Kells Credit Union

CU Car Loans Vs PCP

What sets us apart.

Credit Union Car Loans

  • Unlike a PCP you own the car from the outset
  • You can sell the car on at any time
  • You can borrow for the full amount
  • There are no hidden fees, admin charges, transaction charges, set up costs or balloon payments
  • The interest you pay on a credit union loan is the full cost of the loan so it is fully transparent
  • Credit union interest rates are fair and reasonable and capped by law
  • Repayments are calculated on your reducing balance, so you pay less interest with each repayment
  • Your credit union loan is insured in the event of your death – subject to terms, conditions and eligibility criteria – at no direct cost to you.
  • You can pay off your loan early, make additional lump sum repayments or increase your regular repayments, without a penalty. Other lenders may charge you extra for paying them back faster!

PCP Car Loans

Typically, a person will be offered a PCP package at the forecourt when buying a car. The buyer will be asked to pay an initial deposit (usually between 10% and 30%) and then agree a monthly repayment – usually over the next three years. PCPs generally have low monthly repayments, which can make them seem more affordable when compared to other forms of finance. The provider guarantees a minimum future value (MGFV) for the car taking into account depreciation and wear and tear. The MGFV is the amount you will have to pay to own the car at the end of the agreement. It is calculated by the finance company, based on its estimate of the future value of the car at the end of the agreement. It takes into account such things as, the car you are buying, length of agreement, the condition of the car at the end of the agreement and your annual mileage.

At the end of the term of the PCP, the buyer is left with 3 options….

  • Pay a final payment (the minimum guaranteed future value or balloon payment) and keep the car.
  • Hand the car back. Be aware that if you do opt to hand the car back, you don’t get anything from the car dealer for its value no matter how well you have kept it and maintained it and you might end up having to pay if you have not complied with all the terms and conditions.
  • Put the car down as the deposit on another car and enter into a further PCP. It is important to be aware that the deposit you put down for the first car will not be available when you give the car back to use when taking out a new PCP. The equity you have built up in your monthly repayments and the difference of the MGFV is what you would have to put towards the new car. All you have to put towards the new deposit is whatever equity you built up from the first PCP. This equity may be less than the deposit required for rolling it over so you will need to top the deposit up each time.

Our Advice is read all the small print and be fully aware before you sign on the dotted line.


Kells Credit Union


Kells Credit Union