Used Car Finance Options in Ireland

Don't have enough money saved to buy a used car? There are other options.

Over the past few years, since Brexit really, the used car market in Ireland has been affected by an imbalance in the supply and demand for cars. And due to this demand, prices are at an all-time high. 

However, despite this shortage and high prices, buying a second-hand car is still a sensible move for many of us, especially regarding budget and repayments; a second-hand car is cheaper. 

If you don't have a lump sum of cash to purchase your new-to-you motor, there are other used car finance options in Ireland

Our guide will help you choose the best fit for your needs and budget.

Credit card

Most dealerships will allow you to pay for your used car with a credit card. One of the great advantages of this payment method is that some credit cards offer a zero per cent interest rate on purchases, meaning, unlike some other finance options, you pay just for the cost of the car itself. However, if your credit limit doesn't stretch to the total price of the vehicle, you'll have to make up the shortfall with another payment method.

Personal loan

Taking out a personal loan to pay for a used car can be a viable option, especially if you don't have enough cash to buy the vehicle outright. Depending on your credit rating, you can get a personal loan from a bank, credit union or An Post. 

However, it's important to consider the loan's interest rate and the repayment terms. If the interest rate on the personal loan is high, it will cost you more in the long run than if you had saved up for the car and paid for it in cash. Also, if you don't make your loan payments on time, you might have to pay late fees, which could damage your credit score.

Hire purchase

The difference between a personal loan and HP is that with a personal loan, you borrow money, pay for your vehicle and own it immediately. Under an HP agreement, you hire the car, make regular (usually monthly) repayments of an agreed amount and then become the vehicle owner at the end of the contract. However, until you make that final repayment, the finance company is the car's legal owner. 

So, why would you choose HP? Well, HP agreements may offer lower interest rates than personal loans because the car acts as collateral, reducing the lender's risk and allowing them to offer lower interest rates. However, it's important to compare the total cost of the loan, including any fees, before deciding whether an HP agreement or personal loan is the best option for you.

Car Finance Ireland

Leasing /  Personal Contract Hire (PCH)

Though primarily offered to businesses, leasing is becoming more available to private used car buyers in Ireland. With leasing, aka Personal Contract Hire (PCH), you pay a deposit upfront, rent the car for an agreed period (usually two to four years) and make fixed monthly payments. At the end of the contract, you hand the car back. So, you never actually own the vehicle. However, as the upfront deposit is usually low, leasing is attractive to buyers who don't have a large sum of money saved up and can't or don't want to take out a loan.

Personal Contract Plan (PCP)

Much like leasing, PCP is now a finance option for used cars. With PCP, you can have a flexible finance plan that suits your circumstances. 

You put down an upfront deposit, usually between 10- and 30 per cent of the car's value, and then pay an agreed monthly instalment over a set period, usually 2 to 3 years. A portion of the car's value is deferred until the end of the agreement. This deferred amount (the balloon payment) is the minimum value the financial institute guarantees your vehicle will be worth at the end of your contract, the Guaranteed Minimum Future Value (GMFV). When your agreement is up, you make the balloon payment and either keep the vehicle, trade it in for another one, or return the car to the dealer.

A quick recap

If you have enough money in your piggy bank or actual bank, you can pay for your used car using cash, a debit card, or a bank draft.

If you don't have enough cash, you can finance your used car with a credit card, personal loan, hire purchase, leasing or PCP agreement.

You can pay for the car outright and own it immediately with a personal loan. With HP, you might get lower monthly repayments, but you will only own the car at the end of your agreement. With leasing, you often don't have to have a large deposit; however, you will never own the vehicle. With PCP, though, you will own the car at the end of the agreement; however, you have to pay a lump sum upfront and at the end of the contract.

As always, weighing the pros and cons of each form of used car financing is important to help you choose the one that best fits your needs and budget. Be sure to read the terms and conditions carefully before signing any agreements.

To find out more about car finance in Ireland or to browse used cars on finance CLICK HERE