Car Loan V PCP

PCP balloon payment looming? Maybe it’s time to burst that balloon.

If you already took out PCP finance on a car and are approaching the Balloon payment, you can get a St. Paul’s Loan to clear the Balloon payment and keep the car.

Thinking of buying a new car?

With a St. Paul’s loan you can buy your car, as distinct from leasing it with PCP finance

Some members that opted to clear the PCP Balloon payment at the end of the PCP lease agreement, with St. Paul’s loan, highlighted their issues with PCP as follows

  • Penalties for exceeding kilometers allowed
  • Penalties for not meeting the acceptable return condition of the car

PCP, or Personal Contract Plan is designed to help car manufacturers sell you a car now, and another one three years from now

Before you opt for PCP finance, compare the total cost and ensure you understand all the small print. You cannot compare by APR alone because with PCP finance you are postponing paying a large portion of the price of the car for a number of years and, there can be fees and charges. The real cost of PCP finance is at the end of the leasing term.

Compare the cost of PCP finance with a St. Paul’s Garda Credit Union Car Loan

Take a look at the following example where we compare 0% PCP finance with the St. Paul’s Car Loan Rate of 4.9% (monthly APR 5%) to purchase a popular 4 Door Saloon 1.0L Petrol  Car, on the road price (OTRP) €22,775

Dealer 0% PCP Finance (Car Magazine with Sunday Paper on 16June-2019) St. Paul’s 4.9% Car Loan (APR 5%)
  • Finance and Deposit are calculated on the OTRP – no discount.
  • Deposit/Part Exchange of €6,989.14, the balance to finance is €15,785.86
  • PCP Hire Purchase loan which you repay by 36 Monthly repayments of €219, includes Service Plan
  • €8,369.50 Balloon is due at the end of 3 years
  • You are a Cash buyer and can negotiate a discount, and may be able to avail of the Scrappage of up to €3,000
  • OTRP €22,775 less Discount/Scrappage of €3,000 = €19,775
  • €6,989.14 Cash/Deposit upfront as in PCP example
  • €12,785.86 St. Paul’s loan which you repay by 36 Monthly repayments of €382.63.
  • Total Interest = €988.82
(A) Deposit €6,989.14 (A) Deposit €6,989.14
Finance Amount €15,785.86 Scrappage Discount €3,000.00
(B) 36 x €219 per month €7,884.00 Finance Amount €12,785.86
(C) Balloon Payment €8,369.50 (B) 36 x €382.63 per month €13,774.68
Total Cost A + B + C =

(includes 3-year servicing)

€23,242.64 Total Cost A + B =

(servicing not included)


In this example a St. Paul’s Car Loan, with the Dealer Scrappage allowance, could save you €2,478.82 when compared to the 0% PCP Dealer Finance! That difference should more than cover the cost of servicing the car over the 3 years and still leave you better off.

You will make even further savings if you have a Share Covered Loan

CASHBACK – You can get up to €400 Cashback when you get a loan from St. Paul’s to purchase a new Ford or Hyundai!

One of the big selling points of PCP finance is that at the end of the 3 years you have the choice to

  1.  Pay the Balloon payment and keep the car
  2.  Give the car back and walk away (you may be charged penalties if the car does not reach their “acceptable return conditions”)
  3.  Give the car back and begin the process again with a new car, same make

The big hidden cost of PCP finance is with options 2 and 3 as you are giving the car back to cover the Balloon payment which in this example is €8,369.50. Similar 3 year old cars to the model quoted are currently advertised for sale at between €17,950 and €18,950. ( 19June-2019) However under the PCP Lease Agreement, you are only guaranteed a minimum of €8,369.50 (Guaranteed Minimum Future Value) which is a difference of €9,580 to €10,580 on the value or equity of the car.


Other benefits of a St. Paul’s Loan include:

  • No restrictions on kilometers driven, or where you service your car, or on what make of car to purchase next
  • You own your car from the outset, you can sell it or change it anytime you like
  • You can pay off your St. Paul’s Loan early, make additional lump sum payments or increase your repayments without a penalty. Other lenders may charge you extra for paying them back faster!
  • Your St. Paul’s Loan is insured, subject to terms and conditions, at no direct cost to you. Other lenders may charge for this


To work out the cost of your St. Paul’s loan, go to our Loan Calculator, drop in, or call us on 021-4313355.

Loans are subject to approval. Terms and Conditions apply.