The UK’s near-nine-month ban on car repossessions is set to be lifted at the end of January, sparking an increase in the supply of used cars and thus a fall in values in the first quarter of 2021.
Finance companies haven’t been allowed to repossess vehicles since 27 April, when the Financial Conduct Authority (FCA) introduced an effective ban to protect people affected by the coronavirus pandemic.
That ended on 31 October, but an updated version was introduced on 4 November in light of England’s month-long second lockdown, so repossessions now can’t take place until 31 January. However, while the entire repossession process was forbidden during the initial period, only the final act of recovering the car is now prohibited, allowing finance companies to ready collections during the current ban.
The ban has created “a six-month backlog of repossession cases,” according to Adrian Dally, the head of motor finance at the Finance and Leasing Association (FLA), predominantly affecting cars on typical PCP finance or similar packages.
Further repossessions – not part of the backlog – are expected after the ban lifts, because the economy is predicted to worsen, and this has led to concerns about oversupply and a potential drop in used car values.
“You’ve potentially got [more than] half a year’s worth of [repossessed] vehicles coming onto the market,” said Dally. “That’s on top of others, so there will be an effect on used car prices, because you’re going to have oversupply.”
He said that the vehicles will “trickle” onto the market (which bodes better for prices than an instantaneous swell) during the first quarter of 2021.
“Most car finance providers have had between 10% and 15% of their customers requiring forbearance at some point,” Dally added. “The majority of those are now back to normal payments, which is good, but possibly up to 10% of that 10-15% may end up terminating at some point. So that’s the kind of scale of it.”
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Out in the real world my car
Out in the real world my car has gone from a trade price of £11500 to £9200 in 6 weeks.it will be interesting after lockdown 2 to see what happens, right now the trade wants rid of stock. Luckily thanks to PCP I can hand it back in 10 months or VT any time I want and step into a new deal if new car prices fall enough.
There are some ridiculously cheap lease deals out there right now but not sharp enough yet for me to change.
People living beyond their means.
Why are people interested what other people think of them by what type of car is on their driveway. Buy used with cash therefore no matter what happens in your life the car on the driveway is yours.
567 wrote:
I don't give one s**t what the neighbours think of my car but its sheer idiocy to tie up 30k in cash in a car. You'd be as well encouraging people to buy their houses in cash or to rent incase something happens.
If a monthly PCP payment is the straw that's going to break the camels back, your monthly payment is too high.