Financial watchdog to investigate car leasing market
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Deleted member 6183
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I've been droning on about this for some time.
grober
MB Master
Red C220
MB Enthusiast
Unlike hire purchase, which can be paid off by sale of the asset, Personal Contract Payments (PCP) - the dominant form of car loan - requires a fixed period from which there is no opt-out, without the leaser being able to sell the car to raise funds.
Since when has this been the case?
You're free to sell the car at anytime and settle the finance. He's described Contract Hire which is a fixed term rental and put it under the heading of PCP and this is the Business/Economics editor, what hope the ordinary man in the street?
Someone has written this article that has no comprehension of the differences between HP, PCP, Contract Hire & Leasing.
There's problem number one, education, even the journalists writing about it haven't got a clue.
No doubt the FCA will have a good look at it, make some tweaks and then tell everyone it's just fine, nothing to see here.
Since when has this been the case?
You're free to sell the car at anytime and settle the finance. He's described Contract Hire which is a fixed term rental and put it under the heading of PCP and this is the Business/Economics editor, what hope the ordinary man in the street?
Someone has written this article that has no comprehension of the differences between HP, PCP, Contract Hire & Leasing.
There's problem number one, education, even the journalists writing about it haven't got a clue.
No doubt the FCA will have a good look at it, make some tweaks and then tell everyone it's just fine, nothing to see here.
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Red C220
MB Enthusiast
The real problem is not the creative lending it's actually small or zero deposits that create negative equity and allow people to leverage disproportionately.
Make a minimum deposit requirement based on a fixed percentage of invoice price, say 20% or 25% that aren't allowed to be covered by manufacturer "deposit contributions" or cashback deals. Problem solved.
Make a minimum deposit requirement based on a fixed percentage of invoice price, say 20% or 25% that aren't allowed to be covered by manufacturer "deposit contributions" or cashback deals. Problem solved.
I think they are just being blinded by the technical definitions. Legally you cannot 'sell' a car with attached finance, however you can arrange a sale and either pay it off at the time i.e. Through the dealer or as I have done got the buyer to settle the car and gain written proof that the finance company release any interest in the car before I release it. Done it twice via BMW finance.
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D
Deleted member 6183
Guest
How telling that the 'expert' journalist appears to be confused, I'd be happy to bet that he has bought such a product himself as well.
grober
MB Master
I have always rated Douglas Fraser as a pretty good financial journalist with considerable experience.
Douglas joined BBC Scotland at the moment the financial crisis struck in 2008, reporting on the meltdown at RBS and the collapse of Dunfermline Building Society.
His beat also includes close attention to the offshore oil and renewable energy sectors, and he takes a mostly professional interest in whisky.
Working in Scottish journalism since 1989, he previously worked for The Herald and The Scotsman, among other newspapers.
He has covered politics from the Holyrood parliament, as well as education, the arts and the Highlands and Islands.
He is co-author of the Political Guide to Modern Scotland.
Douglas Fraser - BBC News
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D
Deleted member 6183
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City watchdogs could ban 'irresponsible' car loans in new investigation
It's being reported nationally as well, interesting part of the attached article where the newspaper mystery shopped a car dealer with just £400 disposable monthly income and were sold finance at £397 monthly.
It's being reported nationally as well, interesting part of the attached article where the newspaper mystery shopped a car dealer with just £400 disposable monthly income and were sold finance at £397 monthly.
grober
MB Master
As far as I can make out selling debt
sorry finance 
to customers is often incentivised in a monetary sense - [ moves product or rewarded by commission ] balanced against this are very loosely policed mis-selling regulations---- the same insidious instant gratification /reward "experience" may thus extend to the lender as well as the borrower. 
sorry finance to customers is often incentivised in a monetary sense - [ moves product or rewarded by commission ] balanced against this are very loosely policed mis-selling regulations---- the same insidious instant gratification /reward "experience" may thus extend to the lender as well as the borrower.
Red C220
MB Enthusiast
I have mixed feelings about more regulation and this subject in general.
Part of it makes sense that confusing or misleading products and sales tactics should be reigned in, but the other part of me feels like we're very close nannying people a little too much.
In life consequences happen as a result of poor decisions, there's no changing that, but we're rapidly approaching a point where people, particularly younger people don't seem to understand that they are responsible for their choices and actions. It's not healthy.
Rather than introducing more levels of regulation the time, effort and money should be poured into education. I mean education in schools.
The maths curriculum should include some basic financial do's and dont's and discuss the simple premise of debt and lending, including the ramifications of non payment, credit reports, mortgages, HP, PCP etc etc.
Modern life is absolutely and completely reliant on credit contracts or payment plans for Houses, cars, phones, council tax, household bills.
Education would be more effective than over regulation.
Surely educating people from a young age about fundamentals of money and borrowing is going to be more useful in real life than algebraic fractions?
Part of it makes sense that confusing or misleading products and sales tactics should be reigned in, but the other part of me feels like we're very close nannying people a little too much.
In life consequences happen as a result of poor decisions, there's no changing that, but we're rapidly approaching a point where people, particularly younger people don't seem to understand that they are responsible for their choices and actions. It's not healthy.
Rather than introducing more levels of regulation the time, effort and money should be poured into education. I mean education in schools.
The maths curriculum should include some basic financial do's and dont's and discuss the simple premise of debt and lending, including the ramifications of non payment, credit reports, mortgages, HP, PCP etc etc.
Modern life is absolutely and completely reliant on credit contracts or payment plans for Houses, cars, phones, council tax, household bills.
Education would be more effective than over regulation.
Surely educating people from a young age about fundamentals of money and borrowing is going to be more useful in real life than algebraic fractions?
D
Deleted member 6183
Guest
Some people need protecting from themselves, no amount of education can change the financially feckless.
As an aside, PCP or whatever are providing a glut of used cars from which to choose from at 2,3 or 4 years old with low mileage and full service histories.
As an aside, PCP or whatever are providing a glut of used cars from which to choose from at 2,3 or 4 years old with low mileage and full service histories.
Red C220
MB Enthusiast
Nothing will change that, it's time to start educating as many people as possible rather than setting regulation that caters for the lowest common denominator.
The world always has been full of idiots, it still is and it will continue to be no matter how much regulation is set in place.
There is a fundamental shift in society about responsibility (or lack of it). It really is not healthy.
Where there's blame there's a claim!
Dryce
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Traditionally AIUI vendors were not allowed to disadvantage customers buying on credit when it came to pricing.
But we have a situation where cash is not necessarily king anymore - and the situation where customers are being offered 'discounts' for buying on credit that are not available to cash buyers has to raise eyebrows.
I think it's a sign that the market is not healthy for the consumer.
I think there should be some sort of regulation - if a manufacturer offers a finance contribution then they have to offer the same discount off the top of a cash deal.
'Affordability' isn't a sensible measure. It works for a subsection of the population who can be measured in a particular way. It doesn't work for people who are genuinely thrifty and have net worth. Simple things like opening a bank account or getting a credit card can be remarkably difficult for some people who don't meet the criteria because their wealth and spending just don't fit the templates used by the decision making systems.
D
Deleted member 6183
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We've discussed it at length already so let's see what the FCA make of it.
What us lot think is, of course, irrelevant which doesn't stop us making predictions I suppose.
It's an interesting point though to consider that customers should be clever enough to understand the product. It's worth remembering that these type of transactions were only available to businesses a few years ago but now any Tom, **** or Harry can eagerly sign up to a significant monthly commitment without the assumed savviness of a seasoned businessman.
What us lot think is, of course, irrelevant which doesn't stop us making predictions I suppose.
It's an interesting point though to consider that customers should be clever enough to understand the product. It's worth remembering that these type of transactions were only available to businesses a few years ago but now any Tom, **** or Harry can eagerly sign up to a significant monthly commitment without the assumed savviness of a seasoned businessman.
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The FCA will likely concentrate on transparency issues .... and not on the moral aspects
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Deleted member 6183
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The FCA will likely concentrate on transparency issues .... and not on the moral aspects
I'm not so sure but time will tell.
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