28 Jun 2022

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EXPLAINER: What to consider when financing your new car, by Affinity Credit union

EXPLAINER: What to consider when financing your new car, by Affinity Credit union

EXPLAINER: What to consider when financing your new car, by Affinity Credit union

Buying a new car can be pretty exciting, but when it comes to getting the finance in order to close the deal, are you making the right choice?

There are many options out there to finance your new car. Make sure to shop around. Here are some tips on what to look out for.

APR – What does this mean?

The Annual Percentage Rate (APR) is the interest charged for borrowing that represents the actual yearly cost of the loan expressed as a percentage. The APR, as opposed to the interest rate, gives a more accurate picture of total borrowing cost because it takes into account fees and charges associated with the loan.

Looking at the APR offered on the agreement allows for easy comparison.

You will also notice in any loan advertisement displaying an interest rate that there is a total cost of credit figure. The cost of credit is the real cost of borrowing.

The total cost of credit figure is the difference between the amount you borrow and the amount you repay. Another useful comparison figure.

Affinity Credit Union has one of the lowest APRs on the market for auto loans. Check it out at

PCP/Hire Purchase/Car Loan - Do you know what type of agreement you are getting into?

A Personal Contract Plan (PCP) may seem an attractive method for financing a new car as it can offer low monthly repayments.

However, it is one of the least flexible and most complex forms of finance.

With PCP, you are essentially hiring the car. You pay a deposit, make regular repayments, usually over 3 to 5 years, and at the end of this agreement, if you wish to purchase the car, you will have to make a balloon payment. You do not own the car until the final payment is made.

You must stick to certain restrictions on usage and maintenance.

PCPs are a type of Hire Purchase agreements. With all Hire Purchase agreements, you are hiring the car and the finance company will own the car until a final payment is made.

Read the terms and conditions of the agreement offered carefully! If you miss payments, the finance company may repossess the car.

A Car Loan from your local Credit Union or bank is a lot more stress-free and straightforward - you own the car outright from the start, with no milage or service restrictions and no surprises left at the end of the term!

The car is really yours and you can sell it anytime you want.

When it comes to choosing between a car loan from your bank or you Credit Union, why not support local?

Credit Union loans rates can often be lower than rates offered by banks, with more flexible terms. Credit Union loans also often come with free-to-member benefits such as Loan Protection Life Insurance, so you don’t have to worry about leaving a debt behind.

With Affinity Credit Union offering ‘Loans from Home’ with a digital signature, you can apply anytime from their website. Visit

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