BoE investigates 'terrifying' rise in borrowing to fund new car purchases

[A third of everything]

3 hours ago, Exiled Canadian said:

My understanding is that Case 1 applies.........provided of course you've stuck to the mileage limit and there is no damage to the car (even superficial).

I think it's actually 2) based on a conversation with a friend who came to the end of a 3 year deal on an a4 and has ended up with a bog standard a1 for the next 4 years at the same monthly cost as he didn't want to pay a 4k shortfall... mileage wasn't exceeded at all and no damage 

[19 year mortgage 8itch]

2 minutes ago, A third of everything said:

I think it's actually 2) based on a conversation with a friend who came to the end of a 3 year deal on an a4 and has ended up with a bog standard a1 for the next 4 years at the same monthly cost as he didn't want to pay a 4k shortfall... mileage wasn't exceeded at all and no damage 

I don't think this is scenario 2 at all. Just a realistic case of how this works when there is no 'equity' in the car you are returning. Yes, people do actually use the word 'equity' in a car they are renting...

[spyguy]

10 hours ago, Funn3r said:

How much does it cost to make a car? Surely the profit margin must be enormous? How come all the cost reductions from computerisation and robots  is not being passed on to the buying public? I have a very old car which is not worth much but the price of new cars makes me jump I mean tens of thousands of pounds.

Margin on cars is not great.

I'd guess 10-20%.

[longtomsilver]

21 minutes ago, spyguy said:

Margin on cars is not great.

I'd guess 10-20%.

That'll be soaked up by the manufacturer. I understood that the profit on a car sale for the dealership is only a few hundred quid and that more money is made on the finance, servicing and sales bonuses. Whatever it is it's a well kept secret as there's nothing definitive on the interweb.

[spyguy]

4 minutes ago, longtomsilver said:

That'll be soaked up by the manufacturer. I understood that the profit on a car sale for the dealership is only a few hundred quid and that more money is made on the finance, servicing and sales bonuses. Whatever it is it's a well kept secret as there's nothing definitive on the interweb.

Yeah. My figures are for what the maker flogs them for.

Dealers so opaque. Mainly finance scams.

 

[Errol]

Yes! A new record! We are winning! This is stunning news for the UK and assures of us topping the table in the league this year.

 

Car finance deals soar to new record

The value of finance deals used to buy new cars has soared to a new monthly record, according to latest figures.

Motorists spent £3.6bn on car finance deals in March, a rise of 13% on the same month in 2016, the Finance and Leasing Association (FLA) said.

Adrian Dally, head of motor finance at the FLA, said lenders were behaving responsibly. "We do not share their concerns," he told the BBC. "Lending is responsible. This is a sustainable model going forwards."

http://www.bbc.co.uk/news/business-39895327

 

Edited May 12, 2017 by Errol

[spyguy]

5 minutes ago, Errol said:

Yes! A new record! We are winning! This is stunning news for the UK and assures of us topping the table in the league this year.

 

Car finance deals soar to new record

The value of finance deals used to buy new cars has soared to a new monthly record, according to latest figures.

Motorists spent £3.6bn on car finance deals in March, a rise of 13% on the same month in 2016, the Finance and Leasing Association (FLA) said.

http://www.bbc.co.uk/news/business-39895327

 

Huzzah!

A chicken in every pot and a top end Merc on every driveway.

Anyone know who's carrying the finance can? Is it us again?

Edited May 12, 2017 by spyguy

[Broken biscuit]

4 minutes ago, Errol said:

Yes! A new record! We are winning! This is stunning news for the UK and assures of us topping the table in the league this year.

I don't think looking at one month in isolation is very useful. March was always going to be an exceptional month, what with the new 17 plate and the last chance to have the RFL based on the old system. I suspect a disproportionate number of "luxury" cars were also bought (to beat the £40K deadline) and I bet 99% of those are on PCP deals.

My prediction is that April will have been a bad month.

[19 year mortgage 8itch]

6 minutes ago, Broken biscuit said:

I don't think looking at one month in isolation is very useful. March was always going to be an exceptional month, what with the new 17 plate and the last chance to have the RFL based on the old system. I suspect a disproportionate number of "luxury" cars were also bought (to beat the £40K deadline) and I bet 99% of those are on PCP deals.

My prediction is that April will have been a bad month.

We already know it was because we discussed the sales figures earlier in the thread. Something like sales down 16% overall but private buyers down 28% y-o-y which suggests the April finance figures will be horrendous. (From a debt pusher's point of view)

[Errol]

21 minutes ago, spyguy said:

Huzzah!

A chicken in every pot and a top end Merc on every driveway.

Anyone know who's carrying the finance can? Is it us again?

It's inevitably going to lead to another bailout. Although I think this is ongoing due to the Bank of England FLS scheme (which includes asset finance e.g. car loans). Interestingly, the Bank of England is also a stakeholder in the FLA referenced in that BBC article - https://www.fla.org.uk/index.php/about-the-fla/faqs/ .

[Errol]

19 minutes ago, Broken biscuit said:

I don't think looking at one month in isolation is very useful. March was always going to be an exceptional month, what with the new 17 plate and the last chance to have the RFL based on the old system. I suspect a disproportionate number of "luxury" cars were also bought (to beat the £40K deadline) and I bet 99% of those are on PCP deals.

My prediction is that April will have been a bad month.

Agreed, but this March rise is a rise of 13% on the same month in 2016 , which clearly shows a very large and increasing tendency to debt.

[zugzwang]

20 minutes ago, Errol said:

Agreed, but this March rise is a rise of 13% on the same month in 2016 , which clearly shows a very large and increasing tendency to debt.

Is there a common pattern at work here?

BTL lending: out of control

Credit card lending: out of control

Auto financing: out of control

Payday lending: out of control

 

 

 

Edited May 12, 2017 by zugzwang

[jfk]

54 minutes ago, Errol said:

Yes! A new record! We are winning! This is stunning news for the UK and assures of us topping the table in the league this year.

 

Car finance deals soar to new record

The value of finance deals used to buy new cars has soared to a new monthly record, according to latest figures.

Motorists spent £3.6bn on car finance deals in March, a rise of 13% on the same month in 2016, the Finance and Leasing Association (FLA) said.

Adrian Dally, head of motor finance at the FLA, said lenders were behaving responsibly. "We do not share their concerns," he told the BBC. "Lending is responsible. This is a sustainable model going forwards."

http://www.bbc.co.uk/news/business-39895327

 

Comedy gold

[Democorruptcy]

I cannot remember if this was mentioned earlier in this thread or not but the BoE is buying corporate bonds that include:

• BMW FINANCE NV
• DAIMLER AG
• DAIMLER INTL FINANCE AV
• GENERAL ELECTRIC CO
• MOTABILITY OPERATIONS GR
• TOYOTA MOTOR CREDIT CORP

 

[wsn03]

BBC News today:

Car finance deals soar to new record

http://www.bbc.co.uk/news/business-39895327

 

 

EDIT - sorry just seen this has already been posted

Edited May 12, 2017 by wsn03

[Democorruptcy]

51 minutes ago, zugzwang said:

Is there a common pattern at work here?

BTL lending: out of control

Credit card lending: out of control

Auto financing: out of control

Payday lending: out of control

 

Or.... it's a controlled increase to keep the population under control?

[Errol]

14 minutes ago, Democorruptcy said:

I cannot remember if this was mentioned earlier in this thread or not but the BoE is buying corporate bonds that include:

• BMW FINANCE NV
• DAIMLER AG
• DAIMLER INTL FINANCE AV
• GENERAL ELECTRIC CO
• MOTABILITY OPERATIONS GR
• TOYOTA MOTOR CREDIT CORP

 

Indeed. And Asset finance was included as part of the FLS Bank of England scheme a while ago. Shocking, really.

Edited May 12, 2017 by Errol

[Saving For a Space Ship]

Car loans, low rates, second mortgages: all the ingredients for a new credit crunch

https://www.theguardian.com/business/2017/may/21/car-loans-second-mortgages-ingredients-for-new-credit-crunch

If housing finance was the elephant in the room in 2007 credit crunch.

Car finance is now the elephant in the vroom

 

things may have to collapse before they get better, so bring it on ! 

Edited May 21, 2017 by Saving For a Space Ship

[Toast]

On 12/05/2017 at 2:15 PM, Democorruptcy said:

I cannot remember if this was mentioned earlier in this thread or not but the BoE is buying corporate bonds that include:

• BMW FINANCE NV
• DAIMLER AG
• DAIMLER INTL FINANCE AV
• GENERAL ELECTRIC CO
• MOTABILITY OPERATIONS GR
• TOYOTA MOTOR CREDIT CORP

 

So there's a third scenario: Bank of England eats the losses so there's no need for any politics to be involved.

How are these bonds and auto-maker finance arms structured? Are they some kind of securitised asset, like MBS's, so that, once shot of them, the finance companies are insulated from the catastropic losses, or will they be brought down with the wreckage too?

[Venger]

On 5/12/2017 at 0:46 PM, Errol said:

Yes! A new record! We are winning! This is stunning news for the UK and assures of us topping the table in the league this year.

Car finance deals soar to new record

The value of finance deals used to buy new cars has soared to a new monthly record, according to latest figures.

Motorists spent £3.6bn on car finance deals in March, a rise of 13% on the same month in 2016, the Finance and Leasing Association (FLA) said.

Adrian Dally, head of motor finance at the FLA, said lenders were behaving responsibly. "We do not share their concerns," he told the BBC. "Lending is responsible. This is a sustainable model going forwards."

http://www.bbc.co.uk/news/business-39895327

People enjoying new cars....  I agree.  Sustainable (until it is not).

If circumstances change then it's for the individuals (PCPers / finance houses) involved to sort out... maybe hand cars back.

There's no 'we'.  

I've not got a flash car on PCP.  

It is all individual choices and no one needs the financially-sensible-control-squad-losers to boss people about with what cars they can buy.

You're all trying to rescue people who have their own outlook on the world, and their own minds.   Get back into your ancient Kias.  They know what they want better than you do.  They have choices including the bus.  

[The Knimbies who say No]

On 12/05/2017 at 2:15 PM, Democorruptcy said:

I cannot remember if this was mentioned earlier in this thread or not but the BoE is buying corporate bonds that include:

• BMW FINANCE NV
• DAIMLER AG
• DAIMLER INTL FINANCE AV
• GENERAL ELECTRIC CO
• MOTABILITY OPERATIONS GR
• TOYOTA MOTOR CREDIT CORP

 

That goes some way to explaining the BoE's basic stance which reads like a bailout in the making.

[Broken biscuit]

13 hours ago, Venger said:

People enjoying new cars....  I agree.  Sustainable (until it is not).

If circumstances change then it's for the individuals (PCPers / finance houses) involved to sort out... maybe hand cars back.

There's no 'we'.  

I've not got a flash car on PCP.  

It is all individual choices and no one needs the financially-sensible-control-squad-losers to boss people about with what cars they can buy.

You're all trying to rescue people who have their own outlook on the world, and their own minds.   Get back into your ancient Kias.  They know what they want better than you do.  They have choices including the bus.  

Do you think you'll get a choice about whether to participate in the inevitable bailout?

[Errol]

4 minutes ago, Broken biscuit said:

Do you think you'll get a choice about whether to participate in the inevitable bailout?

There's the problem. The bailout will cost ALL of us - even those who have abstained from buying cars. PCP and other debt levels are currently patently absurd and the only reason it is continuing is due to the BoE buying the car loans/securitised crap and the banks knowing that they will be bailed out (again).

[Venger]

10 minutes ago, Broken biscuit said:

Do you think you'll get a choice about whether to participate in the inevitable bailout?

Can only hold true to the same position I held in 2008 (on HPC), that people are responsible for their own market actions.

From 2008 had HPCers claim "they didn't know what they were doing" (which covered anyone who owned a home.... that means those outright, and who could sell to big big money, and all the BTLers). 

And every year since while SE/London and indeed my own area has HPI surged year upon year upon year (some areas 50% or doubled).

Admittedly I later found out the big push there had been from some individuals who had been caught out paying top whack in the late 80s for houses, with spreadsheets excitedly plotting £1M HPI future mad-gainz... coming a cropper with repo in a market change.  Not them to blame for paying extreme prices, but others.....hmmm.

Quote

Daily Mail

Average UK house price to hit £780,000 by 2040, says leading think tank

Kilo Charlie, My World, 9 hours ago
We purchased a property in 1983 for £72,000.........today it's worth £650,000 plus. It's certainly possible and quite likely.

Sam, Bucks, 3 hours ago
Bought house in ,74 for 16k added extention about £8k now valued at £480k you do the maths?

 

In 2017 I am still fighting the same fight vs house prices which are 30%+ more expensive, vs another near 9 years of rent spent.

Buyers of houses... 

"They don't understand their how their own individual actions have an effect on the wider market."

"They they don't even know who they are themselves."

And some of it from those who had HPI forever outlook, up until S24 given them something to think about with future outlook.   Blah blah blah nonsense (people as innocents with brand new cars or buying houses at these prices.  It is their own choice, as was buying a house / equity rich on house / being a BTLer.

Always the owners/flash car PCPers as the innocents, no matter the high prices, the equity, their choice...  and renters and those on the bus just ye-olde-wise-ones to carry it.

If we look at 2009 QE and ZIRP onward as the bailout.....  I can only push back hard against those who would try and create a bail-in situation with their innocence giving, for to not do so perhaps increases change of bailout, or fuzzy thinking on forum.

Geez there's a former BTLer on HPC, who bought investment property in early 90s to rent out, who still has an IO mortgage on one property (but with cash to pay it off if required), hoping for a debt-jubilee or IO compensation payout !!!    Would cast himself as the victim to get more £, when already been big life winner.

In the wider world I know people don't look at themselves as incapable and not responsible for making their own choices in something so simple as buying and ENJOYING a flash new car on finance, or outbidding all others to buy a house / own a house.  It's a phenomenon on HPC where many a person believe themselves to be Superior/Top-5%, and think people need to be bossed around to what they would do, or indeed, owning a house (vs renters).  Our forum attracts more of that sort of mind like the network-effect because too few push back, imo.

[disenfranchised]

https://www.bloomberg.com/news/articles/2017-05-22/subprime-auto-giant-checked-income-on-just-8-of-loans-in-abs

 

Santander balls deep in US sub-prime car loans & failing to verify most incomes.

I wonder who is up to their eyeballs here?