In recent years PCPs, or Personal Contract Plans, have become a popular way to finance a new car. Many dealerships can offer you a very attractive-sounding deal on the spot – affordable deposit, low monthly payments, trade in the car after 2-3 years… What could possibly go wrong?
Unfortunately, it’s not quite as simple as all that and there are a number of pitfalls to be aware of when entering into a PCP agreement – most of which can be avoided completely by taking out a car loan with Carrickmacross Credit Union Ltd instead.
Here are some reasons you should talk to us rather than enter into a PCP:
A PCP is a kind of hire-purchase agreement, where you don’t actually own the car until you make the final payment. This means if you want to change cars or encounter difficulties during the term of the contract, you can’t sell the car without the agreement of the finance house/dealer.
With a car loan from Carrickmacross Credit Union Ltd you can drive it like you own, because you do!
Because PCP monthly payments are fixed over the term of the agreement, you can’t pay extra each month to finish up early and you will be charged a fee if you need to restructure the agreement in any way.
With us there are no penalties for paying off a loan early, so you can pay more than the minimum each month if you wish.
A PCP is broken into three parts – deposit, fixed monthly repayments and a large final payment, often called a balloon payment, that can be anything up to 50% of the value of the car. You won’t own the car outright until you pay off that final amount.
With a loan from us there are no nasty surprises left at the end of the term – your payments will stay the same throughout.
As part of a PCP agreement, there is usually a restriction on how much mileage you put on the car. Going over the agreed maximum mileage can affect the final value of the car and end up costing you more money.
Here at Carrickmacross Credit Union Ltd we have no interest in how much driving you do in your own car.
PCP providers often insist you have the car serviced on a strict schedule by someone in the official dealer network. If you come to the end of your term and you’ve either missed a scheduled service or had it done anywhere other than one of their specified locations it could end up costing you a fortune.
Carrickmacross Credit Union Ltd just hope you drive safely and look after your car so you can get the most value out of it.
When you buy a car it immediately begins to lose its value to depreciation, very quickly at first, but it does slow down. This is normal and with a credit union loan it isn’t an issue, because as depreciation slows down your payments catch up and it all balances out.
With a PCP, especially if you’ve paid a low deposit, you may never actually catch up with the car’s depreciation. This really only becomes a problem if you need to change cars or if your financial situation changes and you need to exit the PCP early, because even selling the car won’t be enough to cover what you owe the dealer.
PCPs are attractive because they consist of a relatively low deposit and low fixed repayments, which makes them seem very reasonable and manageable at the outset. However, you need to look at the total cost over the term – bearing in mind that the car isn’t even yours until the final payment is made – and it may work out more expensive than a car loan from us.
Carrickmacross Credit Union Ltd is made up of people from YOUR local community, who all share a common bond – whether it’s where they live, the industry they work in or an association they belong to.
Saving with us contributes to the loan fund, which directly benefits other members and helps develop your community.
Not for profit
Carrickmacross Credit Union Ltd is run for the benefit of our members, not to profit from their needs.
Unlike commercial lenders, where profits go to third party investors, any surplus income generated by Carrickmacross Credit Union Ltd is returned to members as a dividend or else invested in improving and expanding the service.
Not only does Carrickmacross Credit Union Ltd offer fair and reasonable rates on personal finance, but we also offer a loan interest rebate at the end of the year – making a Carrickmacross Credit Union Ltd loan even more appealing!
If you’re planning on buying a new car, don’t get sucked into the first shiny-looking PCP offered by the dealership. Talk to the team at Carrickmacross Credit Union Ltd today about a flexible car loan that suits you.
Carrickmacross Credit Union Ltd is regulated by the Central Bank of Ireland. Reg. No CU141.