18 Year Old PCP

AdrianC

Mercdriver wrote: »

This bit isn't new at all. Years ago there was misselling on endowment mortgages where the borrower too an interest only mortgage and took out an endowment savings out. Many if not most were told that the endowment would not only pay off all the capital, but also leave them with a nest egg as well.

I took out an endowment mortgage in the late 90s, back when the "mis-selling" was rife.

The illustrations provided clearly showed various rates of growth, and various possible outcomes. Sure, the rates of growth were extremely optimistic (8% was the median, IIRC), but only a complete and utter ostrich would have taken "Ooh, no, you'll definitely be out way ahead" as the only possible outcome.

RichardD1970

AdrianC wrote: »

I took out an endowment mortgage in the late 90s, back when the "mis-selling" was rife.

The illustrations provided clearly showed various rates of growth, and various possible outcomes. Sure, the rates of growth were extremely optimistic (8% was the median, IIRC), but only a complete and utter ostrich would have taken "Ooh, no, you'll definitely be out way ahead" as the only possible outcome.

I took mine out in the mid 80's and was told categorically that it would pay off the capital and leave a nice little nest egg (and as someone who was just setting out on my financial journey, without all the resources available today to consult, why wouldn't I believe them? They were the "experts")

We did later make a successful claim and with cashing in the endowment that put us roughly back into the position we would have been in with a repayment mortgage.

Mike967angus

Unfortunately not..
Something like an Ibiza TSI is just over a grand so he will be even in 18 months or so and that's without the extra fuel savings AND be out of the PCP.
He was silly but he was young. I said don't do it but what does your dad know when you are 18.
Car salesman with shiny new car was his new best friend and as Martin always says...They're not.
Lesson learned I started the thread to see if there was a way to reduce the shortfall but the consensus seems to be tough. Learn from it and move on:D

uknick

Mercdriver wrote: »

This bit isn't new at all. Years ago there was misselling on endowment mortgages where the borrower too an interest only mortgage and took out an endowment savings out. Many if not most were told that the endowment would not only pay off all the capital, but also leave them with a nest egg as well.

The article I heard was about people getting an interest only mortgage with NO associated product to pay off the capital on maturity. As an example, my brother bought two properties with interest only mortgages (he remortgaged the family home to buy a BTL) and had to sell both properties to clear the mortgage. They were both sold as part of his divorce and now him and his ex are having to rent as neither could afford to get finance to keep at least one of the properties to live in. Whilst they have some equity from the sales, from what he's said this wont last very long. But, he and his wife were always live now pay later sort of people.

nomoneytoday

If your son had bought the car outright, or used HP, he would still have the insurance renewal cost issue.


Does this mean that garages can't sell cars with engines bigger than a sewing machine to under 21s, due to their future insurance costs?

IanMSpencer

nomoneytoday wrote: »

Does this mean that garages can't sell cars with engines bigger than a sewing machine to under 21s, due to their future insurance costs?

No, it means you can't sell overtly sporty cars to immature drivers*, along with certain other cars that apparently attract the wrong sort of drivers.

Oddly, I'd expect that a boring old VW Golf 1.6 would be quite reasonable to insure and a similar price to a Polo GTi - and probably lively enough to drive and as fast or faster. The mistake is assuming that small cars are cheap to insure. The simple letters GT and a stripe are probably enough for a car to fail the insurers' attitude test, even if the mechanics are identical.


*Before any youngsters get all shirty, it is widely accepted that generally the mind is not fully mature until 25, and statistically the insurers have the numbers to back that up.

motorguy

uknick wrote: »

The article I heard was about people getting an interest only mortgage with NO associated product to pay off the capital on maturity. As an example, my brother bought two properties with interest only mortgages (he remortgaged the family home to buy a BTL) and had to sell both properties to clear the mortgage. They were both sold as part of his divorce and now him and his ex are having to rent as neither could afford to get finance to keep at least one of the properties to live in. Whilst they have some equity from the sales, from what he's said this wont last very long. But, he and his wife were always live now pay later sort of people.

That wasnt the issue of mis-selling endowment mortgages - it was people being missold endowment policies under false pretenses as to what they would achieve.

An interest only mortgage is not unusual nor is it necessarily a problem.

motorguy

IanMSpencer wrote: »

No, it means you can't sell overtly sporty cars to immature drivers*, along with certain other cars that apparently attract the wrong sort of drivers.

Oddly, I'd expect that a boring old VW Golf 1.6 would be quite reasonable to insure and a similar price to a Polo GTi - and probably lively enough to drive and as fast or faster. The mistake is assuming that small cars are cheap to insure. The simple letters GT and a stripe are probably enough for a car to fail the insurers' attitude test, even if the mechanics are identical.


*Before any youngsters get all shirty, it is widely accepted that generally the mind is not fully mature until 25, and statistically the insurers have the numbers to back that up.

Yes, its about the insurers perception of the car - and i guess their statistical evidence of risk for that car.

My son got insurance for his 177BHP 120d M Sport BMW when he was 19, but a Polo GTI or Fiesta ST with similar BHP would have been ridiculously more

motorguy

nomoneytoday wrote: »

If your son had bought the car outright, or used HP, he would still have the insurance renewal cost issue.

And therein lies the crux of it - the finance product wasnt mis-sold, the son bought the wrong car, irrespective of how it would have been financed.

Mike967angus

I think than PCP makes cars that Shouldn't be affordable affordable if that makes sense. At my age I'm wise enough to know that low payments don't mean low running costs.
If it was a case of purchasing a 19k car with cash or regular finance it would never have been a possibility and you wouldn't consider the purchase. The balloon payment compounds matters really meaning you have to keep.the car for the duration of take a massive hit.
If you've got 19k cash insurance shouldn't be a major problem and regular HP payments would be too high stop young or impressionable people getting into a pickle.:D