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Vehicle Finance - Credit Bubble?

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smegballs
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PostPosted: 20:27 - 23 Jul 2017    Post subject: Vehicle Finance - Credit Bubble? Reply with quote

Anyone got a rough idea of the magnitude of debt in UK (or elsewhere out of interest) from car finance/loans?

Is this another looming credit bubble? I've heard two anecdotes, and I'm sure you lot will have some, that would seem to indicate it is.

1. Friend of mind gets a used warrior pickup on finance, a little while later it needs new propshafts, but he doesn't have the money to do it. So it sits for ages, still paying the finance, without being in a state to actually provide use.

2. Another mate goes to a house party, meets a lad there who has 80k worth of BMW parked up outside. At one point a few of them go for a beer run to the local corner shop, BMW kid ends up asking for some of the other guys if they could buy him a few beers. He explains that basically all of his money is going on the finance for the BMW and that despite having* the car, he is effectively penniless.

Admittedly these are just two examples, but I'm sure they aren't isloated incidents. Anyone have other stories?


*of course he doesn't "have" the car, the finance company does...
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Itchy
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PostPosted: 20:38 - 23 Jul 2017    Post subject: Re: Vehicle Finance - Credit Bubble? Reply with quote

smegballs wrote:
Anyone got a rough idea of the magnitude of debt in UK (or elsewhere out of interest) from car finance/loans?.


36bn per year +12% on the previous year.

smegballs wrote:
Is this another looming credit bubble? I've heard two anecdotes, and I'm sure you lot will have some, that would seem to indicate it is.


Yes it is. Banks and money creators pushed as much debt as possible on home buyers. This tapped out. So they pushed it onto students... this too was tapped out. So the mega purchases people make in their lives have tapped out.

So they moved onto pushing credit onto the next mega purchases people make vehicles.
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kawakid
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PostPosted: 20:38 - 23 Jul 2017    Post subject: Reply with quote

Every car advert I see now says x amount per month, followed by small print saying something along the line of £2k advance deposit, followed by you won't own this car and you are limited to x miles over 2 years or you will be charged x pence per excess mile.

Lady at work said we couldn't take my husbands car out as his mileage was up.

The same woman who says she was unprepared to commute from Manchester to Halifax in a Golf as they are too small and unsafe.

I bough a 1 year old car recently, I saved up.
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Kickstart
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PostPosted: 20:39 - 23 Jul 2017    Post subject: Reply with quote

Hi

Second has been the case for many many years. Some people spend every penny they have on a toy like that (neighbours sons had a friend who in his early 20s had a Focus RS when they first came out, and was virtually pennyless).

Not so sure on the first, but probably more that these days ever fewer people are capable of doing basic repairs.

All the best

Katy
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dodsi
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PostPosted: 21:21 - 23 Jul 2017    Post subject: Reply with quote

Not all financed vehicles are unaffordable to the 'owner' or a negative impact on their lives.

As I am going over old ground, I would not be able to own and run a nearly new second hand car or buy outright a new car for the cost of the lease I have on a brand new (now nearly 1 year old) car. The cost of having the new car also does not negatively impact my finances- it was a decision took with a great amount of thought.

As we have around 1 year left on the deal I will soon start to think about either taking out a new lease or just buying something for sub £1500 and running that. to me it's not worth having anything of much greater value unless it's a 'special' car as it's just a tool that attracts an ongoing expense.
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M.C
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PostPosted: 21:57 - 23 Jul 2017    Post subject: Reply with quote

I don't know if there's a massive risk of people defaulting on expensive cars. The story I've heard (which we've debated before on here) is that all these vehicles are going back after a few years, and flooding the market. Whilst they're still selling no problem, if that changes then there might be (a big) one.
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Rogerborg
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PostPosted: 22:50 - 23 Jul 2017    Post subject: Reply with quote

dodsi wrote:
I would not be able to own and run a nearly new second hand car or buy outright a new car

And you never will, as long as you keep renting them.
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M.C
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PostPosted: 23:30 - 23 Jul 2017    Post subject: Reply with quote

Let's not do this again Razz
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owl
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PostPosted: 23:47 - 23 Jul 2017    Post subject: Reply with quote

M.C wrote:
I don't know if there's a massive risk of people defaulting on expensive cars. The story I've heard (which we've debated before on here) is that all these vehicles are going back after a few years, and flooding the market. Whilst they're still selling no problem, if that changes then there might be (a big) one.


Or being leased again as "dealer approved used"

https://youtu.be/4U2eDJnwz_s
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Tracey Suntan-King
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PostPosted: 00:55 - 24 Jul 2017    Post subject: Reply with quote

Rogerborg wrote:
dodsi wrote:
I would not be able to own and run a nearly new second hand car or buy outright a new car

And you never will, as long as you keep renting them.


Rated funny just because of Diane Twelvety Abbott avatar. TWELVETY!
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skatefreak
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PostPosted: 10:14 - 24 Jul 2017    Post subject: Reply with quote

I agree that it's not always a bad thing.
My wife has a <2 year old 1.6 C4 cactus on finance, £125'ish a month, more than affordable and after chopping in the finance on the old car + deposit its only a couple of years @ 0%. Expensive motoring but it's about as cheap as it will ever get going that new + she needs a reliable car (read likes shiney) as it's her only form of transport.

Me on the other hand bought a 22 year old 306 a month ago (£200 + £50 driving home + insurance), new disks/pads/clutch and a good service (£100). If it craps out I just get on one of my motorbikes! Laughing

I did brim the tank with (dried + filtered) Waste vegetable oil last week though, another 50 litres ready to go and can dry/filter 100 litres in an afternoon.

The car will have paid for itself in a few months, Tax and insurance (for both of us) in the months after.

I'm cheap, I'll admit that, not fussy in the slightest about what I drive either but am currently doing the 'cross fit' thing (cheap introductory offer, already cancelled the subscription Rolling Eyes) but the smell of chips every time I start that car up is driving me up the wall... Do want chips Shocked Sad
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dodsi
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PostPosted: 12:57 - 24 Jul 2017    Post subject: Reply with quote

Rogerborg wrote:
dodsi wrote:
I would not be able to own and run a nearly new second hand car or buy outright a new car

And you never will, as long as you keep renting them.


I wouldn't buy outright a new car, providing I could get a deal like we currently have on a lease. Obviously, you have to factor in all of the actual running costs.

But as I said, once the next year is up it's either spend sub £1500 on something like a Toyota Avensis and run that on the cheap with the option to throw it away if it throws up a big bill Or shop around for another lease. This will wholly hinge on how good the deals are when the current lease comes to an end.

Question, if its cheaper over a set period of time to Lease a vehicle over owning it then selling it on why would you not? Surely, it's a fairly sensible decision if you can have the same thing cheaper?
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Rogerborg
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PostPosted: 13:33 - 24 Jul 2017    Post subject: Reply with quote

dodsi wrote:
if its cheaper over a set period of time to Lease a vehicle over owning it then selling it on why would

... so many people paying their rent by renting you one?

Genuine question. If someone's making a living from selling you something, you're paying their wages out of your pocket.
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skatefreak
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PostPosted: 15:18 - 24 Jul 2017    Post subject: Reply with quote

Do people really consider car's disposable (answer seems to be yes?)?
You could have the cleanest running car in the world but if you demand a new one every 3 years then you're creating an awful amount of manufacturing pollution Tut Tut

Not to mention the fact that can everyone really afford to 'lease' a car? I mean yeah it's only a few hundred a month but just think of how many cars you are actually buying every decade?

With cheap finance people seem to be buying into the manufacturers arms who have by the way literally hit gold.

Don't just buy one car and drive it for 10 years ohhh no no no no...
Buy 3.5 cars over 10 years!

Although I have to disprove of this wasteful, disposable, consumer mentality on morals... I wont disprove to loud as it seems to keep second hand car values pretty low and I'll be damned if I'm going to piss away thousands on lease/finance/new shite modern cars (when my old clapped out banger finally cops it that is) Laughing
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Itchy
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PostPosted: 16:25 - 24 Jul 2017    Post subject: Reply with quote

skatefreak wrote:
Do people really consider car's disposable (answer seems to be yes?)?
You could have the cleanest running car in the world but if you demand a new one every 3 years then you're creating an awful amount of manufacturing pollution Tut Tut

Not to mention the fact that can everyone really afford to 'lease' a car? I mean yeah it's only a few hundred a month but just think of how many cars you are actually buying every decade?

With cheap finance people seem to be buying into the manufacturers arms who have by the way literally hit gold.

Don't just buy one car and drive it for 10 years ohhh no no no no...
Buy 3.5 cars over 10 years!

Although I have to disprove of this wasteful, disposable, consumer mentality on morals... I wont disprove to loud as it seems to keep second hand car values pretty low and I'll be damned if I'm going to piss away thousands on lease/finance/new shite modern cars (when my old clapped out banger finally cops it that is) Laughing



https://vimeo.com/9683428
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Kickstart
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PostPosted: 18:49 - 24 Jul 2017    Post subject: Reply with quote

Hi

Not sure many people have kept cars from new to utterly clapped out. Part of the appeal for the PCP deals and leasing is to turn over new cars into 2nd hand ones without dropping the prices (as the importers don't want to be seen as cheapy car suppliers), and 2nd hand has always been where most of the sales have been.

Bigger problem is that they appear to be trying to increase sales by making them cheaper based on a value after X years. But by doing this they will force down the value after X years , which will push up the PCP / lease costs.

Possibly more of a worry is the number of people who are going to be screwed over by a load of minor repairs to bring it back up to an acceptable condition at the end of the term. Or worse, find they have to put in an insurance claim to cover the minor bits that have added up.

All the best

Katy
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skatefreak
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PostPosted: 19:05 - 24 Jul 2017    Post subject: Reply with quote

Old 306... red Wub
How did you know I literally bought one of those Shocked
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smegballs
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PostPosted: 19:44 - 24 Jul 2017    Post subject: Reply with quote

I would estimate that modern cars, being so loaded with various features, are also a potential time bomb when they start to get on a bit.

I remember good old mechanical fuel pump diesels from 90s and early 2000s. They would truck on forever with no worries and most likely the car would rust out or otherwise be uneconomical to repair before the engine gave you any trouble.

Contrast with today where modern diesel engines have loads of failure points that are big bills to put right: dual-mass flywheel, various forms of electronic diesel injection, diesel particulate filter etc.

It makes me want to look for a 90s/2000s car in good nick now, stock up on service parts and keep it forever.
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M.C
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PostPosted: 19:58 - 24 Jul 2017    Post subject: Reply with quote

smegballs wrote:
It makes me want to look for a 90s/2000s car in good nick now, stock up on service parts and keep it forever.

Dacia Sandero? Smile They're pretty basic. I agree with your sentiment, one of my neighbours has had a Toyota Altezza for the last 15 years that seems to keep on going, I'd love one actually. I wonder how many cars were lost during the brilliant scrappage scheme Rolling Eyes
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Rogerborg
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PostPosted: 19:59 - 24 Jul 2017    Post subject: Reply with quote

Itchy wrote:
https://vimeo.com/9683428

The problem with working on modern cars is that once the electronics go, you often are cheaper just buying one that's not lit up like a Christmas tree rather than paying hefty fees for diagnosis, tracing, and eye wateringly expensive black boxes which are increasingly keyed to each other and not easily swappable.

I've currently got a yellow EML and a red SRS light on my 2010 Zafira, and am not relishing the conversation with the local techno-spanner monkey come MOT time.

And even mechanically they're not designed to be worked on. I was attempting to get the rear calipers off it only to discover that the top bolt is placed so that you cannot get a socket onto it without first removing the brake line. A spanner just started rounding it off, and there's no convenient way to access the bolts anyway without removing the whole rear bumper or putting it up on ramps.

So I'm not completely ruling out the prospect of getting Mrs Borg into a PCP-mobile, just so that I never have to work on a car again, or pay a garage to do so.
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Kickstart
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PostPosted: 20:40 - 24 Jul 2017    Post subject: Reply with quote

smegballs wrote:
Contrast with today where modern diesel engines have loads of failure points that are big bills to put right: dual-mass flywheel, various forms of electronic diesel injection, diesel particulate filter etc.


A good reason not to touch a diesel with a barge pole!

M.C wrote:
I wonder how many cars were lost during the brilliant scrappage scheme Rolling Eyes


Way too many. My father traded in a Fiat Seicento that had quite a bit of life left in it (and was quite a fun car to drive), because £2k scrappage on trade in was way more than it was worth (the car the new one was replacing got sold separately).

All the best

Katy
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M.C
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PostPosted: 22:08 - 24 Jul 2017    Post subject: Reply with quote

Rogerborg wrote:
I've currently got a yellow EML and a red SRS light on my 2010 Zafira, and am not relishing the conversation with the local techno-spanner monkey come MOT time.

And even mechanically they're not designed to be worked on. I was attempting to get the rear calipers off it only to discover that the top bolt is placed so that you cannot get a socket onto it without first removing the brake line. A spanner just started rounding it off, and there's no convenient way to access the bolts anyway without removing the whole rear bumper or putting it up on ramps.

So I'm not completely ruling out the prospect of getting Mrs Borg into a PCP-mobile, just so that I never have to work on a car again, or pay a garage to do so.

Set it on fire, bill Vauxhall. They don't seem to be very good cars, my dads one which's 10 years old but has only covered 60k is having one problem after another.
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Rogerborg
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PostPosted: 22:57 - 24 Jul 2017    Post subject: Reply with quote

Sadly it had the antifire fix.

Then it had the second antifire fix.

It might actually be the best plan though. I'll PM arry.
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M.C
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PostPosted: 22:59 - 24 Jul 2017    Post subject: Reply with quote

Interesting, my dads got the that'll be alright treatment (and it's one of the combustible models).
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