28 Jun 2022

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Looking for a new car? Let your local Credit Union get you motoring

What to look out for: Your roadmap to buying a new or used car

Looking for a new car? Let your local Credit Union get you motoring

In recent years PCPs, or Personal Contract Plans, have become a popular way to finance a new car. Many dealerships can offer  a deal on the spot – affordable deposit, low monthly payments, trade in the car after three years.

However, there are several things to be aware of when entering into a PCP agreement, most of which can be avoided by taking out a car loan with your local credit union instead. 

Here are some reasons you should talk to your local credit union: 


A PCP is a kind of hire-purchase agreement, where you don’t actually own the car until you make the final payment. 

This means if you want to change cars or encounter difficulties during the term of the contract, you can’t sell the car without the agreement of the finance house/dealer as you don’t actually own the car. You are, in effect, hiring the car until you pay the GMFV. This is the large, final lump sum payment due at the end of the agreement and is how much it will cost you to finally own the car. With a credit union car loan the car is yours from day one.  


As PCP monthly payments are fixed over the term of the agreement, you usually can’t pay extra each month to finish up early and you will be charged a fee if you need to restructure the agreement in any way. 

If you agree to act as a guarantor for someone taking out a PCP you are, in fact, a joint hirer and not just a guarantor. Any missed repayments on the agreement will also show up on your credit record.  As a result of this, you may find it difficult to get a loan in the future. 

With the credit union, there are no penalties for paying off a loan early, so you can pay more than the minimum each month if you wish. 

Also, because each credit union is locally run for the benefit of the community, it is often possible to renegotiate the terms of the loan with your local office should your circumstances change and you run into difficulties. 

Check out the credit union  blog here for more details on the unique flexibility of a credit union loan.  

Balloon payments

A PCP is broken into three parts: 

Deposit - Usually 20 to 30% of the car value.

Fixed monthly repayments - usually low as a large portion of the cost of the car is not paid until the end of the agreement. 

The Guaranteed Minimum Future Value - a large final balloon payment, which can be anything up to 50% of the value of the car.  

You won’t own the car outright until you pay off that final amount. 

With a credit union loan, there are no nasty surprises left at the end of the term – your payments will stay the same throughout. 


As part of a PCP agreement, there is usually a restriction on how much mileage you put on the car. Going over the agreed maximum mileage can affect the final value of the car and end up costing you more money.

For details on how you can own your own car through a loan with St Canice's Credit Union, click here

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