Car Finance

How Much Would You Like to Borrow?

Banks

Why not apply for a 'Personal Loan' from YOUR bank today - to put YOU in the driving seat when buying your next car

Provider
Amount Borrowed
Term
Rate
Total cost of credit
Total Repayable
Monthly Repayment
 
KBC Bank logo
10K
36 months
APR 6.30%*
€971.25
€10,971.25
€304.76
Proceed see detail*
Permanent TSB logo
10K
36 months
APR 8.60%
€1,325.83
€11,325.83
€314.61
Proceed see detail
AIB logo
10K
36 months
APR 9.00%
€1,387.50
€11,387.50
€316.32
Ulster Bank logo
10K
36 months
APR 8.50%
€1,310.42
€11,310.42
€314.18
Bank of Ireland logo
10K
36 months
APR 7.50%
€1,156.25
€11,156.25
€309.90

**The calculations shown above provide indicative estimates of repayments. Banks apply APR calculations in various ways. For comparison purposes, CBG.ie have used an average of the rates on consumerhelp.ie as at 15th May 2017. You should always check directly with a provider to confirm the final repayment values applicable before selecting and purchasing financial product.

What is car finance?

Car finance options in Ireland vary and they’ve been around for some time. Let’s look at it this way. So, you’ve decided to get a new car, but you’ve realised that what’s under the mattress isn’t going to be enough to get you behind the wheel of a new car. It might be time to bite the bullet as you realise that you may have to look at a finance plan. Have no fear, there are options.

Car finance deals in Ireland are offered in a series of ways, and provided you match the right criteria, there is bound to be one for you. The most common methods of cars finance in Ireland are; Personal Contract Plans; Car Loans; Hire Purchase; and Leasing.

What is PCP – Personal Contract Plan?

PCP finance is currently a popular choice of lending on the Irish market – we all seen the PCP offers that are out there, and they certainly appear to be very attractive. Personal Contract Plans, or PCP is used for consumers who wish to purchase a car. These plans appear to be very attractive to customers because of low monthly repayments. In many cases, they are available directly from the seller. Click here to see how PCP deals work.

What is a Car Loan / Personal Loan?

A car loan is a standard personal loan that enables you to purchase a vehicle. You borrow money, and repay it with interest over an agreed period (usually between two and five years). Interest is a charge on the repayment of borrowed money, and is usually expressed as a percentage of the total amount you borrow. Click here to see how Car Loans / Personal Loans work.

What is a Hire-Purchase Agreement?

Hire Purchase is when a customer may hire goods usually over a 2 to 5-year period by paying instalments. If all instalments are made as agreed, the person then owns the goods at the end. The most important thing to remember about Hire Purchase is that the consumer DOES NOT OWN THE GOODS UNTIL THE LAST INSTAMENT IS MADE.


How does PCP work?

The popularity of PCP car finance (Personal Contract Plan) agreements has rocketed. There are some important things to contemplate before you sign up to one of these deals though.

How does PCP finance work?

There are three steps to any PCP agreement.

  1. Deposit
    The deposit usually amounts to between 10% and 30% of the cost of your vehicle. The more you pay at the start, generally the less your monthly repayments become. This deposit is not refundable –it goes towards funding the cost of the finance and the car.
  2. Repayments
    When you sign up, you will agree a monthly payment. Most car-related PCP deals last over three years. The repayment must be made every month, but what makes PCPs so attractive is the fact that the monthly repayments are usually quite low.
  3. What is GMFV? (Guaranteed Minimum Future Value)
    The GMFV is the amount of money that you will pay if you want to buy the car at the end of the three-year repayment period. The GMFV is based on what the lender thinks your car will be worth in three years’ time. This will be estimated using your average mileage (which you will agree with the seller before you buy), the condition of the vehicle and more.

When the three-year repayment period is over you will have some options to choose from.

  1. Buy the car outright. It means you get to keep the car and drive it home.
  2. Hand back the car.
  3. Use any equity you might have in the car as a deposit on another new car and enter a new PCP agreement.

What’s the difference between PCP deals and Personal Loans?

When you purchase a car with a personal loan or a car loan, the car is yours straight away. With a PCP deal, the car is not yours until the last payment has been made.

How flexible are PCP deals?

PCP deals are not usually flexible. You sign up to pay an agreed amount every month, which means if you wanted to increase your payments, this may not be an option. You could also be charged if you wanted to extend the term of repayment.

Read the small print

Before you enter a PCP deal you will have spoken to the seller about mileage, the condition of the vehicle and more. Every rule in the small print could affect your GMFV.

  1. You will agree an average yearly mileage with the vendor. This mileage affects the GMFV. If you go over that mileage, it will mean that the GMFV is no longer guaranteed.
  2. If you would like to end your PCP agreement early there what’s called “The Half Rule”. This means that if you do hand back the keys early, you will have to pay half of the purchase price of the vehicle. If your monthly payments haven’t covered half of the payment price before you return the keys, you must make up the difference.
  3. Ask about hidden costs/fees before you sign any agreement. Is there a fee for setting up the agreement? What if you miss a payment? Is there a repossession fee?

PCP Repossession – Can a car be repossessed on PCP?

Yes. For example, if you miss a payment and have paid off less than a third of the purchase price, then the car finance company can take the car without taking legal action against you. If you’ve paid more than a third and start missing payments, the lender can’t repossess without taking legal action. Regardless of how much you have paid, the car cannot be repossessed from your home. If your car does get repossessed, then it is generally sold by the finance company. The money raised from the sale goes towards your outstanding debt. You will have to make repayments until the remainder of the debt is cleared.

Can I terminate a PCP agreement?

The ‘half rule’ allows you to end a PCP agreement at any time and return your car, but you must pay half the purchase price. If you have not yet paid half the purchase price you can still return the car but you will owe the difference between the repayments you have made and half the purchase price.

PCP - Personal Contract Plan

Pros Cons
Low monthly repayments Mileage and condition of car affects the cost
Small deposit Total amount paid may be more than with hire purchase
A choice of what to do at end of repayment term Must pay the outstanding balance to keep the car
Quick and easy to arrange You don't own the car until the final repayment

What is a Car Loan / Personal Loan?

Personal loans or car loans consist of borrowing a set amount of money, usually between €2,500 and €25,000. The set number of years you can choose to pay back personal loans usually falls between three and five years, although you can apply for longer term loans if necessary.

Personal loans can cover both short and long-term borrowing. The minimum amount that most personal loans are given out for is €2,500, although your local Credit Union may offer you smaller loans if needed.

How do car loans work?

After you have been approved for a car loan, your auto loan provider will work out a monthly repayment plan that best suits you. Your cash advance balance will therefore reduce after each monthly payment.

Car loans or personal loans are paid back to banks, building societies and financial houses via direct debit or standing order. Therefore, you will need to have a current account. Credit Unions are more flexible and may allow you to make your repayments by cash, cheque, standing order or direct debit.

How is interest charged on a car loan?

Annual Percentage Rates (APR) usually range from 9% to 15% for loans over €2,500. Bigger loans often come with a lower APR. If you are looking for a loan under €2,500, then an overdraft or Credit Union loan may be your best course of action.

Different lenders will have different interest rates. Your monthly repayments will remain the same each month if you have a fixed interest rate. Should your loan come with a variable interest rate, your monthly repayments may vary.

How flexible are personal loans?

Personal loans are more flexible if your interest rate is variable. This can work to your benefit should your circumstances change during the loan period and you may wish to:

  • Pay off your loan earlier than originally planned
  • Extend the term or reduce repayments for a period of time

Ask your lender whether you can pay the occasional lump sum off your loan or pay more than your set monthly repayments. Doing either of these things will; help you save on interest and pay off your loan earlier than planned. Ask if you must pay any extra fees if you pay off your loan earlier than planned.

Fixed-rate loans are less flexible than variable rate loans. The main benefit of having a fixed-rate car loan is the certainty that comes with knowing exactly how much you must pay off each month over the loan term.

Other fees and charges

There are no fees or charges with Credit Union loans. The interest you pay is the full cost of the loan. With loans from banks or building societies there may be other fees or charges like; Administration, arrangement, or documentation fee. There may also be penalties if loans are paid off early or if you seek to change from fixed to variable for example.

Personal Loans:

Pros Cons
Available from your bank Monthly repayments may be higher than some other forms of finance
Often available online Interest rates can be higher than lease
Will usually accept lump sum repayments which can reduce the term of the loan  
Variable interest rates  
Doesn’t affect the ownership of the car  

What is Hire Purchase?

Hire Purchase allows a consumer to borrow money over a fixed period of up to five years and the interest rate is fixed for the term of the agreement. It is very important to understand that under a Hire Purchase agreement, you won’t own the car fully until the last repayment is made - unlike a traditional loan, where you own the car when it leaves the showroom!

How does Hire Purchase work?

In the case of Hire Purchase for new cars, an agreement is signed by both the consumer and the dealer who you are getting the vehicle from. The dealer is seen as the owner until the last payment is made - unless the dealer is acting as a third party for the lending institution.

The agreement explains precisely what the object for hire is. It also quotes the cash price of the vehicle. This agreement also highlights the total amount payable over the loan period, the monthly instalment payment, and the balloon payment amount at the end (this amount is usually larger than the regular monthly payments). Other important details in this Hire Purchase contract will be; the date each instalment is to be paid, the number of instalments, details of all parties involved, details of the cooling off period (usually ten days in which the consumer may withdraw from the agreement). This contract will also clearly explain any fees or penalties that may apply due to late payments, documentation fess, missed payment surcharges, completion fees, repossession charges, etc.

What if I want to end my Hire Purchase agreement?

It is possible to end a Hire Purchase agreement at any time by giving the correct notice. If you do pull out of an agreement early, there are usually charges. If this happens, you can return the vehicle, but you will have to abide by the "half rule". If the vehicle has been damaged in this instance, the customer is responsible to pay for repairs. You can also purchase the vehicle earlier than planned by paying the difference. In some cases, this may result in a reduction of the overall loan.

What is the "half rule" in Hire Purchase?

The half rule is when half the amount of the full Hire Purchase price must be paid.

What is a balloon payment Hire Purchase?

With some Hire Purchase agreements, the monthly repayments are not evenly spread out and you may pay less in the earlier months of the agreement. This may result in a large final payment at the end of the term, known as a balloon payment. This can make your monthly repayments appear more affordable.

Hire Purchase:

Pros Cons
Competitive fixed interest rates You don’t own the car until the final repayment
Small deposit Tends to be more expensive for short-term agreements
Flexible repayment terms (usually between 3 – 5 years)  
Quick and easy to arrange