PCP Coronavirus Impact

[Scooser]

I know people who are not rich but don’t think twice about taking a few hundred pound per month PCP deal on some fancy 4x4. Sometimes, both in the household. But, that was when times were good and credit was freely available.

Fast forward to the Coronavirus, and it doesn’t look so clever when you’ve still got £500 per month to pay for the next 3 years, you’ve got little money coming in and need to prioritise the mortgage.

This one could blow up given everyone and there dog seems to be driving a car on PCP these days.

[id5]

It is one of the economy problems that Coronavirus has triggered. Lenders are going to have to give payment holidays but the money will still have to be payed back at a later date.

I suspect that there are many that have too much debt as our society is now built on it. They may not survive the financial desert that this lockdown of the economy brings.

[green van man]

The very reason I pay up front by borrowing from myself.

Many years ago I had to take HP on household goods, the rule for us was 1 item at a time and a fixed monthly amount. When that item was paid off I continued paying the monthly amount to myself by putting it into a deposit account.
This allowed me to put a bigger deposit next time and a shorter payment period. I continue this practice today, a set amount of income is payed into a savings account so that I have a reserve to call on when needed.

No I'm by no means rich, I am now comfortable thanks to years of being prudent.

Oh and the only new vehicles I have driven has been works vans, even when I could afford new volvo could not supply what I wanted so I bought secondhand. A reliable old car gets you there as well as a new one.

Paul.

[Dastardly Diesel]

Coronavirus didn't just trigger it, although it's the latest blow to the economy. The system came near collapse in the late 00's due to fundamental structural problems of a world economy leveraged too heavily on debt, and people still haven't learned.

They're spending money they haven't got to buy cars they can't afford to impress people they don't know.

[Austin160]

The not yet mentioned issue with PCP and the effects of Coronavirus is the already experienced adverse effects on second hand car values. The depreciations are alarming, as second hand values are plummeting. PCPs have been conceived simple to finance the depreciation from the time the PCP starts, to the time it finishes - now often 48 months rather than the earlier 36 months, and the manufacturers attempt to prejudge (and control?) that, and the customer pays that depreciation over the chosen period. ’Thimple’ -as they say!

Fast forward to when this issue comes out the other end:- the vehicles will have depreciated far more than anticipated, and someone will be left holding the baby. Is that likely to be the manufacturer?

[Harvey1512]

I suspect the PCP companies will be generally sympathetic and provide payment holidays. You will still have to pay but not immdediately. If they do not they will get slaughtered in the press and will also end up with a huge amount of bed debt and unwanted cars.

My BiL had a second house out in Spain during their crash. Talking to others out there the banks stopped foreclosing mortgages after a while. They did not want more worthless houses on their books, no money coming in. They were happier to let people pay smaller amounts, spread out longer. Something coming in was better than nothing and a worthless apartment. The same may happen with cars and PCP.

This going to stuff further the move to electric. Who is going to be spending £30-£50k on an electric car in the next 12 months? Even more so if you can get a deflated price 2nd hand pcp car, assuming you can even afford that!

[Dastardly Diesel]

They get slaughtered anyway, so they won't care. They have their customers by the balls - if they don't have PCP's the alternative is they all drive around in 10 year old 1.2 Corsa's, and their egos won't allow them to do that. Hell, look at VW - implicated in the murder of babies born to slave labour and lying about it for over 50 years to minimise the compensation bill before finally fessing, fiddling emissions and leaked documents showing they consider the increased air pollution death rate an acceptable cost for the savings made in not engineering their emissions properly, and eejuts still queue up ro buy their products. The PCP providers will be do different.

[morwenna240]

D'accord