Car payments are ruining our lives - BBC

[jpaul]

Isn't lenders behaviour in the same exploitative mold as the pay day lending companies that were banned from the TV;
not far down the aspirational pyramid of want, from a car, is a large oled TV and Dyson vacuum
... last night saw curry's PCW world advert suggesting people take a loan for a £500 dyson 24.9%apr, is that the action of a responsible company.

but mercedes too, they have these sexy adds .. in this car from £200p/m, or so. ...anyway, haven't 'they' already anticipated that these consumer debts will become the next Fannie Mae and Freddie Mac, an employment blip, created by brexit say

eg.
The BoE is concerned about what might happen if prices for used cars went down. If car values at the end of PCP contracts came in at 30% lower than expected, "market-wide losses would rise to 7%-10% of the outstanding stock" of loans held as assets at UK banks, the BoE says.

but OK the tax payer will have to prop it up, again.

 

[DarkHorizon472]

Isn't lenders behaviour in the same exploitative mold as the pay day lending companies that were banned from the TV;
not far down the aspirational pyramid of want, from a car, is a large oled TV and Dyson vacuum
... last night saw curry's PCW world advert suggesting people take a loan for a £500 dyson 24.9%apr, is that the action of a responsible company.

but mercedes too, they have these sexy adds .. in this car from £200p/m, or so. ...anyway, haven't 'they' already anticipated that these consumer debts will become the next Fannie Mae and Freddie Mac, an employment blip, created by brexit say

but OK the tax payer will have to prop it up, again.

You are correct car finance is growing risk and any real economic shock will make it a serious issue.

 

[Thekwango]

It’s always nice to see the perfect people putting all the blame on the people and none on the predatory practices of lenders.

well said old boy. and most of them didn't even bother to read the full story....it actually states she went out to buy a much cheaper car but was persuaded to go for the more expensive one. (I'm taking the story at face value, of course i realise she could be lying)

it's the age old 'love story' (as in car salesmen love mugs or so i keep reading)...........naive punter goes looking for a car, nice cheap run about, meets slimy car salesman wearing his £50 quid suit, convinces naive punter this lovely much more expensive car is for them, signs them up to nice lucrative contract, buys himself new £50 quid suit and feels all smug with himself.

i've actually seen them try this first hand just over a year ago. now i'm not a car person and probably naievly made that clear but thankfully i'm not a total gob***** either (yea i know others may disagree on that!)........budget and type of car decided on....saw one i fancied and arranged to come and view (this was a large respectable NI firm with multiple branches) had a gander, liked what i saw so started to have a more detailed chat. next thing i know is he's talking at a million miles an hour and trying to sell me a car almost 50% over my budget but bs'ing on that finance would make it 'stupidly cheap' for me and i could keep my cash in the bank.......i waited for him to take a breath then said i'd take a few piccies and chat with the wife (i had no intention of doing either but it was politely make an excuse to leave or punch the **** repeatedly in the testicles until he passed out or the police arrived) My request however seemed to actually kind of upset him, not in an angry way but rather he seemed disappointed - apparently he was giving me a super deal as he liked me (which in itself is weird as not many folk do!) and normally they weren't able to offer such deals to just everyone. needless to say i got in my car and drove off (my own car, not the one he was trying to flog me!) It was a truly surreal experience, the whole thing felt like some great big windup - i genuinely kept waiting for someone i knew to pop out from the boot of a car and give it the whole 'ha - only keeping you going kwangy baby'

the girl is an utter twonk for getting herself into this situation but as others have said the second hand car industry is riddled with dodgy practices and scummy salesmen (admittedly not all)

 

[Psycho Sonny]

A pretty stupid decision from her at the outset. A student with a part-time job and £329 per month going out on a car payment - not clever.

I bet she ran the decision through her parents too and so I have little sympathy for them.

I get the argument that somebody, somewhere along the line, probably should have told her you're not going to be able to afford this car. However, she was at least 18 years old and should have been able to make a decision herself.

Moronic.

At my old work there was a young lass who lived with her mum (paid digs but it would have been buttons compared to normal rent) and had just moved out to live with new boyfriend she had been seeing for all of 2 weeks.

She would constantly whine about debt, credit card bills and her car payments for her really old crap car she had (corsa or the likes). She even took up a second job because of all this debt accrued while living at home. God knows what she spent all this money on.

So her friend went and got a audi tt on finance. Her cars HP ended and she was on looking at cars just as soon as hers had ended.

I did remark to her that she seemed to love her credit and finance. To which she went in a huff.

Some people will never learn. God knows how she was now managing proper bills (even halfers) with all that debt. Likely due to second job but even still it shows you how retarded some people are.

 

[Shawreyboy]

What happened to strong parenting? Silly choice to continuing to pay the finance for her, now they've had enough they bemoan their stupidity.

If it would've been me, I'd have said her issue, she sorts it by getting a job pronto or declares she is unable to afford the finance so the car is repossessed and left with any deficiency payments as a painful reminder.

People simply choose to not live within their means these days. Finance can be useful when life is going right and a massive pain if and when life goes wrong. Finance companies do have this odd ability to tempt us into long contractual agreements which very often are or little to no benefit to anyone other than the financier.

Shawrey

 

[Dup]

I'd say these things are mis-sold, you shouldn't be instantly trapped into the simplest method available which happens to be the most expensive. They don't advertise cars as a full outright purchase of X amount. It's a monthly payment and one for something you can't keep. I assume that it's expected you will PCP a car these days than anything else.

Even car insurance is a trap with finance that people don't realise. Rates above 20% and it's assumed you'll pay that method before paying in full. My credit card rates are cheaper and I can pay off faster with an amount I want to pay.

It needs regulation/education. I have little sympathy for those who don't see the true value of things and live on jam butties to keep up with their equally daft mates in a similar position, that's a naieve way to make life decisions but it's working for those who profit from it

In the meantime I'll drive my 11 year old Civic that I've had for 6 years and paid for outright until I'm in a position to finance the bigger car I so desolately need sensibly. I don't care who else drives what.

 

[OpenToSuggestions]

No sympathy for the woman in the OP. The cost of loans are made clear up front. This is in no way the fault of the car company, and this is coming from someone who hates car salesman.

 

[Maccapacca]

It'll be the next bank charges or PPI controversy

 

[TNGL]

At my old work there was a young lass who lived with her mum (paid digs but it would have been buttons compared to normal rent) and had just moved out to live with new boyfriend she had been seeing for all of 2 weeks.

She would constantly whine about debt, credit card bills and her car payments for her really old crap car she had (corsa or the likes). She even took up a second job because of all this debt accrued while living at home. God knows what she spent all this money on.

So her friend went and got a audi tt on finance. Her cars HP ended and she was on looking at cars just as soon as hers had ended.

I did remark to her that she seemed to love her credit and finance. To which she went in a huff.

Some people will never learn. God knows how she was now managing proper bills (even halfers) with all that debt. Likely due to second job but even still it shows you how retarded some people are.

Somebody who is bad at managing money becoming defensive when their financial decisions are questioned...? Sounds about right.

 

[jpaul]

people have some bloody big debts .. the girls not alone

The total amount financed on new cars was actually up 3% to £19.4 billion – about £600 million more than 2017 – despite there being 30,000 fewer car loans.

Just under 960,000 private new car buyers took out some form of car finance in 2018, usually a personal contract purchase (PCP), with a record total of almost £19.4 billion borrowed. This works out to just under £20,200 per car, which is more than 6% more than the previous year’s record average borrowing of £18,900 per car.
..
The number of used cars financed by FLA members was up 7% to 1.45 million cars, with the total amount of debt up by 13% to more than £17.5 billion. This makes the average amount borrowed just over £12,000.

https://www.thecarexpert.co.uk/car-finance-report-2018-record-debt-for-new-and-used-cars/

and pcp are greater than 70% of market- wasn't it ?

Household debt, OECD countries % of disposable income, where data available Q2 2018
Denmark 270.1 Netherlands 222.4 Australia 202.7 Sweden 180.9 Canada 168.5 Ireland 141.2 UK 140.1 Finland 128.5 Portugal 121.8 France 112.1 Spain 109.7 Belgium* 109.1 US 101.2 Japan** 100.8 Austria 85.9 Germany 85.2 Italy 80.8 Chile 72.3 Czech Rep. 65.7 Poland* 60.9 Slovenia 52.2
BRIEFING PAPER Number 7584, 21 December 2018 Household debt: statistics and impact on economy

 

[kurosagi01]

Isn't lenders behaviour in the same exploitative mold as the pay day lending companies that were banned from the TV;
not far down the aspirational pyramid of want, from a car, is a large oled TV and Dyson vacuum
... last night saw curry's PCW world advert suggesting people take a loan for a £500 dyson 24.9%apr, is that the action of a responsible company.

but mercedes too, they have these sexy adds .. in this car from £200p/m, or so. ...anyway, haven't 'they' already anticipated that these consumer debts will become the next Fannie Mae and Freddie Mac, an employment blip, created by brexit say

but OK the tax payer will have to prop it up, again.

Kinda reminds me for every adverts known to planet in retailing, amount of times they slap a fancy number people don't pay attention to the small print of "upto" 50% and the same with car finance adverts. Get xyz for £xxx per month "deposit of xyz but subject to availability etc"

 

[Psycho Sonny]

It'll be the next bank charges or PPI controversy

People have been saying that about interest only mortgages too but I call BS to both.

You are told what you will be paying and the interest isn't as bad as payday loans, etc.

In fact some are competitive.

 

[EddScott]

When I swapped my Subaru plus cash for my BMW, I had to decline the finance agreement 3/4 times. They would give me cash for the Subaru and keep £4K as the deposit then £££per month.

I wanted to swap the car + cash. No finance. The guy even said to me nobody does that any more.

When I go for servicing, I get the odd raised eyebrow that the car isn't leased.

Discussed the slightly crazy way car finance is handled with a mate. He wanted to buy a BTL property but couldn't be bothered with the endless paperwork. So took the deposit to BMW to buy a M2. They took £4K off him, signed a bit of paper he could afford the £500+ per month and handed over the keys (more or less). Just seems very skewed to me. Particularly when someone else is paying the monthly payments with the BTL property.

Those that take these finance agreements out are not without blame but the culture of near enough forcing folk into finance agreements needs looking at. Plus these adverts that offer great finance deals on 2nd hand cars yet when you go to the dealer, it turns out that the new cars are on 0% (fancy that) and the new car gets rented out .

 

[adolf hamster]

it's the modern way, see everything as a monthly payment and dont bother doing the maths.

it started with mobile phones and now it's cars. gotta have the latest flashy model.

now i like a good motor, but £20k on an a1? i'll take an old m3 thanks......

 

[Jumper118]

high time preference.

 

[Bear]

Those that take these finance agreements out are not without blame but the culture of near enough forcing folk into finance agreements needs looking at.

In the past four cars I have bought, they have been from dealers and not once have I been pressured to take out finance. That is from two different Jaguar dealers, one BMW and one Mercedes. Ive always told them right at the start Im making a cash purchase and am not interested in any finance or extras they want to sell me so can they please not try it and they dont.

 

[AiiR]

In the past four cars I have bought, they have been from dealers and not once have I been pressured to take out finance. That is from two different Jaguar dealers, one BMW and one Mercedes. Ive always told them right at the start Im making a cash purchase and am not interested in any finance or extras they want to sell me so can they please not try it and they dont.

I've had the same experience from main dealers. I spoke to Arden BMW about an approved used Z4 and they never tried forcing anything onto me. In fact it was the opposite as I never heard back from them about availability! And this was when the new model was fresh out so could've easily tried pushing me towards a PCP deal.

On the flip side I had a friend heavily pushed towards a finance deal on a Vauxhall Corsa in a dealership. They tried offering all sorts of incentives to sell the finance package that in the end it was better to take the finance option with extras and then pay it straight off with the cash.

 

[iamdjdz]

I have one car on finance and one outright. A while ago we changed car on PCP mid term to a different model essentially adding no value to the overall finance and dropping the payment by £100 per month. Yes we lose out a bit by having paid the depreciation from the first car and by having slight negative equity (surprisingly little) but it made monthly payments easier and long term will have negligible difference. (2018 Mazda CX5 to 2018 BMW 320d)

The outright one is ancient and cost £800.

Car finance can work out OK but I wouldn't have got into the position of having it if we couldn't easily pay it monthly with just one income. We budgeted and stuck to budget and in the end came off ok. It mangles my head though how some people do car finance and I don't have sympathy for the girl in the story.

 

[EddScott]

In the past four cars I have bought, they have been from dealers and not once have I been pressured to take out finance.

I've had the same experience from main dealers.

I bought my car from Woolaston BMW. Right from the start I said I wouldn't be taking out finance but the salesman still sent all the finance agreement paperwork.

My friend buying the M2 from Sytner BMW went in with £30K and they only took £4K. They just didn't want the cash as they make more on the finance and keep you on the hook as you never have any equity in the car.

Suited him as he still bought the BTL property and got someone else to pay for the property and some of the car (should have thought of that myself)

 

[robj20]

In the past four cars I have bought, they have been from dealers and not once have I been pressured to take out finance. That is from two different Jaguar dealers, one BMW and one Mercedes. Ive always told them right at the start Im making a cash purchase and am not interested in any finance or extras they want to sell me so can they please not try it and they dont.

Same, i have never been even offered finance, last car was 18k cash, felt odd paying so much with chip and pin on the debit card. I knew finance was available but it was never pushed or even offered.