Regulation of €2.7bn of car finance (PCP)

corcaigh1

The Irish car market market in terms of car finance is 3.8 billion and 2.7 billion of this is PCP, surely cant be?


https://www.thecork.ie/2018/04/01/government-must-regulare-pcp-car-finance-says-cork-td/

colm_mcm

That’s only 90,000 cars @ €35k and spread over a number of years. I assume they’re not counting general purpose loans in this figure too.

There were 130k cars sold in 2017, 146k in 2016 and 124k in 2015, so in 3 years that’s 400,000 cars.

SEPT 23 1989

Did I read somewhere that bundles of these loans have already been sold off before the inevitable happens

colm_mcm

What’s the inevitable?

ShadowHearth

Will this regulation will just end up to bring to costs up or a new tax if you go with pcp? :pac:

Yes, I am on of those people who picked up a car on pcp last year. It took me almost a year to figure out if I can afford it. Pcp made it possible for me to own a brand new car at least once in my life.
Saying that, I knew what was my max budget on a car and a year after its proven that it works for me. Since I got the car, I am putting away money each week to separate account just to cover balloon payment if I wont go for another one.

Now I know that a good chunk of people already took out cars that they cant afford, but I am really getting sick of people who cant do maths and use common sense before signing up for any financial commitment. In the end it will be again not their fault, but someone else, because someone else was not regulating their brain and the wallet.

I read an article somewhere that in uk pcp is even bigger, but repayments and commitment to loans is very high, with very low percentage of people failing.

Nonoperational

ShadowHearth wrote: »

Will this regulation will just end up to bring to costs up or a new tax if you go with pcp? :pac:

Yes, I am on of those people who picked up a car on pcp last year. It took me almost a year to figure out if I can afford it. Pcp made it possible for me to own a brand new car at least once in my life.
Saying that, I knew what was my max budget on a car and a year after its proven that it works for me. Since I got the car, I am putting away money each week to separate account just to cover balloon payment if I wont go for another one.

Now I know that a good chunk of people already took out cars that they cant afford, but I am really getting sick of people who cant do maths and use common sense before signing up for any financial commitment. In the end it will be again not their fault, but someone else, because someone else was not regulating their brain and the wallet.

I read an article somewhere that in uk pcp is even bigger, but repayments and commitment to loans is very high, with very low percentage of people failing.

100% agree. It is clearly laid out in front of you when you meet the finance people, but from day one people were on here giving out yards and almost taking pleasure in how it would cause an apocalypse in a few years.

It's a financial product that changes the way you pay for a car. You pay for it one way or the other, and you shouldn't do it if you can't afford it. Not rocket science.

Agent_47

corcaigh1 wrote: »

The Irish car market market in terms of car finance is 3.8 billion and 2.7 billion of this is PCP, surely cant be?


https://www.thecork.ie/2018/04/01/government-must-regulare-pcp-car-finance-says-cork-td/

The PCP part is correct AFAIAW

Agent_47

Our 3yr PCP is up, the balloon payment is waiting to be taken at the end of April (that is if Ulster Bank don't feck it up)

Squeaksoutloud

The 'pillar' banks are all probably just annoyed that now you can bypass them to finance a car. I'd say their car loan business has shrank a good bit.. Thoughj I know some them provide the finance through the garages.

Agent_47

Squeaksoutloud wrote: »

The 'pillar' banks are all probably just annoyed that now you can bypass them to finance a car. I'd say their car loan business has shrank a good bit.. Thoughj I know some them provide the finance through the garages.

BOI through Ford at 0%, go figure that one! I'm still scratching my head

ba_barabus

I blame the government/parents/society/poor/rich/teachers/unemployed/public servants/civil servants/all other members of society/imf/banks

mickdw

Ford are taking the hit. Letting the cars out at 4k discount but zero per cent finance deal helps maintain the appearance of the full retail price and will help with resale.

ba_barabus

mickdw wrote: »

Ford are taking the hit. Letting the cars out at 4k discount but zero per cent finance deal helps maintain the appearance of the full retail price and will help with resale.

4k? I have it on good authority the Vignale Mondeos have gotten far more off than just 4

colm_mcm

Focus Titanium has €7k off in one dealer there recently at the end of a March. They’re doing 2 years road tax too. Was in a dealer there recently and the amount of newish focus trade ins they have is concerning. They must be under serious pressure to sell new ones before the new new model comes out.

Philb76

After the initial period does it have to be a balloon payment or CAN you continue with the payments or do you hand it back

mickdw

ba_barabus wrote: »

mickdw wrote: »

Ford are taking the hit. Letting the cars out at 4k discount but zero per cent finance deal helps maintain the appearance of the full retail price and will help with resale.

4k? I have it on good authority the Vignale Mondeos have gotten far more off than just 4

colm_mcm wrote: »

Focus Titanium has €7k off in one dealer there recently at the end of a March. They’re doing 2 years road tax too. Was in a dealer there recently and the amount of newish focus trade ins they have is concerning. They must be under serious pressure to sell new ones before the new new model comes out.

I was just showing how Ford can offer 0 zero per cent via bank of Ireland when a customer would pay around 4k interest on a mondeo if they went with a loan direct from bank of Ireland.
Actual discounts have little to do with the point I was making.

Cakerbaker

Philb76 wrote: »

After the initial period does it have to be a balloon payment or CAN you continue with the payments or do you hand it back

You can refinance. Payments may not be exactly the same as it depends on the amount due and will probably be at a higher interest rate.

Lantus

TD claims we need regulation but fails to mention any actual problem or how spurious regulation will provide a solution.

corcaigh1

ShadowHearth wrote: »

Will this regulation will just end up to bring to costs up or a new tax if you go with pcp? :pac:

Yes, I am on of those people who picked up a car on pcp last year. It took me almost a year to figure out if I can afford it. Pcp made it possible for me to own a brand new car at least once in my life.
Saying that, I knew what was my max budget on a car and a year after its proven that it works for me. Since I got the car, I am putting away money each week to separate account just to cover balloon payment if I wont go for another one.

Now I know that a good chunk of people already took out cars that they cant afford, but I am really getting sick of people who cant do maths and use common sense before signing up for any financial commitment. In the end it will be again not their fault, but someone else, because someone else was not regulating their brain and the wallet.

I read an article somewhere that in uk pcp is even bigger, but repayments and commitment to loans is very high, with very low percentage of people failing.

That was my thinking reading the article also, a lot of fake money around so...

colm_mcm

These people have the option to walk away after the agreement so I can’t see the problem.

Lantus

ShadowHearth wrote:

Now I know that a good chunk of people already took out cars that they cant afford, but I am really getting sick of people who cant do maths and use common sense before signing up for any financial commitment. In the end it will be again not their fault, but someone else, because someone else was not regulating their brain and the wallet.

It's relatively easy to recover the asset if non payment occurs. So minimal risk overall as after three years car can be handed back.

I agree that better explanation of PCP is needed from an independent source. That's very easy to do and doesn't need a big organisation to undertake. Dealers should reference this and get every customer to sign they have been told and are aware of such a resource.

Poor little Johnny cannot claim he is s victim when all the facts are laid out clearly with opportunities to ask questions and verify the data before committing to anything.

Philb76

Poor little Johnny is usually blinded by his shiny new motor excuse my ignorance is pcp and hp much of a difference

colm_mcm

Philb76 wrote: »

Poor little Johnny is usually blinded by his shiny new motor excuse my ignorance is pcp and hp much of a difference

HP is easier to digest because you have a fixed deposit and fixed repayments and then the car is yours

Where I think people get mistaken about pcp is on what happens when the term is up. There is definitely a misconception that you can just get a new car again and keep paying what you were paying. Whether people that have actually done PCP think that I don’t know.

draiochtanois

This post has been deleted.

listermint

draiochtanois wrote: »

This post has been deleted.

Car is worth what someone will pay for it, As can be aptly demonstrated by the for sale ads in this thread where people are finding it difficult with people parting with over 16K for vehicles. (most wont)

then you have what the garage is willing to offer, and that looks like its becoming a serious issue for many key Marques (over stocked)


So 'worth' is subjective until the money is in your hands

Where does the risk lie?
Who is giving the finance?

If it is being given by Volkswagen what risk is there to the Irish economy?

bazz26

Philb76 wrote: »

Poor little Johnny is usually blinded by his shiny new motor excuse my ignorance is pcp and hp much of a difference

In layman's terms they are just a different structure for payment of credit:

- PCP incorporates the entire amount borrowed plus interest into lower monthly payments over 3 years with with the option at the end of the term to a. hand back the vehicle and walk away, b. trade the vehicle in against another with a new PCP deal or c. keep the car and pay off a lump sum owed on it.

- HP incorporates the entire borrowed amount plus interest into monthly payments over a longer term so there is nothing owed at the end of that term.

bazz26

Deleted User wrote: »

Where does the risk lie?
Who is giving the finance?

If it is being given by Volkswagen what risk is there to the Irish economy?

VW like many car makers these days have their own bank under their company umbrella which gives them the power to compete with regular banks.

Philb76

Heard an ad from seat on radio offering 3.9 per cent on used cars that sounds alright

colm_mcm

Philb76 wrote: »

Heard an ad from seat on radio offering 3.9 per cent on used cars that sounds alright

One issue is have with that is there is no list pricing for used cars so it would be easy to just have an overpriced used car. That said it’s up to the buyer to know whether it’s a good price or not. It’s more difficult to do this on a used car of course.

ShadowHearth

colm_mcm wrote: »

One issue is have with that is there is no list pricing for used cars so it would be easy to just have an overpriced used car. That said it’s up to the buyer to know whether it’s a good price or not. It’s more difficult to do this on a used car of course.

3.9% for used car is finally a good move in to the right direction. It wasstupid how demo or 1-2 year old same model cars were way worse option, because you needed to go for 9% instead of 0%.

bazz26

Generally PCP is not financially viable on a used car unless the car is fairly new ie a year old at most. PCP is mostly designed to make getting into a brand new car more affordable so usually that's where they best deals are as it's driven by the car manufacturers to sell units.

Philb76

When I go up North i was seeing loads of golf r on the road asked a friend wots the story with the all the golf r is everyone wealthier now he said it is pcp but u also have to pay a big deposit and still hand car back seemed a strange one or maybe I haven't a clue about it

colm_mcm

bazz26 wrote: »

Generally PCP is not financially viable on a used car unless the car is fairly new ie a year old at most. PCP is mostly designed to make getting into a brand new car more affordable so usually that's where they best deals are as it's driven by the car manufacturers to sell units.

An awful lot more scope for them not to honor the GMFV on say a 6 year old car than on a 3 year old. Has to be good for the service department too to have cars outside warranty come in for by-the-book service/maintenance

Philb76

Philb76 wrote: »

When I go up North i was seeing loads of golf r on the road asked a friend wots the story with the all the golf r is everyone wealthier now he said it is pcp but u also have to pay a big deposit and still hand car back seemed a strange one or maybe I haven't a clue about it

Handing the car back is the worst of 3 options and nobody should be doing it unless they are in serious financial trouble.

You can pay the lump sum or trade in against a new car instead both of which are much better options.