PCP Leasing v Car Loan

Thinking of buying or leasing a new car?

Car manufacturers advertise PCP leasing finance rates to entice you to lease a car from them for typically three years. At the end of the term you can buy out the lease, by paying the balloon payment, enter another lease agreement or return the car.

When comparing PCP leasing with a car loan, 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. Then, at the end of the term you could face penalties and charges for not meeting the acceptable return condition of the car or exceeding kilometers allowed.

You are better off if you buy the car with a car loan from St. Paul’s Garda Credit Union as you will be treated as a Cash buyer and can negotiate real discounts and save yourself money. You can drive the car as often as you like with no worries about exceeding the kilometers limit, and you can change or sell the car whenever you choose because you own it.

If you already have PCP finance, you can get a car loan from St. Paul’s to clear the Balloon payment when due.

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. (www.carzone.ie 19-June-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

You can apply for a loan online now by logging in to your online account or via the St. Paul’s Garda Credit Union App

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

Loans are subject to approval. Terms and Conditions apply.