Car payments ruining family's life

derrick

The Glue that binds us together.
I know so many people not just kids who bury themselves in dept just to have a new car in front of there house.
A guy i know recently bought brand new BMW. Now cant afford to keep is bike up to scratch.
 
Why does she think she needs to drive a 20k motor? All comes from the parents I think.
Young peoples expectations are higher and they think it's their right to drive around in a 20k motor
Which is it, young peoples fault or their parents?

I suspect it's neither and both. Young people generally don't buy cars, they can't afford them. They don't buy houses either, they can't afford them either. Average salary needed to buy a house, £54,000, so they spend their money on things which look ostentatious, phones, taxis, eating out, holidays, which actually hides the fact that life has become too expensive for young people to buy the things their parents or grandparents bought.
 

Bazzer

Setting the controls for the heart of the sun.
I strongly suspect she is not alone and that there are many older and more worldly wise, who have been seduced by the patter of a salesman; particularly when it comes to financing a purchase. It is easy to think of (say) £300 as a payment for a couple of months, but less so of always having to make that payment for the next 3 years, or however long.
I have never understood why people enter into PCP, except in particular circumstances, yet the number of people entering into these contracts (at one stage I understand around 80% of new cars), suggested my own thinking was out of line with many others.
 

Bromptonaut

Rohan Man
Location
Bugbrooke UK
Young peoples expectations are higher and they think it's their right to drive around in a 20k motor.
I was in Sheffield last year and a taxi drive told me most of his customers were students from uni. Too proud to take the bus or cycle.
I don't think there's any evidence for the first proposition though the sort of finance we're discussing here will make it easier for those who wish to buy a new car do so. When I was in my twenties repayments on HP were way out of my reach and probably would have been even if I lived at home with my parents. Interest rates then though were 15%. Nowadays they're less than a third of that and removal of credit controls, together with rise of products like PCP where you're only borrowing to cover depreciation, have turned the arithmetic on its head.

Students have always used taxis as well as buses and bikes. More than two of you and a taxi or Uber is cheaper than the bus.
 
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how did she think she was going to pay for it, she has made a mistake, a stupid one at that, just as many others have, but now she will have to face the concequences, lose the car , enter into negotiations to make AFFORDABLE payments to clear the debt, I don't agree with folk who say , it will become the parents responsibility to clear the debt, it isn't , the responsibility lies with her, not her parents. if her parents choose to help then that's a different thing altogether


Tomorrow never comes.
it just has done for her:okay:
 

marinyork

Resting in suspended Animation
Location
Logopolis
Unfortunately it's now the society of instant gratification. You want a phone, you walk into a shop sign up for x' years and it's yours. Can't afford something, sign up for a credit card, go and spend. Same with a car and whatever else you care to mention.
Tomorrow never comes.
It is, but it is all generations and has gone on for 20/30/40 years (we can argue about that) and all pervasive in subtle ways way beyond finance and the never never.
 

Kajjal

Veteran
Location
Wheely World
Unfortunately it's now the society of instant gratification. You want a phone, you walk into a shop sign up for x' years and it's yours. Can't afford something, sign up for a credit card, go and spend. Same with a car and whatever else you care to mention.
Tomorrow never comes.
This is increasingly a big problem as it tempts people into impulsive decisions with long term consequences.
 

Bromptonaut

Rohan Man
Location
Bugbrooke UK
Unfortunately it's now the society of instant gratification. You want a phone, you walk into a shop sign up for x' years and it's yours. Can't afford something, sign up for a credit card, go and spend. Same with a car and whatever else you care to mention.
Tomorrow never comes.
There is, and always has been, such a cohort in society. Sure credit is more available then it ever was but that doesn't mean society as a whole refelects that lifestyle.
 
I work with people who have their entire life ‘on tick’. I sometimes ask them if they have a ‘safety net’ should the brown stuff hit the fan. The usual response is “I’ll cross that bridge if I come to it” at best, and “I’ll just go bankrupt, it gets discharged in a year now” at worst.
 

stowie

Legendary Member
As a student how did she pass the credit checks and prove that she could afford the payments.
I expect she didn't. The story says that she wasn't asked for pay slips and the seller didn't run an affordability assessment.

Car sales have boomed in the last decade as PCP has made new cars much more affordable. In theory it isn't a terrible idea. The residual value of the vehicle is built into the repayment scheme thus making it more affordable. Vehicle manufacturers have actually been able to keep or raise their new car prices since the monthly cost now appears to be more important to consumers than the total sticker price. But growth in car sales has slowed considerably and we are definitely in a saturated market. So the less scrupulous sellers will bypass the checks in the same way that mortgage lenders in the US bypassed credit checks on subprime.

I bought a car last year on a standard bank loan. I am paying over double per month what I would pay on PCP but over a shorter time and at a much lower interest rate. The PCP seemed attractive until I started asking questions. I do significantly more than average yearly mileage yet this wasn't going to be factored into the repayments but "sorted out at the end". Which I assume means buy another car on PCP at the end of the agreement or face a massive balloon cost. This doesn't appeal at all (I am also not interested in buying a car every few years either).

I doubt very much that any PCP crisis would feed itself into the wider economy in the same way as the mortgage loans were the instrument to feed the 2008 crash, but the cycle seems quite similar. A low growth, saturated market encourages "creative" financial thinking.

As for the woman in the story - I feel sorry for her, but as a student a £20k car should set alarm bells going everywhere. I would imagine her best bet is to negotiate with the finance company with a view to minimising the repayments upon handing back the keys. People make stupid mistakes - and this applies equally to "clever" university types as to anyone else.
 
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Good afternoon,

I agree with the "She entered into it... " argument.

Despite this there is a regulatory system for offering credit and it is quite possible that the dealer didn't follow the rules.

Not related to this specific case Lookers a multi branch franchisee for most car brands https://www.lookers.co.uk/ are getting a look over from the FCA, http://otp.investis.com/clients/uk/lookers/rns/regulatory-story.aspx?cid=1429&newsid=1302181

Currently there are no specifics.

So yes it definitely her fault, no one forced her to take on the deal, but to help people who may be manipulated by super smooth salesmen, someone able to lend large amounts is given a licence (FCA authorisation) to do so under the condition that they undertake certain checks.

Bye

Ian
 
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