WITH consumers changing their cars more frequently than before – a trend that is continuing in 2018 – Killarney Credit Union is reporting a significant increase in queries about car loans since the start of the year.
The latest Carzone Motoring Report found that one in two people now change their car every five years and 60 per cent are planning on buying either a new or used car in 2018. But with so many set on a new pair of wheels, it’s likely that some will struggle to decide between a traditional car loan or a Personal Contract Plan (PCP) to help finance the purchase.
Headline rates on PCP agreements can initially look more attractive but this can easily distract from the range of additional charges and a good deal of inflexibility.
Essentially, PCPs are lease schemes and the buyer has, in effect, hired the car for a particular period of time, usually three to five years, while they make payments. At the end of the agreement, they will have to make a balloon payment to own the car.
In addition, they will need to be conscious of mileage because the final payment, or guaranteed minimum future value of the car will have been calculated with their annual mileage in mind.
With a credit union car loan, the consumer simply borrows the money to pay for a car – which they own immediately – and they can drive as much as they please. They can also sell the car on at any time they wish, should they need to, whereas they do not have that option with a PCP.
“There appears to be a renewed interest in the traditional car loan due to greater flexibility and more straightforward terms and conditions. We would encourage anyone considering buying a new or used car in 2018 to pop in or call us before making any decisions,” said Helen Courtney Power Business Development Officer with Killarney Credit Union.
“If you arrange finance with your credit union before going shopping for a car, you are in a much stronger position. You are effectively going as a cash buyer to the car dealer and you may well be able to negotiate a better deal,” she said.
Killarney Credit Union is currently offering a car loan with an APR rate of 7.8%* and it also offers car insurance, through the credit union insurance website coveru.ie. A loan is typically approved within 48 hours.
* For a €5,000, two-year variable interest rate loan with 24 monthly repayments of €225, an interest rate of 7.49%, a representative APR of 7.8%, the total amount payable by the member is €5,399.86. Information correct as at 16/01/18.
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