Your car finance options explained

WITH the New Year here, many of you are looking to upgrade your car and acquire one of those alluring new

‘151’ or

‘152’ plates.

The number of new private cars registered reached 96,344 in 2014, which was the highest since 2008 and showed an increase of 29.5% over 2013. Early indications are that the positive trend will continue in 2015, with new car sales set to pass 115,000.

Buying a car is regarded as the second most important purchasing decision in our lives after our home.

Individual car brand websites will show you the features of each model and specialist car magazines or websites are also a good source of information.

However, customers should be very aware that they are not protected by industry regulations by going privately – either person to person, via classified adverts in magazines or online.

Dealerships are an excellent source of information and offer test drives – vital in ensuring that the car is right for you.

They all offer very competitive finance options and can arrange a trade-in of your current vehicle.

Carla Delaney, Area Manager for Bank of Ireland, explained:

“There are two main types of car finance available when purchasing a car: dealership finance such as hire purchase and personal contract plans or an unsecured personal car loan.

“We offer customers a secured hire purchase option at a competitive fixed rate, giving you peace of mind knowing your repayments will not change throughout the term of your agreement.

“At the end of your agreement and on payment of a small purchase fee, the car belongs to you.

“Secured finance is suitable for cars priced over

?¬7,000 from a recognised dealer in the Republic of Ireland. This is becoming an increasingly popular option for new car purchases with Irish consumers and in recent years we have seen increased competition and great value emerge on the forecourts.

“In most cases a minimum deposit (cash or trade-in) is required and there may be documentation fees. With this finance option customers don’t own the car until the end of the agreement.

She added:

“Car loans are more suited to people buying used cars or when purchasing privately and Bank of Ireland offers a choice of fixed or variable rates and there are no hidden fees.

“By choosing this type of finance you would own the car from the outset, allowing you the option to sell the car whenever you like.

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Bank of Ireland Finance (BIF) is the leading provider of funding to the Irish Motor Industry and for car buyers who would like to drive a new car every two to three years.

BIF, through their franchise partners, offers a Personal Contract Plan (PCP) on both new and pre-owned vehicles up to 18-months-old.

PCP is becoming more popular in the Irish market and the product is now the fastest growing way to purchase a new car. At its simplest, this product is a hire purchase agreement, but from the outset the dealer puts a price on what the car will be worth at the end of the agreement. This is called the Guaranteed Minimum Future Value (GMFV subject to overall kilometre conditions and a wear-and-tear policy that the customer must adhere to).

This amount, together with the customer deposit, which can be as low as 10 per cent, is deducted from the cash price of the car and the monthly payments are calculated on the balance plus interest on the GMFV, which results in lower monthly payments for the customer.

At the end of the agreement, the customer then has three options: to hand back the car to the dealer with nothing further to pay; trade-in and use the equity for a new car; or pay off the GMFV and hold on to the car.

Bank of Ireland Finance has established relationships with 14 motor franchises and offers a variety of options from low APR programmes to specific Personal Contract Plans (PCP).

If you would like to enquire about a Personal Contract Plan (PCP) or a low APR offer, please speak to your local franchise dealer. Bank of Ireland Finance provides motor finance to the following motor distributors: Toyota, Ford, Lexus, Hyundai, Opel, Kia, Peugeot, Mercedes-Benz, Honda, Volvo, Land Rover, Jaguar, Suzuki and Mitsubishi.