Household debt rises to highest level since 2008

Graham_Devon

I do see the point michaels is making here though. Where you drive can make a huge difference to the serviceability of the consumables on a car.

A clutch can easily last 200k if the car is cruising up and down the motorway each day. However, wouldn't expect 40k out of it if the majority of your driving was stop start and town/city driving. Same for tyres and pretty much everything else on the car.

The majority of the roads in the UK often require numerous gear changes and wear and tear on every other part that goes with that.

I don't have a lease car, all paid for, but do get tired sometimes of the unknown hundreds you can end up having to pay out on any single normal day.

bugslet

venison wrote: »

One wonders where its all being spent with next having a dreadful xmas and even john lewis posting sales down 9.4% immediately after xmas.

I think it's probably down to a lot more competition, far more retailers so that the money available is spread around more.

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.

I frequently wonder as I look around at all the new cars about me as I bimble around how people pay for them. I bought a 7 month old small van ( dogs trash cars ) for £7500.00 18 months ago and will keep it for around another 5 years, doing around 35k a year in it. I could easily be driving round in a blinged up Range Rover Evoque ( white of course ), but it seems daft for my circumstances.

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.

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.

Not insanity in your case, but you are above average in being able to suss out a good deal, michaels. A lot of people are just getting them because they can afford the monthly payments and want the 'kudos' of a 66 plate.

As an aside, we buy all our commercial vehicles outright rather than any form of lease deal, I always see it as money down the drain if you can afford to buy. Again, it fits our circumstances and not every hauliers.

wotsthat

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.

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.

Sounds like a good deal. My wife would probably benefit from a car like that - very short commute and frequent low mileage trips to clients with returns to an office where charging could take place. Probably less than 8000 miles per year because if there's a long trip we'll either use my expensed car or swap for the day.

chucknorris

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.

It is the reliability that puts me off, what I tend to do is buy a newish car (6 to 12 months old) for cash form a car supermarket, keep it until it becomes unreliable (usually >90,000 miles and/or >9 years old), then repeat. I really don't want to get into car maintenance (think holy cross and Dracula).

steampowered

kabayiri wrote: »

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.

Agreed, I would merely point out that the price you pay on a PCP takes account of depreciation.

People end up paying for depreciation whether they buy a car outright or finance/lease it!

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

There is another reason. Car finance providers pay a substantial commission on sales.

For example, if the effective rate on the PCP is 7%, the dealer will get a 1-3% cut from that. Dealers makes more money on finance sales than cash sales!

Dird

Is student loan debt counted? I assume not

BobQ

venison wrote: »

One wonders where its all being spent with next having a dreadful xmas and even john lewis posting sales down 9.4% immediately after xmas.

On line of course. The High Street is now too expensive for all but the most urgent buys.

globalds

Seems when you take out all those student loans our debt has been higher

BobQ

steampowered wrote: »

I don't think you can blame "people in power".

Individuals are responsible for deciding how much debt they take on. If an individual takes on too much cheap credit and finds him or herself in trouble when interest rates rise, they have only themselves to blame.

True but sometimes Governments need to create the climate in which people behave in ways that are better for the country.

When I was a lad, ordinary working people were reluctant to get into debt. Today they are irritated if they cannot exceed their credit limits. I thought that 2008 GFC and the austerity that followed it would have changed people's attitude to debt, but no they carry on regardless. New cars, exotic holidays, refinancing their house debt to maintain a lifestyle they cannot afford. The same attitude is also encouraging those lucky enough to have a pension to spend it at unrealistic rates .

So yes individual responsibility is good , provided the individuals are responsible.

The coming years will be testing, fixed mortgage deals are less easy to come by in the expectation of interest rate rises and as people come to the end of the current ones they may find this becomes a problem.

kabayiri

steampowered wrote: »

Agreed, I would merely point out that the price you pay on a PCP takes account of depreciation.

People end up paying for depreciation whether they buy a car outright or finance/lease it!



There is another reason. Car finance providers pay a substantial commission on sales.

For example, if the effective rate on the PCP is 7%, the dealer will get a 1-3% cut from that. Dealers makes more money on finance sales than cash sales!

There are a lot of angles on PCP, many of which we don't notice it, including the commission.

Another plus for PCP is the dealers have a guaranteed supply line of known cars coming back into their clutches for the resale market.

I was interested in Michael's PCP deal.

Once self drive / semi autonomous cars start to become a reality, maybe the leasing model will change.

I am recently all too familiar with just how much if costs to insure new drivers. Maybe we can see new pricing models?