LK Credit Union - the best option for your car loan

The open road – Letterkenny Credit Union can get you on the road

There has been an increase in the number of people changing their cars more frequently and it is estimated this trend will continue throughout 2018. With more people considering a new car Letterkenny Credit Union is asking customers to consider what is the best finance option for you. When deciding on whether to go for a new car many may struggle with the decision whether to go with a traditional car loan or a Personal Contract Plan (PCP) to help finance the purchase.

For many, headline rates on PCP agreements can at first look more attractive, however the Credit Union is reminding customers that essentially PCPs are lease schemes. The buyer has in effect, hired the car for a particular period of time, usually 3-5 years, while they make payments. At the end of the agreement, they will have to make a balloon payment in order to own the car. In addition, they will need to be conscious of the mileage they are racking up, because the balloon payment, or guaranteed minimum future value (GMFV), of the car will have been calculated with their annual mileage in mind.

In contrast, with a car loan, the consumer simply borrows the money to pay for a car, which they own immediately, and they can drive as much as they please. Paul Hume, Chairperson Letterkenny Credit Union said: “There appears to be a renewed interest in the traditional car loan due to greater flexibility and more straightforward terms and conditions. “We would encourage anyone considering buying a new or used car in 2018 to pop in or call us at Letterkenny Credit Union before making any decisions. We are happy to see all our members, no matter how long it has been, and of course we are always happy to chat to anyone who has never been a credit union member.”

Mr Hume said if you finance with your credit union before shopping for a car it puts you in a much stronger position. He added that they offer car loans with an APR rate of 6.5%* and also offer car insurance, through the credit union insurance website coveru.ie. Letterkenny Credit Union has also put together a checklist for anyone considering a PCP agreement before they sign the dotted line:

• Be aware that to extend the term of a PCP you may be charged a rescheduling fee.
• Take note of the cap on the number of miles/kilometres you are allowed to clock up over the period of the contract.
• You may be requested to commit to certain car servicing agreements.
• Ensure you always enquire about additional fees and charges, you are entitled to a list of all additional charges so ask the garage for this before you sign any agreement.

For more information on PCP’s and how they work check out www.consumerhelp.ie/pcp For further information, please contact Letterkenny Credit Union on 0749124166 or email loans@letterkennycu.ie

* For a €25,000, 5 year variable interest rate loan with 60 monthly repayments of €486.89, an interest Rate of 6.3%, a representative APR of 6.5%, the total amount payable by the member is €29213.37. Information correct as at 22/2/2018.