Tips to Finance your Car

1. Use savings to pay for your car

Pro – saving up is the cheapest option as you do not have to pay interest on a loan.
Con – it takes time to save so if you need a car urgently then this may not be an option for you.

If you want to buy a car but are in no rush it is a good idea to set up a savings account. Make sure you get the best interest rate on your savings by checking out the regular savings account comparison on the CCPC’s consumer website. Rates from different providers can vary between one and four percent depending on which savings account (specific t&c apply to certain accounts that offer the customer higher interest rates) you choose so make sure you shop around first and get the most for your money. You can also open a savings account with your credit union.

2. Take out a personal loan

Pro – unlike some forms of car finance, you own the car while paying off the loan so if you got into financial difficulties you could sell the car.
Con – you will be paying interest on the amount you borrow and your credit rating can be affected if you miss repayments.

If you need a car urgently and don’t have savings, you might be thinking of opting for a loan. Check out the CCPC’s personal loan cost comparison on the consumer website, to see where you can get the best value loan and how long it will take you to pay it back. Remember, credit unions also offer savings and loans for their members. You can get more information on credit union membership from the Irish League of Credit Unions, the Credit Union Development Association or your local credit union.

3. Choose hire purchase

Pro – a hire purchase agreement can be a convenient option because the garage you are buying from may also arrange your finance. It saves you from having to visit your bank or credit union to arrange a personal loan.
Con – you don’t own the car until it is fully paid off therefore you cannot sell the car if you run into problems making your repayments.

4. Choose a Personal Contract Plan (PCP) agreement

Pro – The monthly repayments are relatively small, which can make the plan seem more affordable.
Con – you cannot sell the car if you run into problems making your repayments and you also have a large final payment called the “guaranteed minimum future value” (GMFV).


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