Car payments ruining family's life

PCP is a loan for the depreciation of the asset ( car Normally ) the manufacturers love it, because it guarantees work. The dealers love it, as long as you don’t pay the ‘balloon’ or hand back and walk away, hence the reason you get bombarded by calls and mails halfway through your ‘term’ about ‘upgrades’.


The Monch
Inside my skull
Shame she didn't discuss it with her parents just after she'd bought it. But she's an adult, her choice to take that debt on, and not to cancel it once she'd had time to consider it.


Getting old but not past it
North Wales
New cars are so expensive these days that PCP is the best way manufacturers can sell their new shiny automobiles . It is very clever as, basically, the customer only pays half the value of the new car and replaces it 3 or 4 years later with another brand new one. It is like having another mortgage round your neck as you keep paying for ever. Many people only see as far as getting possession of their brand new vehicle and only think of the financial burden when the deal comes to an end and they have to start all over again or pay off the other half of the car if they can afford it.


Resting in suspended Animation
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.
As bromptonaut said, to a certain extent the wealthier students have always taken taxis. People use buses and even bikes. Uber is very common, you can see people using in huddled in groups, app out waiting.

Of late I'm sure I've seen a lot more Uber use since the tram engineering works have caused absolute chaos. I even met someone that said they'd started cycling because of it. Also the bus services get cut and cut. Huge swarms of people walk each morning from campus and student accomodation to the uni.
I'm confused why the family doesn't just sell the car. They bought it on HP so they should be able to sell it to pay off most of the debt and then pay off the gap. Much better than paying a monthly payment for years.
Probably, it doesn't actually belong to them until they've paid it off and any finance check would show that.
The details of this deal and type of loan are not clear.

The car was second hand when she bought it - the £20,000 mentioned in the article is the approximate cost of the repayments and deposit.

Looks like she is £700 behind, which is a couple of months.

The car was bought in early 2017, so she ought to have made about 26 payments out of the 60 due.

One might hope she has repaid some of the capital advanced, but car loans are often back end biased in that respect - the early repayments are mostly interest.

Another critical unanswered question is the worth of the car.

Less than the loan outstanding, no doubt, but without that figure we cannot calculate the cost of getting out from under the agreement.
Probably, it doesn't actually belong to them until they've paid it off and any finance check would show that.
True, over here you don't get the 'pink slip' or ownership papers until you've paid the car off, but you can still sell the car at anytime as the bank takes all the proceeds. The car will be worth less than the loan amount and so they'll owe something extra, but still better than being stuck with a monthly payment. I've done this twice when I needed to get rid of a car I was paying off. Maybe car financing is different here in the US.
....A house can only increase in value.....
Try telling that to all the people who found themselves having to sell houses for less than they paid for them after the financial crisis, and to all those still in houses bought before the finacial crisis but find themselves still in negative equity.
I remember as an 18-year-old (with a salary!) having to go for an interview with the bank manager because I wanted to borrow a couple of hundred to buy a used car.

He asked me what I was after. I said I had my heart set on a Corsair 2000E, at which he promptly told me to wind my neck in and go for something more modest. :sad:


Rohan Man
Bugbrooke UK
A seasonal blip. Long term the house will become worth more than the price you paid.
Hmmm. Long term isn't much help if you need to relocate for work. It's not much joy if it stops you from upsizing either.

Aside from fact that UK house prices are at an unsustainable ratio vis a vis earnings there are a lot of uncertainties that could spook markets and affect jobs/housing. Brexit and the war drums in the Middle East to name but two.


A seasonal blip. Long term the house will become worth more than the price you paid.
As Keynes once said (sort of) - in the long run we are all dead.

In the long run houses will increase in price, even if only because of inflation (interestingly, long run returns on share portfolios outperform housing generally).

But the "blips" can ruin people if they are accompanied by interest rate rises.
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