Hyundai Car Finance
Tired of the Jargon? Confused what to do / how to pay? Finance Form
Here is a simple breakdown of the various options available to finance your new car.
- Cash: Use your own cash, true you get very little return in interest these days and then have to pay DIRT at 41 %, but the flexibility of knowing you have your cash available in these times for unforeseen expenses, family or business should not be overlooked, banks are not too sympathetic to loan applications these days so holding your cash when smart financing options are available makes more sense.
- Credit union Finance: yes using your Credit union may seem attractive, but it may tie up your credit line of available funds by using it all to buy a car, better to look at dealer financing.
- Your own bank financing: Personal loans are unheard of nowadays and the main banks AiB and BOI will introduce you to their car finance divisions whose rates seem to be more expensive than dealer financing.
Dealers generally offer 3 kinds of Finance deals:
- Normal consumer Hire Purchase: over 1 to 5 yrs at competitive rates
- PCP type financing: PCP (personal Contract purchase) is basically a standard consumer hire purchase contract, with all the same rights for you as a consumer, in some cases at rates subsidised by manufacturer as an incentive, together with a Guarantee from the dealer to buy your car back at the term expiry if you do not want to keep it. Using PCP type finance reduces your exposure and your costs, typically saving you 1800 on a 20000 eu loan over 3years as compared with same loan over 5 years and settled after 3 years, in other words you do not pay for time you do not use, and you own your car and any equity in it at the end of the agreement. This is by far the most flexible way to finance your car these days.
- Contract hire: This is a rental agreement, for business users or sole traders and can be used for cars or commercial vehicles. The agreement will cover the use of the vehicle for a defined time and mileage and may or may not include a maintenance contract as well. As it s a business type agreement the rentals will include vat, which may be deductible in the course of your business, this can apply to both cars and commercials. Whether you are starting a new business or running a fleet, Contract hire has attractions in that the funding is off balance sheet, you are not building up a stake in cars / vans at the expense of valuable working capital. You should of course talk to your tax adviser, and as experienced professionals we are available to help as well.