Car buying is an expensive deal, and factors such as depreciation and running costs make it harder sometimes. To buy a car, some amount is required to cover the initial purchase cost, unless of course you’re just enormously wealthy and can pay for a new set of wheels out of petty cash.
1. Personal Contract Plan
A PCP is a specific type of finance sharing similarities with a standard Hire Purchase (HP) agreement. It basically has a company car, and only the difference is that the company is you. PCP is productively a lease in which you never really own the vehicle as such, but a deposit is being paid by you followed by a monthly fee for usually 36 months before there’s a final balloon payment.
Essentially in PCP, the carmakers are allowed to take into account the expected depreciation of the vehicle and minimum value of the car is guaranteed at the end of the lease by most companies.
The value effectively covers the final balloon payment, giving an option of either walking away from debt-free and handing over the car back at the end of the term or making the final payment (if you have diligently saved up for three years). This way, it helps to encourage customer loyalty.
The critical points in a PCP are its terms and conditions. All the terms and conditions should be carefully read and checked upon as there may be a provision relating to the vehicle’s maintenance and condition, or that final guaranteed value may be nullified.
2. Hire Purchase Agreement
HP is another good option that gives you the freedom to buy and own a car. It is an agreement whereby a person hires goods by paying instalments for a stipulated period and can hold the goods by paying the instalments at the end of the agreement.
The time frame of Hire purchase agreements are between 2 and 5 years. Majority of the dealers and carmakers have pre-agreed HP packages with central banks. In contrast, some of them may have their own internal finance companies, making things easier by just signing on the day as a PCP and finalising the deal.
The drawback is that the monthly payments will be higher, leaving no balloon payment swaying at the end, requiring for a higher deposit, depending on the plan. In HP, the car cannot be sold without the lender’s permission and is owned by the lender the final payment is made.
3. Bank Loan
A traditional bank loan is also considered a good option in buying a car. The benefit of this old-fashioned loan is owing to the vehicle from day one. All the banks offer this facility with very competitive rates. In contrast to the sharp-eyed banks, carmakers or dealers offer finance facility and make the car buying process more manageable.
With the finance facility, it opens up the way to get financed a second-hand car as well. These types of loans provide you with greater bargaining power without having to fund the initial hit of depreciation.
4. New versus old
The standard way is to buy a second-hand car to get the maximum value. Many car makers offer approved second-hand packages providing the warranty at somewhat higher entry cost.
Some of the benefits include a full mechanical check and service and roadside recovery packages making it like buying a new car but cheaper.
Ireland mortgage market is a very well developed market. A mortgage is another option to buy a car.
6. Annual Percentage Rate
APR helps in understanding the cost of borrowing. APR is the total amount to be paid the interest cost and any fees as well as the vehicle cost.
Qualifying for car finance is easy and depends on fulfilling the factors of being above 18 years of age and a permanent resident of Ireland.
In Ireland, having a bad credit doesn’t stop you from applying for car finance, as direct lenders give priority to your affordability over your credit rating. They do so because of the belief that financial irresponsibility is not the sole reason for impaired credit rating.
Many marketplace lenders provide car finance with bad credit as well. They offer it at an affordable rate and can be acquired quickly without any credit requirements.
The factors checked by the lender are your employment status, loan size, income and age. The interest rates are based on the amount and the timeline of the loan.
Few tips for Applying with Bad Credit
- Settle up on any payments being missed previously
- Provide a deposit for the loan in order to gain confidence of the lender.
- Preference for a joint application with your spouse, partner increases the chance of its acceptance.
- Many car makers and lenders provide great options for car finance with bad credit. These loans are an absolute solution for borrowers looking to buy a new car.