HP was the car version of a mortgage in so much as it was secured and you made monthly payments of capital and interest over a defined period to fully pay off the debt and release the security. In a way a PCP is the same but with lower monthlies as the capital outstanding is about half the original amount at the end. As we all know this reduced the monthly payments and led to shorter term debt as the change cycle reduced - car manufacturers increased volume by acting as banks. I often wondered why some challenger bank did not try and convince the regulator that they could offer a PCP mortgage where you only owned half your house after 25 years. We live in a very strange world.
When should we stop buying new cars?
- Thread starter bigbob
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That's bonkers. To be handing over the fat end of a grand a month for something as utilitarian as a Volvo is madness. How long before buyer's remorse would set in?
Still, if people are happy to spend the money then the market will set the price.
GeoffCapes
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Whilst they may not be uniquely smart I would say they are the exception to the rule.
When I was in communication with my now 20 year old son, I impressed on him the fact that he should buy his cars rather than lease them (especially if he followed in my footsteps by smashing the first 4 cars I owned up!).
Even when ALL of his friends we getting cheap leases (via their parents in most instances).
dickygrace
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That’s been the way for 15 years now since the last crash. It’s only the clever folk who buy cash. Most can’t afford to for starters, and they’d rather drive a car they can’t afford than one that they can. I’ve never bought one car on finance; as a former maths teacher I can’t ever justify what the car is going to cost over the pcp/lease period. I’ve spoken to so many people at length about this, there are some deals that are truly good deals. I know of things such as a 4C, Golf R and a Tesla that were offered on great deals. So good however, that they sold out within hours and couldn’t be replicated. The lenders/brokers and dealers are the only winners. Kudos to you people on here who buck the trend, we sell less than 5% of our stock on finance.
You operate in a great sweetspot selling cars that are used, unlikely to be daily drivers, typically a bit old for PCP but above all at the right price point (£25-50k) for people to buy for themselves as a 'treat'.
As an aside I cannot get over how good value GranTurismos are. Through lockdown I thought about trading my 2011 GranTurismo for a final DB9 (probably 2013-2015) with the 510PS engine but the price differential was just too much for a car that was not materially different from what I would be selling.
zagatoes30
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Subscription services are now common place in lots of scenarios, and the younger generation see it as the normal way to pay for things, they don't appear to be concerned about total cost more the ease of service. We do subscription services for make-up products, you sign up to what you want pay a monthly fee and we send you the next batch at an agreed frequency. The overall cost is almost always more expensive than buying when you need but we take the thinking out of the transaction. I am sure we send stuff to customers who haven't used their last products so there are probably cupboards full of unused items sitting there.
The same consumers think the same about cars, they just want to pay a monthly amount for something and change when they want, some don't even bother with a car ownership in any form they just use these city cars where you pay a fee for the journey you need it for and leave it in an appropriate place.
The world is very different to my day.
The same consumers think the same about cars, they just want to pay a monthly amount for something and change when they want, some don't even bother with a car ownership in any form they just use these city cars where you pay a fee for the journey you need it for and leave it in an appropriate place.
The world is very different to my day.
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That, though, is an excellent model for people who need a car maybe only once a fortnight to fetch the groceries or once a month to collect something bulky from a DIY or furniture store. Like with my two lads, owning a car is unnecessary but occasionally convenient and access to a car makes far more sense than the cost of owning one. Better for the planet too, where there's a one-many relationship between car and consumer.
It will be interesting to see how many subscription services survive the recession. Mobile banking makes it easy to cancel direct debits and I suspect over Christmas many people will be reviewing what they do and don't 'need'.
As an aside, car ownership is bound to decline for many, many reasons so any motoring forum is bound to be bad at predicting consumer trends.
As an aside, car ownership is bound to decline for many, many reasons so any motoring forum is bound to be bad at predicting consumer trends.
will-w
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It's a completely nuts prospect, isn't it? That's about £400 less than my mortgage is (at the moment!)
will-w
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I have jet to find someone that can describe how buying a 'normal' new car with cash is better than finance.
The current financial situation has shaken things up a little by increasing finance rates, but it's good to see that those are starting to settle and fall again.
The current financial situation has shaken things up a little by increasing finance rates, but it's good to see that those are starting to settle and fall again.
dickygrace
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I can, it’s cheaper. It really is that simple.
GeoffCapes
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And also should you lose your job, you have an asset you can realise in the event of being potless!
will-w
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It’s only cheaper if the APR is greater than the investment return you could achieve.
Our last BMW product had an APR of 1.9%. You would need to be clinically insane to not take that opportunity.
You also need to know for certain that you want to keep that car for the rest of its serviceable life.
Never invest (your own) money in depreciating assets.
c4sman
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Funny that I posted at the same time! At 1.9% there’s definitely a win to be made
will-w
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Indeed.
I expect it’s practically impossible to do at the moment with manufacturer rates rising, although I have still seen some 50:50 offers at 0% - so there is still chance.
When the likes of BMW set their interest rates to 6.9%, and Porsche at 9.9% you know there’s significant trouble ahead!
dickygrace
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I wasn’t giving financial advice, I was simply pointing out the fact that buying a car is cheaper than financing one.
dickygrace
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The fact that they have to offer the car with an APR of 1.9% means it is overpriced in the first place. That’s a thing of the past now though as you’ve mentioned; 9.9% at Porsche etc.
will-w
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The problem with 9.9% is that the cars are already massively over priced, and yet the rates are very high. It’s not going to stimulate the market that’s for sure