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  • FIRST POST
    • Mike967angus
    • By Mike967angus 13th Feb 18, 11:30 AM
    • 23Posts
    • 7Thanks
    Mike967angus
    18 Year Old PCP
    • #1
    • 13th Feb 18, 11:30 AM
    18 Year Old PCP 13th Feb 18 at 11:30 AM
    My son in a moment of weakness decided to purchase a new Polo GTI. I was far from impressed bearing in mind the type of car and his age & relative nativity so ended up going to the VW dealer to grudgingly negotiate a better deal. One year in and despite a clean record his premium has made the car virtually uninsurable
    He wants rid and is in 2k negative equity.
    As car is on a PCP is it worth writing to VW finance as although he signed on the dotted line. I wonder was the PCP the correct thing to offer him bearing in mind his age (Just18)and type of car?
Page 3
    • Mercdriver
    • By Mercdriver 14th Feb 18, 9:33 AM
    • 1,640 Posts
    • 1,120 Thanks
    Mercdriver
    If you are referring to the 2016 This is Money article;

    http://www.thisismoney.co.uk/money/cars/article-3644528/Claims-lawyers-looking-mis-selling-PCP.html

    that people were not specifically told PCP may cost more than a bank loan, wouldn't that be covered under caveat emptor? Or, the fact it wasn't explained the balloon payment may be more than the car is worth, isn't a buyer expected to do due diligence anymore?

    I did read the other day interest only mortgages are being looked at because people don't realize they have to find the capital to pay the mortgage off at the end of the loan period. What did they think would happen? The bank would write it off?
    Originally posted by uknick
    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.
    • AdrianC
    • By AdrianC 14th Feb 18, 9:48 AM
    • 17,366 Posts
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    AdrianC
    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.
    Originally posted by Mercdriver
    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
    • By RichardD1970 14th Feb 18, 10:17 AM
    • 2,910 Posts
    • 4,301 Thanks
    RichardD1970
    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.
    Originally posted by AdrianC
    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.
    Last edited by RichardD1970; 14-02-2018 at 10:24 AM.
    • Mike967angus
    • By Mike967angus 14th Feb 18, 10:23 AM
    • 23 Posts
    • 7 Thanks
    Mike967angus
    Insurance
    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
    • uknick
    • By uknick 14th Feb 18, 10:27 AM
    • 760 Posts
    • 344 Thanks
    uknick
    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.
    Originally posted by Mercdriver
    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
    • By nomoneytoday 14th Feb 18, 12:51 PM
    • 4,747 Posts
    • 2,875 Thanks
    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
    • By IanMSpencer 14th Feb 18, 2:12 PM
    • 1,462 Posts
    • 1,080 Thanks
    IanMSpencer
    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?
    Originally posted by nomoneytoday
    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
    • By motorguy 14th Feb 18, 2:14 PM
    • 16,607 Posts
    • 9,796 Thanks
    motorguy
    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.
    Originally posted by uknick
    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.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • motorguy
    • By motorguy 14th Feb 18, 2:16 PM
    • 16,607 Posts
    • 9,796 Thanks
    motorguy
    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.
    Originally posted by IanMSpencer
    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
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • motorguy
    • By motorguy 14th Feb 18, 2:18 PM
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    motorguy
    If your son had bought the car outright, or used HP, he would still have the insurance renewal cost issue.
    Originally posted by nomoneytoday
    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.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • Mike967angus
    • By Mike967angus 14th Feb 18, 2:25 PM
    • 23 Posts
    • 7 Thanks
    Mike967angus
    PCP Vs Finance Vs Cash
    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.
    • Mike967angus
    • By Mike967angus 14th Feb 18, 2:29 PM
    • 23 Posts
    • 7 Thanks
    Mike967angus
    PCP Vs Finance Vs Cash
    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 and stop young or impressionable people getting into a pickle.
    BTW motorguy is right the car was inappropriate bearing in mind fuel and insurance costs can always go up.
    • motorguy
    • By motorguy 14th Feb 18, 3:02 PM
    • 16,607 Posts
    • 9,796 Thanks
    motorguy
    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 and stop young or impressionable people getting into a pickle.
    BTW motorguy is right the car was inappropriate bearing in mind fuel and insurance costs can always go up.
    Originally posted by Mike967angus
    As a parent i can relate to your frustration (particularly when it comes to cars and driving abilities) - ultimately its a harsh lesson for him, but if he learns from it and thats the worst happens to him he'll be grand
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • Robisere
    • By Robisere 14th Feb 18, 3:25 PM
    • 2,240 Posts
    • 3,053 Thanks
    Robisere
    Has anyone criticised the sons choice to buy the car? I know i havent?

    What has been criticised is the "blame culture" attitude that it must be someone elses fault.
    Originally posted by motorguy
    I mentioned no names and was not pointing fingers at anyone specific. You are either overly sensitive, or perhaps the cap fits ...
    I think this job really needs
    a much bigger hammer.
    • uknick
    • By uknick 14th Feb 18, 4:41 PM
    • 760 Posts
    • 344 Thanks
    uknick
    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.
    Originally posted by motorguy
    I didn't say the story I heard on Money Box had anything to do with endowment mortgages. The Money Box story is about people taking out interest only mortgages thinking that at the end of the period if they didn't have the means to repay the capital the lender would let them keep paying interest until they did. Or, the lender would wait until the borrower died and then take the capital back from the sale proceeds of the house.
    • motorguy
    • By motorguy 14th Feb 18, 4:49 PM
    • 16,607 Posts
    • 9,796 Thanks
    motorguy
    I mentioned no names and was not pointing fingers at anyone specific. You are either overly sensitive, or perhaps the cap fits ...
    Originally posted by Robisere
    No - i'm pointing out that people on here are predominantly criticising the blame someone else attitude / mis-selling eluded to initially by the O/P NOT the fact he got the car.

    If anyone is interpreting otherwise of this thread, then they're the ones mis-reading it / chosing to read it how they want.

    And dont make veiled allegations without backing them up - WHERE did i say he shouldnt have got the car in the first place?
    Last edited by motorguy; 14-02-2018 at 4:54 PM.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • motorguy
    • By motorguy 14th Feb 18, 4:50 PM
    • 16,607 Posts
    • 9,796 Thanks
    motorguy
    I didn't say the story I heard on Money Box had anything to do with endowment mortgages. The Money Box story is about people taking out interest only mortgages thinking that at the end of the period if they didn't have the means to repay the capital the lender would let them keep paying interest until they did. Or, the lender would wait until the borrower died and then take the capital back from the sale proceeds of the house.
    Originally posted by uknick
    Oh thats just nuts.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • reeac
    • By reeac 14th Feb 18, 8:23 PM
    • 1,199 Posts
    • 485 Thanks
    reeac
    Back in the day endowment backed mortgages were an excellent choice. We started one in 1965 and added to it a few times with the whole thing maturing in the late 1990s with terminal bonuses considerably bigger than had been predicted. That was just lucky timing as the 1990s saw a continuous stock market boom. On the other hand the lending bodies operated strict rules regarding size of loan relative to family income. That all went to pot when those bodies started competing with each other, lending bigger and bigger multiples of income and property value during the 1980s until finally Northern Rock happened.
    • Mike967angus
    • By Mike967angus 14th Feb 18, 8:41 PM
    • 23 Posts
    • 7 Thanks
    Mike967angus
    He's my son and I know he shouldn't have got the car!
    Mite have helped if the salesman had guided him towards a Polo Beats rather than a GTi. Wether he would have listened I don't know probably not.
    The salesmans there to sell cars but long term they've now lost a customer.
    My main gripe is PCP put a car he couldn't really afford to run just enough within his reach to buy it which he couldn't if it was on normal finance.
    • motorguy
    • By motorguy 14th Feb 18, 9:18 PM
    • 16,607 Posts
    • 9,796 Thanks
    motorguy

    The salesmans there to sell cars but long term they've now lost a customer.
    Originally posted by Mike967angus
    Why?

    They sold him the car he wanted and the car he told them he could afford? Turns out he cant for reasons outside of everyones control, so whys that their fault?

    As you've said yourself, if they'd insisted he bought a Polo Beats he'd have walked and bought the GTI (or an equivalent) elsewhere so they'd have "lost a customer" anyway?

    I once bought a brand new BMW X5 that was kindly "facilitated" by my local BMW dealer with a palatable PCP deal. Between the finance payments, the fuel consumption and the running costs there are probably small south american countries that cost less to run and i very quickly realised it had been a Very Bad Idea and ditched it at great expense.

    Hardly the dealers fault though and i've bought various (more sensibly priced) cars off them since.

    You do seem to be persisting with the view that someone should be "punished" or blamed for your sons situation?
    Last edited by motorguy; 14-02-2018 at 9:42 PM.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
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