for their misfortune.

That's loss is not my problem but mercedes finance are going to really wonder why it lost 10k on an interest free deal and none of the main dealers want the car back on their forecourts...

Im told that roughly 600 SLs were sold on 0% finance deals thats potentially a 6 million pound problem if they are all adrift 10k on their prices

[greenlake]

a couple of days ago I was offered nearly near Golf GTI - half price

Was it LHD or RHD though....?

[AtW]

Lots of cheap cars around, one just need to wait for the right deal, say a couple of days ago I was offered nearly near Golf GTI - half price because one of the keys got lost apparently.

[Dark Black]

My current daily cost me £775 6 years ago.. Great little workhorse.

Why people put themselves in massive debt for something that will (generally) depreciate is beyond me.

[AtW]

"The Car Finance Company offers rates of 49.6 per cent for customers who want a zero-deposit loan. Investors wrote off £50million in the firm as so many customers were falling into arrears."



There cars in the market for £200, why get one that 4k that you can't afford and then make £199 monthly payments?

[BrilloPad]

Lenders install 'kill switches' to immobilise cars | Daily Mail Online

[AtW]

It's easier to do it with new unregistered cars whose production manufacturers control - second hand market is different, also with rates going up cost of financing all that would go up - much harder to keep stock that does not move

[Hobosapien]

No final payment on majority of those (which is why it got so crazy popular) - they rely on secondary market instead, so if the bottom falls off that market then the whole system crashes, with banks on the hook for all this lending...

So if leasing is as crazy popular as appears, then they've swapped the airfields full of new cars for airfields full of used cards, to keep the secondary market artificially high.

Wondered why I didn't get a 3 year old ex-leased car in my box of cornflakes this morning.