Household debt rises to highest level since 2008

wotsthat

kabayiri wrote: »

Sometimes the lenders were less than diligent, especially when it came to brokerage businesses white-labelling car finance products.

I remember one case which involved a broker being defrauded out of 6 Ferraris !!

Well, I suppose if you are going to make off with a car, you might as well aim high :rotfl:

I certainly include some lenders in the stupid category.

Like the one that agreed a PCP for a family member (who already had a car on PCP) to be used by her husband because he couldn't get one directly due to his horrendous credit history.

They're now both driving around in cars they'd never be able to afford to buy but strangely justify the cost by pointing out the 'savings' compared to buying new. Without PCP they'd be sharing a 6 year old Ford Fiesta (one of them has a 1.5 mile commute!) instead of spending £700/ month on car leasing.

steampowered

wotsthat wrote: »

They're now both driving around in cars they'd never be able to afford to buy but strangely justify the cost by pointing out the 'savings' compared to buying new. Without PCP they'd be sharing a 6 year old Ford Fiesta (one of them has a 1.5 mile commute!) instead of spending £700/ month on car leasing.

Indeed. £8,400 a year on car leases. Imagine how much they'd save over the long term if they saved up and bought second hand cars, rather than leasing new ones.

Personally I find it a bit scary how many people buy cars on finance without properly understanding the cost.

kabayiri

steampowered wrote: »

Indeed. £8,400 a year on car leases. Imagine how much they'd save over the long term if they saved up and bought second hand cars, rather than leasing new ones.

Personally I find it a bit scary how many people buy cars on finance without properly understanding the cost.

It's the sheer entry point cost now, which is the issue.

A small car could easily cost £15,000. To purchase you would need a sizeable deposit.

With higher price tags comes greater depreciation. The car my DW has will lose nearly 20 grand in 3 years, and that model is considered one of the better cars.

The car retailers have to push PCP to ensure they have the widest target consumer market.

Herzlos

But you can still buy a basic new car for under £8k, so it's more than just entry cost. I think it's at least partially do with masking the actual cost of the purchase, since car costs are quoted monthly by most of the big dealers / adverts.

Lots of people seem to buy into the £99/month thing (or worse, the £8/week TV) without having any real understanding of how much it's costing or how the PCP works. As shown by the number of posts we get on here with people trying to get out of deals after a few months.

Thrugelmir

kabayiri wrote: »

A small car could easily cost £15,000. To purchase you would need a sizeable deposit.

A good second hand car can last for years if properly maintained. My Toyota is now 12 years old. Bought it 8 years with very low mileage on the clock. Even now only clocked 54,000 miles. So some life in it yet.

michaels

iantojones40 wrote: »

I wonder how much of that debt is pcp deals on cars?... People borrowing money to rent a car, utter insanity.

I normaly drive old bangers but now 'rent' a brand new car on pcp no deposit, 130 per month for 2 yeas, £100 servicing all in, no tax, no mot, fully under warranty and 2p/mile fuel (it is electric) - basically renting a new car for much less than it cost me to keep the banger it replaced on the road.

Still you can call it insanity but I suspect it is only insanity for the finance company who have a gfv of 13k on a car that will be worth 8k.

dktreesea

I suppose people work quite hard and every now and then want to treat themselves. A night out at the weekend, a new car, some decent clothes, a few restaurant meals out with friends, a concert, a show, going clubbing, maybe a few days away, and before you know it you've put on £2,000 in debt.


I would be wary of taking a car lease though. You get to the end of three years and prepare to hand the car back. Someone comes around and microscopically checks the car - every scratch/ding/scuff mark and you get charged for having them all fixed. Normal wear and tear? Well, check the small print before you sign anything.

Thrugelmir

michaels wrote: »

I normaly drive old bangers but now 'rent' a brand new car on pcp no deposit, 130 per month for 2 yeas, £100 servicing all in, no tax, no mot, fully under warranty and 2p/mile fuel (it is electric) - basically renting a new car for much less than it cost me to keep the banger it replaced on the road.

Low mileage driver?

michaels

Thrugelmir wrote: »

Low mileage driver?

Lage number of short journeys from cold in traffic - carp mileage from both petrol and diesel, diesel engines dying from sooting up, clutches dying from huge number of gear changes. Both pisoning local environment.

Electric is the answer and pcp was by far the cheapest way of owning electric (List price 26k, price afer incentives 16k, gfv 13k, 0% finance = very cheap rental)

lisyloo

Thrugelmir wrote: »

A good second hand car can last for years if properly maintained. My Toyota is now 12 years old. Bought it 8 years with very low mileage on the clock. Even now only clocked 54,000 miles. So some life in it yet.

Mine cost me £250 5 years ago. 42k on the clock.
Might have to get rid of it this year though.