Why are there so many leased cars on the roads lately?

I have noticed there seems to be an unprecedented number of newly registered, German brand, premium cars on the roads around my neighbourhood. They're presumably driven by people who would otherwise not be in the market for such cars, taking out personal lease finance. I can only think that there will be large number of these cars returned to the finance companies upon expiration of these two and three year leases.

Asked on 31 July 2017 by Gordon Tait

Answered by Honest John
You're right and this is exactly why Mark Carney is asking awkward questions. These finance houses are facing a debt crisis because most of the cars now on personal contract purchase plans will not be worth anything like the 'Guaranteed Future Values' on which the contracts are based. So, instead of using their 'equity' in the car as the deposit on another one, most purchasers will simply return the cars, creating a glut of returned three year old cars at precisely the point the UK economy is at its most vulnerable due to Brexit. (Smart PCPers will then buy the three year old cars at their true market value on the basis of personal loans, providing interest rates have not gone through the roof.) Unscrupulous dealers and finance houses will try to cut losses by finding "damage" on the returned cars and charge customers accordingly. Or they will offer to fund their deposits on customers' next PCPs, but the only way that can be funded is for the UK prices of cars to rise substantially, so expect cars in two - three years time to be priced 30 per cent higher than they are now. This is what happens when a country tries to live way beyond its means by overvaluing its real estate and living on credit. The old song "there may be trouble ahead" could not be more true.
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