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?

Before you opt for PCP finance, compare the total cost and ensure you understand all the small print;

  • Who is providing the finance?
  • Can the car be repossessed for missed payments?
  • Missed repayment fees or Repossession charges?
  • Servicing and maintenance requirements?
  • Penalties for exceeding kilometres allowed?
  • Penalties for not meeting the acceptable return condition of the car?
  • Fees and charges to set up PCP?
  • How will you pay the Balloon Payment? – (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)

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

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

Car manufacturers are currently advertising special deals, upgrade packs, servicing offers and PCP finance rates to entice you but if you get your loan from St. Paul’s Garda Credit Union you will be treated as a Cash buyer and can negotiate real discounts and save yourself money

It’s important to look at the total cost of the “deal” being offered by garage or dealership finance. 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 term when you could lose thousands of euros on the value of the car.

Take a look at the following example where we compare 1.9% PCP finance with the St. Paul’s Car Loan Rate of 4.9% (monthly APR 5%) to purchase a popular 4 Door Saloon 2.0L TDI Diesel Car, on the road price (OTRP) €25,830

Dealer 1.9% PCP Finance (Car Manufacturers Magazine with Sunday Paper on 9/10/2016) St. Paul’s 4.9% Car Loan (monthly APR 5%)
  • Finance and Deposit are calculated on the OTRP – no discount.
  • Deposit/Part Exchange of €7,639.97, the balance to finance is €18,190.03
  • PCP loan which you repay by 36 Monthly repayments of €259
  • €9,520.90 Balloon is due at the end of 3 years
  • You are a Cash buyer and can negotiate a discount, often up to 10%.
  • Here we will assume only a 5% discount and a price of €24,538.50
  • €7,639.97 Deposit/Part Exchange
  • €16,898.53 loan which you repay by 36 Monthly repayments of €505.71
Deposit/Part Exchange €7,639.97 Deposit/Part Exchange €7,639.97
Acceptance + Completion Fees €150.00 No Documentation Fees €0.00
36 x €259 per month €9,324.00 36 x €505.71 per month €18,205.56
Balloon Payment €9,520.90 No Balloon Payment €0.00
Total Cost €26,634.87 Total Cost €25,845.53

In this example a St. Paul’s Car Loan is €789.34 cheaper than 1.9% PCP Finance!

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!

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

  • No restrictions on mileage, 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

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 €9,520.90

There is no identical 3 year old car to the model quoted advertised for sale at the moment, i.e. 2.0L TDi, but 141 registered models with a smaller 1.6L engine are currently advertised for sale at between €17,950 and €21,950 so you could lose in the region of €8,400 to €12,400 on the value of the car!  (www.carzone.ie 13/10/2016)

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.