The Best Car Finance Blog In The World

If you are one of those that has downloaded my introductory video on my vehicle finance training you will know that I have very little faith in the ability of the press to provide proper advice on vehicle finance, in fact I said that some of their advice is criminally misleading. However you expect the Times and Telegraph to at least do some basic research before throwing misleading information onto their online sites. You expect rubbish from the popular press but not from the more upmarket news and information providers. So what is it that has made me so angry? Well, it started with a report provided by Glass’s Guide who, a week after I announced it, declared that there is a slump in used car prices. That is accepted and Glass’s continued to say that they expected a drop of 25% in used car values this year, bearing in mind that used car prices have continued to increase month on month (subject to small seasonal variations) for several years now so this estimate is very bad news for anyone who owns a car and will have to sell it sometime this year. However, the newspapers picked on PCP‘s which, as many of you know, have a guaranteed final payment, in other words you can either pay the final payment to own the car or hand the car back to the finance company. Many consumers are sold on PCP by dealerships on the basis that at the end of the agreement the car will have a value in part exchange in excess of the final payment leaving the driver with some profit to put down as a deposit on the next car. The two newspapers then say that because of this sudden drop in used car values many people who have taken out a PCP will find themselves in negative equity. In other words the value of the car will be substantially less than the final payment leaving the driver little choice, they can either pay more than the car is worth or hand the car back, either way no longer having any money left for the deposit on the next car as the dealer had suggested. Although the Times suggests that the driver is ‘saddled with debt worth more than the car’. This is very misleading – how can you be saddled with debt if you can simply hand the car back? As a result of the two reports the papers appear to steer consumers away from PCP when in fact they have a huge benefit when used car prices are dropping. Take a car that cost £15,000 with a £7,000 optional final payment. At the time of taking out the agreement the salesman said the car should be worth £8,000 leaving the customer with £1,000 as a down payment on the next car. However, when the driver takes the car into the dealer to part exchange it with another he is told that the car is actually only worth £5,000 so this ‘disgraceful finance product’ means that by handing the car back the driver will be out by a £1,000 as indicated by the Times and Telegraph. What a load of old rubbish and dangerously misleading. The finance package was geared towards a car that would be worth £7,000 so you pay depreciation of £8,000 and interest charges based on a purchase price of £15,000 and a residual value of £7,000. But the really great news is that by handing the car back at the end of the agreement you pass that £2,000 actual loss over to the finance house. You are quids in as a result. Compare this to someone who has paid cash or taken out HP. They suffer depreciation of £10,000 compared to your PCP in which you suffer depreciation of just £8,000. It’s a great product, nearly as good as leasing but not according to The Times and the Telegraph. They should be disgusted with themselves.