How Does Car Finance Work Ireland

Car financing is very common in Ireland and many parts of the world as millions of people have been able to purchase their dream cars through car finance. But the question is, “How Does Car Finance Work Ireland?”

Although car finance is common in many other countries, how it really works varies a bit from country to country. Hence the reason for this article so you can learn about how it works in Ireland.

But then again one may ask, “why go for car finance?” Well the answer is quite simple. Not everyone can afford to come up with the lump sum needed to purchase their desired cars. Hence auto financing offers such people the opportunity to own a car and pay back later.

Here in Ireland, the way car finance works comes in three different ways. Hence as a borrower or one who intends to use car finance, it is up to you to choose which option works for you. However, have it at the back of your head that they all have their specific merits and demerits.

Read along as I answer the question of “How Does Car Finance Work Ireland” in the subsequent paragraphs

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Types of Car Finance in Ireland 

As mentioned earlier, there are at least three good car finance options you can choose to finance your car. They are;

  • Car Loans
  • Personal Contract Plans (PCP)
  • Hire Purchase

Car Loans 

Car loans is one of the most used car finance options in Ireland because of its many merits. With car loans, an applicant can apply for a loan from either a bank or credit union. Once approved, you can then visit the dealership(s) to shop for your desired car.

You are usually not required to make any down payment with this type of financing but rather make regular payments at regular intervals for a duration which will be specified in the loan agreement.

Using the car loans option puts you in a better position to purchase the car at a better cost than it would have cost if you were tied to the dealer. You automatically become the owner of the car the very day you purchase it.

Personal Contract Plan (PCP)

Personal Contract Plan is more or less like a hire purchase only that with PCP, the monthly payments are relatively lower than the usual hire purchase and the borrower then makes a balloon payment at the end of the loan term.

The Personal Contract Plan is also widely used by car loan borrowers in Ireland because of its lower monthly payments. You will however be required to make an initial deposit ahead of the monthly payments and then the balloon payment. The higher the amount you pay as deposit, the lower the balloon payment which can sometimes be difficult to pay.

A survey by Motorcheck in 2016 showed that over 70,000 car owners purchased their vehicles using the personal contract Plan.

Hire Purchase 

High Purchase is also another way of financing your car and is absolutely safe to do. Financing your car using the Hire Purchase option involves making an initial deposit then you pay the remaining balance plus all other interest and fees in monthly installments for a specific duration. The car then completely becomes yours once you finish payment.

These monthly installments are however usually higher than for example PCP.  You can also return the vehicle along the line and walk away if you no longer wish to continue. However, you will be required to make a 50% payment value of the car.


Although all these options are available for you to choose from. Don’t just rush into any of these without properly understanding of the terms and conditions of the finance document. Analyse each of these options carefully and Finance your car with the option that works best for you.

Do not go for a particular option simply because a friend or loved one went for it. Do the necessary checks and self examination before putting your signature on the loan agreement.

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Q1. What Documents are required to finance your car in Ireland?

Documents required when financing your car include the following;

  • ID
  • Proof of permanent address
  • Proof of income
  • Drivers Licence
  • Bank details

Q2. Which car finance options is best?

All the three finance options (PCP, Hire Purchase and car loans) have their own merits and demerits. And also what is best for me may not be good enough for you because we both have different situations. Hence you need to analyse all of them and see which one is best for you.

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