Thinking of buying a new car in 2023?
As a major purchase, we should take some time to think about all the car finance options available to us when we are buying a car. Let’s look at two options: PCP and Car Loan from the Credit Union.
PCP (Personal Contract Plan) Vs a Car Loan from Blanchardstown & District Credit Union
PCP is a popular finance option offered in most car dealerships. Get the car of your dreams for a small amount of money, what’s not to love? Not so fast, the fine print – read it!
Can I buy a used car with PCP?
No, this type of finance is for new cars only.
Can I buy a used car with a car loan from Blanchardstown & District Credit Union?
Yes, you can buy the car that suits your budget, lifestyle, and requirements and agree on a monthly repayment and a loan term to suit you.
Will I own the car at the end of the PCP deal?
The short answer is no. From start to end, the finance company is the legal owner of the car.
The usual term for PCP car finance is 36 months/3 years and there are 3 elements to the agreement:
1. The deposit – usually between 10%-30% of the new car value
2. The agreed monthly repayments
3. The final lump-sum payment/balloon payment which is called the Guaranteed Minimum Future Value (GMFV)
Unless you pay the final lump-sum payment in the 37th month, often known as a balloon payment, you do not own the car. So, your options in the 37th month are:
1. Pay the lump sum
2. Return the car and owe nothing (assuming you have met all their contract restrictions on mileage, servicing, and wear & tear – see next question)
3. Start a new PCP contract on a new car
Will I own the car at the end of my loan term with Blanchardstown & District Credit Union?
Yes, you will and here is the best bit – you will own it from the start too! You choose the monthly repayment and car loan term that suits your budget, so that way no upfront payment, no final balloon payment. You pay the same amount each month, allowing you to spread the costs evenly for your own peace of mind.
What are the restrictions on a PCP contract?
The agreed amount for the final lump sum/balloon payment or GMFV amount is set from the start of the PCP contract and is based on a number of restrictions being met at the end of the contract period:
– An agreed annual mileage – If the car has more mileage than the agreement, an excess mileage charge is applied.
– An agreed reasonable vehicle condition – if this is not the case at the end of the contract, you will be charged to repair the car.
– If you decide to move into a new PCP agreement, the dealership will value the car with its current mileage and condition. The amount still owed on the car is calculated and the difference between the two figures forms the deposit for your next PCP deal.
What are the restrictions on my car loan with Blanchardstown & District Credit Union?
Absolutely none, once you are approved and keep up the repayments on your loan, you are free to drive as far as you like, when you like and service it in a garage of your own choice, the car is yours. We wish you many happy and safe years of motoring!
What if the Final Lump Sum or Balloon Payment on PCP is the same as the actual value of the car after three years, will I have money left over for a deposit?
No, you won’t. PCP is all about encouraging you to change your car every 3 years, so the final lump sum payment is set to meet the shortfall in payments with nothing left over.
Is there a balloon payment with a car loan from Blanchardstown & District Credit Union?
No, you pay the same monthly amount across the agreed loan term. You choose the amount and the term that suits your budget. When you are finished paying your loan, you can sell it, trade it in or keep it – its value is yours!
Can I break out of a PCP deal and hand the car back early, with no financial drawbacks?
You can settle the PCP agreement at any stage, but you will be charged future interest to do this. If you run into financial difficulty during your agreement, you wouldn’t be able to sell the car unless you have permission from the finance company as they are the legal owner of the car.
Can I pay my car loan earlier than the agreed term with Blanchardstown & District Credit Union, with no financial drawbacks?
Yes, you can, we have no penalties for early repayment of a loan.
Top Tip from the Competition & Consumer Protection Commission If you agree to act as a guarantor for someone taking out a PCP contract,
you are in fact a joint hirer and not just a guarantor. Any missed repayments on the agreement will also show up on your credit record. As a result of this, you may find it difficult to get a loan in the future.
So, why not check out our Loan Calculator for a loan amount and term that suits your budget and become a car owner from the start with Blanchardstown & District Credit Union.
Blanchardstown and District Credit Union Limited is regulated by the Central Bank of Ireland. Reg. No.:291CU