We’d just like to take this opportunity to wish all our Members a very Happy New Year – we hope everyone is relaxed and re-energised after taking some much deserved time off.
The New & Nearly New Car Market
As finances continue to recover for some people across Cork City there has been a sharp increase in the total sales of new cars. This trend is set to continue with 2016 forecasts suggesting that around 150,000 new cars are expected to be sold nationwide over the course of the year. There will also be considerable value in the nearly new car market due to the increase in attractive trade-in and scrappage offers, many of which will find their way back into the market.
Financing the Purchase
For most people getting finance of some sort is essential for buying a new or nearly new car. The finance options available are extensive. Here’s some of the options available to car buyers:
1. The Lough Credit Union Car Loan:
While the interest rate may be higher with us than it would be from a finance company it might work out better in the long run. Unlike a PCP or HP, a Car Loan from The Lough Credit Union has the following benefits:
- You own your car from day one – we lay no claim to it and you can drive it without worry;
- It’s a straight forward loan with regular repayments over an agreed term;
- There are no administration fees, set-up fees or hidden charges;
- You can pay the loan off early, make lump sum repayments or increase repayments without penalty;
- You can sell your car on if you’re circumstances change or if you’d just like to get a different car, and;
- Eligible members get free loan insurance.
Our special Car Loan rate of 7.23% APR is available to members purchasing a new or second hand car for domestic or private use with a value greater than €3,500. Members can borrow at the standard rate for cars below this value. (See here to find out what your repayments could be and to request a call back)
2. Personal Contract Plans (PCPs):
In the past few years personal contract plans have become quite popular for people buying cars in Cork. These plans operate as a sort of hire purchase hybrid with benefits including lower monthly repayments. Check out the pros and cons of these contracts over at http://www.consumerhelp.ie/pcp – here’s a useful excerpt:
Comparing a PCP with a personal loan
The main difference between using a personal loan and a PCP contract is that with a personal loan you borrow the money, pay for your car, and own it immediately. With a PCP agreement, you don’t own the car, you are hiring it for a period of time, typically 3-5 years. You only own it when you make the final payment. This is important because if you were to run into financial difficulty during your PCP agreement, unlike a personal loan, you cannot sell the car to pay off your debt.
How flexible is a PCP?
These agreements are among the least flexible forms of finance. Because the payments are fixed for the term of the agreement, you cannot usually increase your repayments each month if you wish to do so. If you want to extend the term, you may be charged a rescheduling fee.
While PCPs may seem tempting, with what seem like lower monthly repayments, their complexity can often cost more in the long run and tie consumers into inflexible arrangements. Onerous restrictions set out in the contract can impose limitations on mileage, car condition and service intervals/providers, with penalties often imposed for non-compliance with such conditions.
3. Hire Purchase (HPs):
Many ‘car finance loans’ offered by garages and some lenders are actually hire purchase agreements. The difference between these and a personal loan is that you do not own the car until you make the very last payment. Your car dealer will act as an intermediary for the finance company and actually sells the car to the finance company, who in turn rents it to you until the final repayment is made. These can often work out more expensive and if you’re unfortunate enough to fall behind in repayments the car might be recovered by the finance company.
The advice from the Competition & Consumer Protection Commission is “don’t choose long, fixed-repayment agreements if you can get a more flexible personal loan from a credit union or bank.” See more on their website.
Before committing to buying a new or nearly new car we’d advise all members and potential members to shop around to get the best finance option for their personal needs.
If you are thinking about changing your car it’s well worth considering all of the available options. PCPs/HPs can work well for some but with a loan from us you will always have the flexibility and convenience you need without having to worry about how you motor.
Ways to Apply for a Lough CU Car Loan
Pick up the telephone & Freephone 1800-410-400
Visit one of our branches on Bandon Road or at Shournagh Lawn in Togher
Apply online using our cuOnline banking facility (requires registration)