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Innovative Car Finance Options in Ireland
  • admin
  • July 10, 2024

Innovative Car Finance Options in Ireland

More people want to buy cars lately. However, paying for one can be tricky. Motors are cool - fast, quiet, and cheap to run. No smelly petrol or oil changes either - just recharge your ride's batteries overnight like a mobile phone.

New models come out all the time now, fancier and able to drive farther before plugging in. Everybody wants to go electric, it seems!

But electric cars cost more upfront to buy. So old-school car-buying loans don't always work well. Not everyone has tens of thousands in cash lying about! New car finance ways help though.

Car Loans

Getting a car loan lets you buy your wheels even if you don't have all the money saved. You can easily find the best car loan rates in Ireland.

 ar loans work like mortgages - you borrow money from a bank or lender to cover your ride's price minus any down payment. You then make fixed monthly instalments for 1-8 years until it's paid off and officially yours!

Compared to leasing and financing schemes you own the car. No returning it after payments or complicated contracts. Just predictable loan terms so you can budget properly.

Tips for scoring prime car loan rates:

  • Electric and hybrid cars often qualify for lower interest rates - which makes that eco ride cheaper!
  • Shop lenders to compare. Credit unions and online loan marketplaces compete for business.
  • Shorter loans have lower rates but higher monthly payments. Do the math to find the best terms.
  • Unless buying used, wait for dealership finance offers, too. They want the sale!

Once you get pre-approved for a competitive car loan, you can negotiate - cash talks! Make sure to line up insurance along with an emergency fund for surprise repair bills.

1. PCP (Personal Contract Purchase)

Buying a car with PCP keeps your monthly payments low. It works well if you like driving a new car every few years. Here are the basics of how it goes:

Each month you pay a small amount towards the value of the car. This lets you drive the car you want while freeing up cash compared to normal car loans.

When your PCP deal ends in 2-4 years, you've got three choices:

  • Fork over the final "balloon" payment and keep the wheels.
  • Return the car and walk away if you want - no more owed.
  • Use any equity to put towards another new car.

With PCP, the amount you end up financing is tied to what the car market says your motor will be worth down the road. This puts a cap on your remaining payments if you decide to hand back the keys.

PCP has become the most popular form of car finance in Ireland, accounting for over 50% of new car purchases.

The flexibility appeals to people who get bored after a few years and like the latest models with up-to-date gadgets. You can keep rolling from one PCP to the next and bypass the ugly deprecation cars suffer.

Terms can vary but often range from 24 to 48 months. Shorter timeframes have lower monthly payments but less chance of equity building if you want to trade in versus return the car.

2. Hire Purchase (HP)

With HP, you set fixed monthly payments over 1-5 years to ultimately buy the car. It takes more money down, but you own the motor outright after the last payment.

Unlike leasing, HP means you're working towards owning the vehicle. The finance company technically owns the car until you finish paying. But you get to drive it the whole time as long as you make payments.

Here are key need-to-know on HP car deals:

  • Requires a 10-30% down payment when you start. More than leasing so save in advance!
  • Locked-in monthly payments spread out ownership costs.
  • Must be insured & serviced like normal during payment term.
  • When all instalments are paid, the car fully transfers to your name for €1!

Bank of Ireland offers HP agreements with a fixed interest rate of 6.75% APR. You can finance amounts from €7,000 to €60,000 over 2 to 5 years.

This lures people, and it also allows them to buy nicer cars than possible if they are trying to pay in one shot. And unlike leasing, you aren't left without a car when payments finish.

The set monthly cost makes managing expenses easier, too. Just budget properly upfront for the larger deposit amount.

3.  Leasing (Operational Lease)

Leasing lets you drive a nice new car without buying it. Lower monthly fees make the payments more affordable. Here's an easy guide to understand leasing:

With leasing, you rent the car from a finance company for 2-4 years. They keep ownership - you just pay to use it. This skips depreciation costs making the monthly price tag lower.

When the lease ends, you return the car. This means you're always riding in the newest models! Lease a car, use it awhile, then switch to another and repeat. No car loan debt either.

Other need-to-know stuff:

  • Down payments are lower, usually just the first month's payment.
  • Mileage limits apply to avoid high excess mileage fees.
  • Maintenance might be included to fix budgeting.
  • Need a good credit rating as leasing is technically long-term renting.

Most leasing companies still require you to pay taxes, tags, fees, and maybe a few lease payments upfront. If you can't afford the full lease down payment, you can get a loan in Ireland to cover it.

If you lack funds to cover the first chunk, lenders can give you a personal loan to pay the lease inception costs. Then you just repay the loan over months or years like normal.

If you get bored of cars after a few years, leasing makes a ton of financial sense. Pay an affordable rate just to operate a car as long as you like - turn it in once ready for the newest bells & whistles! No loan nasties either - just driving happiness!

Conclusion

Picking how to pay for a new car used to be simple - just get a loan from the bank. But now? Way more options exist so people can find deals to fit their budget and needs! Between car loans, there are many ways beyond standard loans. Mix and match deposits, monthly payments, contract lengths and all that to craft personalized plans.

The variety helps explain why new car sales keep rising despite high prices. Finance is made flexible to get people rolling in their dream rides!

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