Quote:
Originally Posted by AyrshireColin
Yeah I perhaps framed it wrong. I know 100% how can you be £12k in negative equity.....you drive away from the garage and the VAT is away!
Goneinsixtyseconds you've nailed it - why would anyone consider trading with £12k negative is more what my thinking was. I struggle with the notion.
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No. Your original statement is this. And it is categorically wrong. The VAT is not charged on as a second hand car, we all know that.
But your original statement said that was why cars end up in negative equity as the VAT comes off the value of the car as you drive away. That is rubbish, it makes zero difference.
The cost of a second hand car is all to do with supply and demand, nothing at all to do with VAT.
For example, if the law was that VAT WAS charged on a used car, same as a new car, a dealer would still only be able to charge the market price for it. Which would be directly related to the price of the equivalent new car, and supply and demand. Demand will be influenced by lots of other factors, including reliability, warranty, etc etc etc.
But, the price the dealer can sell it at is in no way influenced by VAT. He couldn't just add it to the price of the car, as it would be too close to the new price and no one would buy it. It would still cost the same to us, just the dealer would make less.
Same as your false statement on pre reg cars. They are just being sold at market value, nothing to do with VAT. The dealer has paid the VAT as a new car yes, but he doesn't just discount the used car by that amount and write it off as a loss.
Plus, a pre reg can, and often is, more expensive than a brand new car with the biggest broker discount you can find......that you're still paying VAT on.