Experts have warned that car prices are falling by the thousands of motorists in "negative equity" on their car loans. It means that many car buyers in similar positions to those whose mortgages are greater than the value of their house. Overall, the total amount that is owed on car loans and the value of the vehicles could be so much as 272 million.
If your car on a personal contract purchase (PCP) Finance Deal bought, the problem is much worse. The totalowed 2.13 billion pounds last year. These contracts are usually with a series of monthly installments. Then a final payment after two years to secure the possession of the car. This is on what are the vehicle to be expected, based on its value.
However, these estimates are now very inaccurate, as predicted future values turns out to be much higher than the current value. These deficiencies must be as much as 49 percent between the predicted value of some car and found its actualValue in the economic downturn.
An example is: a two-year-old Volvo XC90 with a predicted value of 18,775 pounds now has an actual value of 12,600 pounds, according to a study by the magazine Auto Express, based on figures from the CAP, the car data analysts. A 3 years old BMW 750i with a predicted value of 22,400 pounds is worth 15,600 pounds, a decrease of 44 percent.
A spokesman for the AA, said: "This is shocking news to suffer. A lot of people." He said this is the damagethe new car market and prevent a negative equity on a car buyer to stop it, such financing deals.
The Finance and Leasing Association said that it was important that drivers remember that car could end up higher or lower values than the MGFV. However, since the buyer had the option to simply return their keys, the risk was with the dealer, but as the buyer.
The Lord of the AA said: "Those who had burnt their fingers, is not a solicitation to buyAnother new car at this kind of business. "An Auto Express spokesman said:" The sharp decline in the value needs of drivers who bought their cars on PCP with a final payment is more than the vehicle is worth on the left. He lets the driver from the bag. "
The credit crisis and recession led to a slump in car sales, so motorists are caught in a vicious circle. This has then press the resale value of the car when the driver will continue to sell or trade in their vehicles. It means to bargain for the buyer butBut those who try to sell or trade in their cars find their cars worth thousands of pounds less than they had hoped.
Last year, sales of new cars fell by 37 percent, the worst case more than 28 years. Manufacturer of high end luxury and sports cars, 4x4 and big gas guzzlers "are with the brunt of the crash, with sales falling far above the average.