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Car finance deals soar to new record

(40 posts)
  • Started 6 years ago by kaputnik
  • Latest reply from crowriver

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12

  1. kaputnik
    Moderator

    http://www.bbc.co.uk/news/business-39895327

    The value of finance deals used to buy new cars has soared to a new monthly record, according to latest figures.

    Motorists spent £3.6bn on car finance deals in March, a rise of 13% on the same month in 2016, the Finance and Leasing Association (FLA) said.

    The vast majority of the purchases were via so-called Personal Contract Purchases (PCPs).

    The Bank of England and the Financial Conduct Authority (FCA) have raised concerns about such deals.

    Including used cars, consumers spent £32.5bn in the year to March, the FLA said.

    In case you were wondering how there seems to be an ever-increasing number of newer and more expensive motors out there in a financial climate such as this.

    I've read it put that motor finance might be the new sub-prime loans.

    Posted 6 years ago #

  2. chdot
    Admin

    "motor finance might be the new sub-prime loans"

    Dunno but they get more people owing more money, without actually owning anything at the end.

    Problem only comes if incomes continue to stagnate while prices generally rise and/or significant increase in unemployment/less work for those on precarious contacts...

    Posted 6 years ago #

  3. neddie
    Member

    Cars should called "debt-instruments" rather than "cars".

    I suppose at least you can hand the car back* when you find you can't make the payments anymore. Somewhat different to sub-prime loans where it is undesirable to hand back your whole house...

    *Although this may mean you lose your job if you've set your life up as "car dependant" and can no longer make the commute.

    Posted 6 years ago #

  4. Stickman
    Member

    @neddie_h:

    Part of the problem with sub-prime was exactly that: people in some American states had non-recourse mortgages and could just hand back the keys, leaving the bank with a house worth less than the mortgage.

    Posted 6 years ago #

  5. jonty
    Member

    And cars usually depreciate anyway (without a potential glut of repossessed vehicles in the market).

    Posted 6 years ago #

  6. kaputnik
    Moderator

    I'd happily bet there are some cars that are never sold and sit in manufacturers lots in mothballs for years before being either written off on the books and sold at auction or quite literally scrapped.

    I'm envisaging the car factory of the future with shiny motors rolling out of the plant, only to go straight into the scrapyard and recycling plant to be reprocessed into the raw materials to go back in to the car factory. Every so often one of them sells and gets plucked off the conveyor belt for a lifetime where it spends 95% of its existence sitting empty in a parking space.

    Posted 6 years ago #

  7. Stickman
    Member

    I've never been able to figure out the "pre-registration" shenanigans that car dealers do to manipulate their numbers.

    Posted 6 years ago #

  8. wee folding bike
    Member

    I think it's to do with monthly quotas and sales are low at some times during the year so they register a car and it counts as sold. My dad has got preregistered cars a few times.

    I'd been wondering if the new VED system where it goes with the owner, not the car, has had an effect on the timing of second hand sales. If you buy a car on the 29th and take it home then you have to pay a whole month of VED for a day or two. I've not bought a car since 2004 but if I did I'd be happy to wait a couple of days and get the whole month's worth. Perhaps people spending thousands on a car don't mind or maybe the dealers pick it up.

    Posted 6 years ago #

  9. LaidBack
    Member

    It is the finance industry on wheels and sets the tone for all other high value purchases, including bicycles.
    In reality people get very poor finance deals on cars but feel happy enough as everyone is doing same thing.
    Base price is the factor that swings it. The 'loss' on this is recovered on expensive finance.
    Garages have cars coming in an these can be pre-registered to defeat rrp suggestions from makers.
    Always more cars required and the pure volume allows it to carry on.
    Too big (and desirable for some) to be allowed to collapse. Plus it's a mobile asset with chance to re-possess without making people homeless.
    There are bike finance schemes of course. LB does Cyclescheme.

    Posted 6 years ago #

  10. chdot
    Admin

    But -

    http://www.independent.co.uk/news/business/news/uk-car-registration-slip-new-tax-demand-sales-vehicles-brexit-latest-news-a7824226.html

    Posted 6 years ago #

  11. crowriver
    Member

    “As forecast, demand for new cars has started to cool following five consecutive years of solid growth but the numbers are still strong and the first half of the year is the second biggest on record,”

    Nothing to see then. Keep on motoring down the road...

    Posted 6 years ago #

  12. chdot
    Admin

    Shift in how car purchases are financed (more personal debt) but decline in U.K. production and sales -

    "
    The fall in production mirrored a decline in UK car sales.

    Over the first six months of this year, sales were distorted by a rise in Vehicle Excise Duty in April, which prompted drivers to bring forward purchases of new cars.

    But comparing the first six months of 2017 with the equivalent period in 2016 still showed a fall of 9.5% in UK sales, the SMMT said.

    "

    http://www.bbc.co.uk/news/business-40732335

    Posted 6 years ago #

  13. LaidBack
    Member

    Electric cars will be great for the finance industry.

    Posted 6 years ago #

  14. Baldcyclist
    Member

    "Poor finance deals"

    I've never really paid more than 5% on a car finance deal.

    New cars will be going at 0-5% Apr.

    2nd hand cars going to young, or poorer people at 25% is where the money is being made.

    Or in other words, new cars are practically being given away by the dealers at cost to get them into the system. They can then buy back / sell many times.

    Posted 6 years ago #

  15. crowriver
    Member

    Carmageddon? Not really, considering the previous five years saw "solid growth"...

    ---

    Scottish new car sales decline sharply

    Sales of new cars in Scotland were dented last year, with a fall of 8% in registrations to 203,300. The stalled market was more of a problem for diesel-fuelled cars, down by 17% to 80,000 registrations.

    The decline was steeper for Scottish car dealers than for the UK as a whole, according to the Society of Motor Manufacturers and Traders (SMMT). The decline in new car registrations was most apparent towards the end of the year.

    http://www.bbc.co.uk/news/uk-scotland-scotland-business-42587078

    Posted 6 years ago #

  16. Morningsider
    Member

    According to the figures reported by the BBC, electric cars made up 0.44% of all cars sold in Scotland last year, while diesel cars accounted for 39.4%. So much for the Scottish Government's commitment to decarbonising transport and clean air.

    Posted 6 years ago #

  17. chdot
    Admin

    Not about to defend or excuse SG, but that’s in spite of a lot of noise and a certain amount of charging infrastructure.

    Exposes how little Govs are ‘in control’.

    To some extent it’s the inability/unwillingness to deviate too far from what Westminster/EU decides.

    To get rid of diesel or significantly increase the % of electric cars seems to be impossible (electorally) without massive (extra) subsidies.

    (And that’s without any serious look at whether cars (more of similar) are the optimum future transport option.

    Posted 6 years ago #

  18. I were right about that saddle
    Member

    My motor car is diesel. That's because;

    1) I don't use it round town
    2) I rated its lower carbon emissions highly
    3) It was relatively cheap

    Turned out it was part of the Audi-VW NOx scandal. Not sure if I'd see retrospective punition based on particulates as fair or not.

    Posted 6 years ago #

  19. wishicouldgofaster
    Member

    We considered an electric car last year but just felt (and still do) that
    1) there are not enough charging points
    2) charging still takes too long (4 hours on the model we were considering)
    3) range on one charge is not far enough (100 miles)

    We did however go for a petrol car rather than diesel

    Posted 6 years ago #

  20. LaidBack
    Member

    @chdot - To get rid of diesel or significantly increase the % of electric cars seems to be impossible (electorally) without massive (extra) subsidies.

    Norwegian Gov has success by just removing VAT from e-cars. That and making them exempt from tolls. Over 30% of car sales there are electric.
    Of course they do have a robust tax regime and an oil fund ;-)

    SG have helped with funding of seven electric buses in Edinburgh. These cost around 400,000 pounds each so a long way before commonplace.

    Posted 6 years ago #

  21. crowriver
    Member

    Electric cars/vans make sense as fleet vehicles for councils or large organisations with campuses (eg. universities, colleges, some large employers like RBS etc.) as they are ideally suited to shorter urban journeys. Arguably they also make sense for tradesmen, "last mile" deliveries, taxis, etc..

    Of course you can argue they make sense for the vast majority of private drivers, who rarely travel further than 10 miles anyway. But there's always the summer holiday/hillwalking in the Highlands/visiting Auntie Brenda in Plymouth argument that mitigates against family use.

    Of course for short urban journeys many/most people could be walking, cycling or hopping on public transport. But they have the their cars, so they use them...

    Posted 6 years ago #

  22. chdot
    Admin

    "But they have the their cars, so they use them..."

    Which is a key issue.

    UK Govs unwilling to challenge that either directly or by making much effort to produce/encourage attractive alternatives.

    Posted 6 years ago #

  23. chdot
    Admin

    "

    Air pollution fears after rail fare rises make the cost of commuting cheaper by car

    "

    http://www.heraldscotland.com/news/15812171.Revealed__ScotRail_ticket_price_hike_means_its_now_cheaper_to_take_the_car_to_work_than_the_train/

    Posted 6 years ago #

  24. crowriver
    Member

    ---

    And the most recent transport statistics for Scotland show a steady increase in car traffic over the last five years – while regulated rail fares have increased 12.7 per cent over the same period.

    Scottish Government figures show 34.7 million vehicle kilometres were travelled by cars on all of Scotland’s roads in 2015-16, up from 33.6m in 2010-11, an increase of 3.2 per cent.

    Official statistics also show 2.9m motor vehicles were licensed in Scotland in 2015, the highest-ever level – 13 per cent higher than in 2005 and up from 0.9 million in 1964.

    ---

    Posted 6 years ago #

  25. chdot
    Admin

    https://www.theguardian.com/business/live/2020/may/05/uk-car-sales-tumble-services-pmi-recession-covid-19-business-live

    Posted 3 years ago #

  26. crowriver
    Member

    “Whilst the market is down significantly, our data does point to a market that has been paused, rather than stopped, and ready to return to health quickly once the restrictions have been lifted."

    Posted 3 years ago #

  27. gembo
    Member

    Lowest since 1946

    Once in a lifetime chance to end this behind the wheel of. A large automobile

    Madness

    (Reference the sublime and brilliant Talking HEads)

    Posted 3 years ago #

  28. chdot
    Admin

    “Reference the sublime and brilliant Talking HEads“

    Not like you to give away the source of your wordplay!

    Posted 3 years ago #

  29. Rob
    Member

    Cinemas and restaurants also saw record lows. Barbers haven't had such a bad month since the 70s.

    Posted 3 years ago #

  30. I were right about that saddle
    Member

    Barbers haven't had such a bad month since the 70s.

    There will be no going back. Knotted, polka-dotted, twisted, beaded, braided, powdered, flowered, and confettied, bangled, tangled, spangled, and spaghettied!

    Posted 3 years ago #

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