Dropping sales of new cars should serve as a reminder that economic downturns can affect everyone, whatever their socioeconomic status, said debt management company GregoryPennington.com.
Figures from the Society of Motor Manufacturers and Traders (SMMT) reveal that the number of new cars registered in August 2008 was down 18.6 per cent compared with August 2007. August is usually a quiet month for new car sales, but this year saw the worst August for new car sales since 1966 – just 63,225 registrations.
Premium brands, according to The Times, ‘were among the hardest hit, with Aston Martin suffering a 67 per cent drop to just 19 cars sold’. Land Rover sales dropped 58 per cent, and Jaguar sales 41 per cent.
“This kind of news challenges an often-held assumption that the impact of economic turbulence is more likely to felt among lower-income individuals,” said a spokesperson for the debt management company. “Even less-expensive new cars, while not ‘luxury’ products, tend to be purchased by people who enjoy a reasonably comfortable standard of living.”
Following, as they do, the news about declining sales in other market segments, the SMMT figures are a stark reminder of the decreasing spending power of the population as a whole. According to a report from comparison site uSwitch, the average UK household is £2,500 worse off than last year.
“While it’s good to see people taking sensible steps to reduce their non-essential spending,” the spokesperson for the debt management company continued, “that reduced spending will clearly have an effect on the health of British industry – in this case, the car industry.”
Furthermore, the savings people make are often ‘swallowed up’ by rises in essential bills, such as food and utilities. By definition, these bills can only be reduced up to a certain point.
Under certain circumstances, however, there may be ways to reduce monthly payments to secured and/or unsecured debts.
“Homeowners may find there are ways their mortgage provider could help them service their mortgage debt during a difficult period. Even temporary concessions can make all the difference to a household struggling to keep up with mounting bills, shrinking income, or both.”
Nonetheless, any change to the way they repay their mortgage can have a substantial impact on the borrower’s long-term finances. It may make more sense to look into the various forms of debt help which can could free up the necessary money by reducing their payments to unsecured debts.
Many people enlist a debt management company to negotiate with their unsecured creditors on their behalf: “Unsecured creditors may be willing to take a flexible approach to repayment agreements if this is the best way for the individual to repay the debt as soon as realistically possible.”
A debt management company will talk to each of their client’s creditors, explaining how their financial situation has changed, and negotiating concessions: “They may agree to accept lower payments, for example, freeze interest and / or waive charges, helping the borrower bring their expenditure back in line with their income.”
“Debt management is by no means the only option. Nor is it always the most appropriate – many people with financial problems could benefit more from a debt consolidation loan or IVA (Individual Voluntary Arrangement), either of which could help them reduce their monthly expenses, freeing up the money they need for essential bills. The important thing is to seek professional debt advice sooner, rather than later.”