Are you thinking about your first car, trading up before that staycation, or even an electric car?
Consider a Credit Union Car Loan instead of a Hire Purchase or PCP option. With a Credit Union Car Loan you borrow the money, pay for your car, and own it immediately.
Hire Purchase / PCP, are they really that different to a Credit Union loan. Yes they are!
- When you use a hire purchase or PCP (Personal Contract Purchase) agreement to buy a car, the agent sells the car to the finance company. The finance company then rents the car to you for an agreed period of time in return for a set monthly repayment over a number of years.
- If it’s a motor dealer arranging the agreement, the motor dealer acts as an agent for a finance company and earns commission to arrange the finance for you. In this case, the motor dealer is acting as a credit intermediary and must be authorised to act on behalf of the finance company.
- With a hire purchase / PCP agreement, there may also be a range of additional fees and charges which you may incur. This would include a documentation fee (for setting up the agreement) and completion fee (a fee charged to end the agreement).
- If you run into difficulty in meeting the terms of the agreement, you may be charged a penalty fee for missed repayments, a rescheduling fee (if you need to change the terms of the agreement) and a higher rate of interest may be charged on any repayments which you missed.
- The conditions of some agreements also result in monthly payments not being evenly spread out and you may pay less in the earlier months of the agreement. This can make your monthly repayments appear more affordable. However, you may have to pay a large final payment (known as a balloon payment) at the end of the term, a payment you may not have budgeted to meet.
- Finally, while a HP contract covers the entire purchase price of the car, PCP does not unless you make the optional 'final payment’.
Why Choose A Credit Union Car Loan instead of a Hire Purchase or PCP agreement?
With a Credit Union loan its much more straightforward. You borrow the money. You agree a repayment schedule that suits your circumstances. You pay for the car and own it immediately. Also, should you be in the happy position of being able to repay the loan early, you may do so without any penalty charges. At your local Credit Union, you also get to avail of the wide range of member benefits, including various insurance services which protect your loan, without any fees or charges. You also get to deal with friendly people who are always available to talk to you about any queries you have.
And did we mention, when you borrow with your local Credit Union, the interest you pay goes back into your local community, through various sponsorships, community funds and club support! So borrowing with your local Credit Union means you are supporting your local community in lots of different ways!
