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33 minutes ago, Jonny69 said:

 

 

On the vehicle PCP issue. I once had someone say to me they were going to use a credit card to pay the deposit on PCP for a brand new car. The person earn't around 16-18k and wanted a 35k car. I suggested this was not sensible however the car dealer had it all agreed ready to go. Never found out if they signed the paperwork but it sounded frightening to me. 

1

Thats just stupid. Its living beyond ones means like this that causes problems

 

edit: you could argue that any finance is living beyond ones means before someone points it out

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7 hours ago, Jonny69 said:

On the vehicle PCP issue. I once had someone say to me they were going to use a credit card to pay the deposit on PCP for a brand new car. The person earn't around 16-18k and wanted a 35k car. I suggested this was not sensible however the car dealer had it all agreed ready to go. Never found out if they signed the paperwork but it sounded frightening to me. 

I have a grand daughter who is in exactly this position, is there any way of baling out?

 

Can someone explain in simple terms how this PCP, balloon etc work?

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9 hours ago, Jonny69 said:

This is a smart way of doing it. Though you might consider only keeping the machine 3-5 years. The difference in cost of ownership over the period would be very minimal and you would get a shiny new digger with warranty more often. 

 

Tree surgery kit is easy to finance because the residuals are high, rates on it should be good as well. Want to finance a printing machine, floor cleaning equipment, workshop tools (not spanners and sockets) etc and things get more difficult as they are items that are basically worthless very quickly. 

 

On the vehicle PCP issue. I once had someone say to me they were going to use a credit card to pay the deposit on PCP for a brand new car. The person earn't around 16-18k and wanted a 35k car. I suggested this was not sensible however the car dealer had it all agreed ready to go. Never found out if they signed the paperwork but it sounded frightening to me. 

 

You're right about residuals on tree surgery kit being good, but there is an issue of lenders not really understanding it, or being a bit nervous about funding it. Its not so bad with things like chippers and grinders, which usually return to the same place at the end of the day, I'm thinking more things like Harvesters which sit around in a forest for weeks on end, miles away from anywhere. I think that worries some of the underwriters a bit.

Printing machines, floor cleaning stuff, workshop kit etc can actually be much easier to finance a lot of the time. 

 

On your observation about the PCP deal - the car dealer will have been rubbing their hands thinking about the 5% kickback they would be getting from the finance company. Very shady business in the motor trade sometimes. 

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2 hours ago, openspaceman said:

Can someone explain in simple terms how this PCP, balloon etc work?

PCP agreements have lower monthly payments because at the end of the term there is a "balloon payment", which should represent what the vehicle is likely to be worth at the end of the term. Its a good trap for car dealers because it motivates people to come back at the end of their term and use any equity that they have in their car as a deposit on their next one, rather than having to pay the balloon. Many people can get into difficulty when they go over their mileage allowance and thus devalue the car to less than the balloon, or when the balloon has been overestimated from the outset. 

 

Not sure the details of your granddaughter's situation, but there is a way of getting out of a PCP agreement under certain circumstances - its called Voluntary Termination, and it is a very handy protection for the consumer. Not sure how far in your granddaughter is or whether the situation lends itself to that but it may be an option. 

 

Happy to explain it to you and help you sort it out for your granddaughter, but I don't know that we should hijack this thread, and also its probably best not to put full details for your granddaughter's sake. Send me a PM if you like and I will see if its a possibility. 

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18 hours ago, Steve Bullman said:

Thats just stupid. Its living beyond ones means like this that causes problems

 

edit: you could argue that any finance is living beyond ones means before someone points it out

Or perhaps it gives you the means in which to live😏!

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5 minutes ago, Matthew Storrs said:

Or perhaps it gives you the means in which to live😏!

I’m not against finance, but taking out finance to be able to take out finance is asking for trouble 

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1 hour ago, Steve Bullman said:

I’m not against finance, but taking out finance to be able to take out finance is asking for trouble 

Yeah I agree. I only do it for necessary business equipment- personal life, if I can’t afford it outright I don’t buy it!

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15 hours ago, openspaceman said:

I have a grand daughter who is in exactly this position, is there any way of baling out?

 

Can someone explain in simple terms how this PCP, balloon etc work?

Not sure on the details of it to be honest as its very specific to the car trade. Forestry Finance would be the man to ask or I can give you a number to have a chat to. 

 

If its anything like a regulated CCA agreement then there are ways of getting out but its time dependent and also changes if your granddaughter is in Scotland as their rules are a little bit different I believe. 

 

PCP is just a way of keeping payments down on car that would/could cost more per month when done as HP agreement. This is to allow people to buy and run cars they possibly can't really afford and allows to dealers to sell more new car. The margins in new vehicle sales for manufacturers are unbelievable. It has mileage and damage clauses like a contract hire. In the end it makes no difference which way you skin it. A three year old car with 30k on the clock is worth x% less than when it was new. What's important is how much you still owe relative to how much its worth.

 

I'm not in the finance industry, just know a tiny bit more than most because my dads been financing business assets for thirty odd years. 

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3 hours ago, Matthew Storrs said:

Yeah I agree. I only do it for necessary business equipment- personal life, if I can’t afford it outright I don’t buy it!

Got a mortgage? :)

 

Though I do agree in principle, when you can finance Christmas presents from a catalog or a £500 sofa then it gets a bit silly. 

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9 hours ago, Jonny69 said:

The margins in new vehicle sales for manufacturers are unbelievable

I heard an interesting bit of info just last week from one of the lenders I deal with. They had seen the accounts for a fairly mainstream reputable motor dealer, and in one year they had made £13,000,000 profit. That amounted to a £14,000,000 gain in referral fees from finance companies, and a £1,000,000 loss in selling cars. 

I reckon that is similar in a lot of the motor trade - the finance companies give the dealer a 5% kickback, which is why they push you on to their finance. But who pays for that? The mug consumer who ends up on a deal that's costing 9.9% a year or sometimes more. Very grim in my opinion. 

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