In recognition of the new norm that most people will purchase their next car on finance, we have designed the Terrific.ie website to be terrific when it comes to finance. We detail a finance offer on most cars and facilitate the user in making an online finance application through the site. A credit analyst will review the application within 3 hours, which allows the car dealer to revert to you in a prompt fashion.
This involves you paying an initial deposit and then smaller monthly increments, generally for a duration of between 3 and 5 years.
The monthly payments are worked out by looking at the purchase price of the car, taking off your deposit (normally in the form of a trade-in of an older car), adding on the interest amount the dealer will be charging and then dividing the entire amount by the number of months duration of the agreement. This gives you a fixed monthly payment.
At the end of the agreed period you will have paid for the car in full plus the specified interest. With this option you will own the car in full at the end of the agreement and there don't tend to be penalties for damaging the car or going over any mileage limits.
The concept behind PCP is similar to HP, you pay a deposit and fixed amount every month for the duration of the agreement, but the difference is that with PCP finance a large chunk of the purchase price of the car is taken off and reserved for the final payment of the agreement. This means that your monthly repayments will be smaller than with HP and when it comes to the end of the term you'll have some options.
1. you can pay off the remainder of the purchase price and take ownership of the vehicle.
2. You can hand the keys back to the dealer.
Bear in mind though that you will have to agree to a Guaranteed Minimum Future Value (GMFV) for the vehicle and if by the end of the term your car no longer meets this minimum threshold of value you can be penalised. Essentially this comes down to an agreed upon annual mileage limit and the car being in good condition when you hand it back.
This really depends on personal preference. Your dealer will be able to talk you through all the pros and cons with regards to your personal situation.
Your credit rating will affect the kind of finance you can take out, but a poor credit rating doesn't rule out the option of finance.
Hire purchase and Personal Contract Plans are the most popular options to finance the buying of a car, but you can also look into taking out a loan from your bank, building society or credit union.