PCP
02-16-2017, 04:06 AM
#21
Those sort of Bic-disposable cars make a great deal of sense to someone who needs reliable transport (tools of their trade?) for very little 'rent' per month.
But like Gad, I find the idea of paying £800 per month for something that spends most of its time deteriorating in the drive almost deliberately wasteful, as well as being rueful of the opportunity cost.
But like Gad, I find the idea of paying £800 per month for something that spends most of its time deteriorating in the drive almost deliberately wasteful, as well as being rueful of the opportunity cost.
02-16-2017, 04:34 AM
#22
UK Moderator
Those sort of Bic-disposable cars make a great deal of sense to someone who needs reliable transport (tools of their trade?) for very little 'rent' per month.
But like Gad, I find the idea of paying £800 per month for something that spends most of its time deteriorating in the drive almost deliberately wasteful, as well as being rueful of the opportunity cost.
But like Gad, I find the idea of paying £800 per month for something that spends most of its time deteriorating in the drive almost deliberately wasteful, as well as being rueful of the opportunity cost.
For example, I paid £18.5k for my first S2000 in 2002. It was 2 1/2 years old, and was probably sold to the dealer by its first owner for about £17k. That's an £11k loss on the new price in 28 months, or £392 a month.
In 2016 money (using the BoE calculator), that's £16,421, or £586 per month.
Under my ownership it's price fell about £14k over the 12 years I had it (befroe the engine expired of course), which equates to about £97 per month. There were "a number" of other expenses in that time, of course
The rather obvious moral of the story is that if you buy a new car, you will lose a lot of money in terms of depreciation*. And the more you pay, the more you will lose.
*there are exceptions to this of course with rare, desirable cars like MB's Cayman GT4, for example
I've been leasing a Peugeot as my "winter car" for the last year or so, and it's due back in November. I'm not sure I'll lease again, especially, as the result of the recent boom in leasing is a good number of relatively new, low mileage cars available to buy. I'm thinking Polo GTi or perhaps a boggo 1-series.
02-16-2017, 04:50 AM
#23
It's the same with pretty much any new car.
For example, I paid £18.5k for my first S2000 in 2002. It was 2 1/2 years old, and was probably sold to the dealer by its first owner for about £17k. That's an £11k loss on the new price in 28 months, or £392 a month.
In 2016 money (using the BoE calculator), that's £16,421, or £586 per month.
Under my ownership it's price fell about £14k over the 12 years I had it (befroe the engine expired of course), which equates to about £97 per month. There were "a number" of other expenses in that time, of course
The rather obvious moral of the story is that if you buy a new car, you will lose a lot of money in terms of depreciation*. And the more you pay, the more you will lose.
*there are exceptions to this of course with rare, desirable cars like MB's Cayman GT4, for example
I've been leasing a Peugeot as my "winter car" for the last year or so, and it's due back in November. I'm not sure I'll lease again, especially, as the result of the recent boom in leasing is a good number of relatively new, low mileage cars available to buy. I'm thinking Polo GTi or perhaps a boggo 1-series.
For example, I paid £18.5k for my first S2000 in 2002. It was 2 1/2 years old, and was probably sold to the dealer by its first owner for about £17k. That's an £11k loss on the new price in 28 months, or £392 a month.
In 2016 money (using the BoE calculator), that's £16,421, or £586 per month.
Under my ownership it's price fell about £14k over the 12 years I had it (befroe the engine expired of course), which equates to about £97 per month. There were "a number" of other expenses in that time, of course
The rather obvious moral of the story is that if you buy a new car, you will lose a lot of money in terms of depreciation*. And the more you pay, the more you will lose.
*there are exceptions to this of course with rare, desirable cars like MB's Cayman GT4, for example
I've been leasing a Peugeot as my "winter car" for the last year or so, and it's due back in November. I'm not sure I'll lease again, especially, as the result of the recent boom in leasing is a good number of relatively new, low mileage cars available to buy. I'm thinking Polo GTi or perhaps a boggo 1-series.
Even if you have a barn filled with interesting, but dubiously-reliable old crap, the idea of renting something very affordable that might start and defrost its windows on a cold morning, suddenly makes a great deal of sense!
02-17-2017, 11:41 PM
#24
Just read this short article in The Week, which sums it up nicely
Could the next financial crash be ignited by cars, asks Patrick Collinson. That’s the fear of some analysts, who claim that a boom in cheap leasing deals is “fuelling a colossal buildup of debt” in Britain and America; there are “parallels”, they argue, with the sub-prime mortgage crisis. The motor industry is on a roll: a record 2.7 million new cars were sold in Britain last year – the fifth year in a row of rising sales – with the vast majority of purchases being financed by “personal contract plans”, or PCPs. Some of these leasing loans have been packaged into asset-backed securities and sold on to investors such as pension funds. “The ratings giants, Standard & Poor’s and Moody’s, have given most of these batches of loans a triple-A safety rating”, arguing that the default rate is “extremely low”. But given that cars are a depreciating asset, the sheer buildup of debt is worrying. In the US, the total stock of outstanding car loans has jumped to $1.1trn. The impact on repayments, were the economy to tank or interest rates to rise, is obvious. Car financing is “a flashing light”.
THE WEEK
18 February 2017
Could the next financial crash be ignited by cars, asks Patrick Collinson. That’s the fear of some analysts, who claim that a boom in cheap leasing deals is “fuelling a colossal buildup of debt” in Britain and America; there are “parallels”, they argue, with the sub-prime mortgage crisis. The motor industry is on a roll: a record 2.7 million new cars were sold in Britain last year – the fifth year in a row of rising sales – with the vast majority of purchases being financed by “personal contract plans”, or PCPs. Some of these leasing loans have been packaged into asset-backed securities and sold on to investors such as pension funds. “The ratings giants, Standard & Poor’s and Moody’s, have given most of these batches of loans a triple-A safety rating”, arguing that the default rate is “extremely low”. But given that cars are a depreciating asset, the sheer buildup of debt is worrying. In the US, the total stock of outstanding car loans has jumped to $1.1trn. The impact on repayments, were the economy to tank or interest rates to rise, is obvious. Car financing is “a flashing light”.
THE WEEK
18 February 2017
02-18-2017, 01:33 AM
#25
Just read this short article in The Week, which sums it up nicely
Could the next financial crash be ignited by cars, asks Patrick Collinson. That’s the fear of some analysts, who claim that a boom in cheap leasing deals is “fuelling a colossal buildup of debt” in Britain and America; there are “parallels”, they argue, with the sub-prime mortgage crisis. The motor industry is on a roll: a record 2.7 million new cars were sold in Britain last year – the fifth year in a row of rising sales – with the vast majority of purchases being financed by “personal contract plans”, or PCPs. Some of these leasing loans have been packaged into asset-backed securities and sold on to investors such as pension funds. “The ratings giants, Standard & Poor’s and Moody’s, have given most of these batches of loans a triple-A safety rating”, arguing that the default rate is “extremely low”. But given that cars are a depreciating asset, the sheer buildup of debt is worrying. In the US, the total stock of outstanding car loans has jumped to $1.1trn. The impact on repayments, were the economy to tank or interest rates to rise, is obvious. Car financing is “a flashing light”.
THE WEEK
18 February 2017
Could the next financial crash be ignited by cars, asks Patrick Collinson. That’s the fear of some analysts, who claim that a boom in cheap leasing deals is “fuelling a colossal buildup of debt” in Britain and America; there are “parallels”, they argue, with the sub-prime mortgage crisis. The motor industry is on a roll: a record 2.7 million new cars were sold in Britain last year – the fifth year in a row of rising sales – with the vast majority of purchases being financed by “personal contract plans”, or PCPs. Some of these leasing loans have been packaged into asset-backed securities and sold on to investors such as pension funds. “The ratings giants, Standard & Poor’s and Moody’s, have given most of these batches of loans a triple-A safety rating”, arguing that the default rate is “extremely low”. But given that cars are a depreciating asset, the sheer buildup of debt is worrying. In the US, the total stock of outstanding car loans has jumped to $1.1trn. The impact on repayments, were the economy to tank or interest rates to rise, is obvious. Car financing is “a flashing light”.
THE WEEK
18 February 2017
It's particularly true where the Septics finance secondhand cars that way, too.
Our current economic success is largely attributable to a consumer debt bubble - people are spending like we've left a prison.
It's not inasmuch the PCP, it's more how the professional gambling addicts arbitrage them, multiplied by a financial contraction.
02-18-2017, 11:52 PM
#26
Haha, i reckon they've been reading your posts
its ok, the BoE will protect us with low interest rates
until it cant
its ok, the BoE will protect us with low interest rates
until it cant
02-19-2017, 10:29 PM
#28
I think that's the nub - if you buy an expensive new car, you really have to aim to keep it forever. Or buy it used, down the line.
Even if you have a barn filled with interesting, but dubiously-reliable old crap, the idea of renting something very affordable that might start and defrost its windows on a cold morning, suddenly makes a great deal of sense!
Even if you have a barn filled with interesting, but dubiously-reliable old crap, the idea of renting something very affordable that might start and defrost its windows on a cold morning, suddenly makes a great deal of sense!
What WILL be interesting is what happens to the 2nd hand values of all of these mega SUVS as they hit the used market in failed fred state / blue screen of death in the ECU / infotainment systems - no warranty will touch them.
Disco / Rangie - failed dash is apparently common, can require new locks, ecu and a dash - £7k Or how about failed diff / gearbox - similar price. You can buy the car 2nd hand for 10k or less at the moment, what do you do when your car requires a 2nd loan as big as the original purchase one to fix just one issue
This is on cars under 5 years old and with < 60k miles.
02-20-2017, 12:46 AM
#29
Banned
You could of course just add a 5 year old Focus to the fleet - no need to spend more than a couple of grand if that's what you 'need'.
What WILL be interesting is what happens to the 2nd hand values of all of these mega SUVS as they hit the used market in failed fred state / blue screen of death in the ECU / infotainment systems - no warranty will touch them.
Disco / Rangie - failed dash is apparently common, can require new locks, ecu and a dash - £7k Or how about failed diff / gearbox - similar price. You can buy the car 2nd hand for 10k or less at the moment, what do you do when your car requires a 2nd loan as big as the original purchase one to fix just one issue This is on cars under 5 years old and with < 60k miles.
What WILL be interesting is what happens to the 2nd hand values of all of these mega SUVS as they hit the used market in failed fred state / blue screen of death in the ECU / infotainment systems - no warranty will touch them.
Disco / Rangie - failed dash is apparently common, can require new locks, ecu and a dash - £7k Or how about failed diff / gearbox - similar price. You can buy the car 2nd hand for 10k or less at the moment, what do you do when your car requires a 2nd loan as big as the original purchase one to fix just one issue
This is on cars under 5 years old and with < 60k miles.Beater for day to day and 'exotics' in the garage/barn/storage.
You need to not worry about your image when driving your daily but anyone who thinks a new repmobile diesel gives them any cred is truly delusional
There will be fixes for some of these crazy FRED failures but not all
There are already plenty of cars that are really scrap/spares donors as soon as they develop a tricky fault - A8s come immediately to mind
Perhaps we shouldn't be surprised - people don't fix things anymore as a rule
My parents' generation repaired just about everything
02-20-2017, 01:06 AM
#30
I think the current generation of cars are engineered to fail 1 day outside of the 3 or 5 year PCP - apparently that makes me paranoid. At which point you can either spank a fortune on a warranty, you can buy endless numbers of expensive parts that a teenager needs to code to your car with a computer ( Yes BMW and your Fred'd charging system i'm looking at you) or you just join the PCP herd and accept the terms.
Talking of rep-mobiles, Did i see the 2017 Merc C class Diesel can be upspecced to north of £54k from a list price of about £30k in TopGear magazine? Mental, just mental.
I think it's the other reason the S2000 ( and the MX5 ) has remained popular, it is relatively uncomplicated and generally reliable and doesn't need a main dealer / £120 p/h + VAT labour rates to keep it alive.
Talking of rep-mobiles, Did i see the 2017 Merc C class Diesel can be upspecced to north of £54k from a list price of about £30k in TopGear magazine? Mental, just mental.
I think it's the other reason the S2000 ( and the MX5 ) has remained popular, it is relatively uncomplicated and generally reliable and doesn't need a main dealer / £120 p/h + VAT labour rates to keep it alive.