Car finance is how most Irish people buy cars — over 60% of new car purchases use some form of finance. The two main options are Hire Purchase (HP) and Personal Contract Plan (PCP). Dealers overwhelmingly push PCP because it’s more profitable for them. Here’s what they don’t explain.
Use our free finance calculator to compare HP vs PCP side by side for any car.
Hire Purchase (HP) — The Simple Option
HP is straightforward: you borrow a fixed amount, pay it back in equal monthly instalments over 3–5 years, and own the car outright when you’re done.
How HP works:
- Deposit: typically 10–20% of the car’s price
- Fixed monthly payments for 3–5 years
- Interest rate: typically 6–9% APR (variable by lender)
- You own the car at the end
Example: €25,000 car on HP
- Deposit: €2,500 (10%)
- Financed: €22,500
- Term: 4 years at 7% APR
- Monthly payment: €539/month
- Total cost: €2,500 + (48 × €539) = €28,372
- Total interest paid: €3,372
Personal Contract Plan (PCP) — The Flexible Option
PCP splits the cost differently. You pay a deposit, then lower monthly payments, with a large “balloon payment” (called the GMFV — Guaranteed Minimum Future Value) at the end. At the end, you choose: pay the balloon, hand back the car, or trade it in.
How PCP works:
- Deposit: typically 10–30%
- Lower monthly payments (you’re only paying the depreciation, not the full value)
- Balloon payment at end: 30–50% of original price
- You don’t own the car unless you pay the balloon
Example: Same €25,000 car on PCP
- Deposit: €2,500 (10%)
- GMFV (balloon): €10,000 (40%)
- Financed: €12,500
- Term: 3 years at 6.9% APR
- Monthly payment: €385/month
- Total paid before balloon: €2,500 + (36 × €385) = €16,360
- If you pay the balloon: total = €26,360
- Total interest: €1,360 (seems low — but you don’t own the car without the balloon)
The Hidden PCP Trap
Dealers love PCP because:
- You’ll probably trade in — most people can’t or won’t pay the €10K balloon. So you trade in and start a new PCP. You never build equity. You’re perpetually paying for a car you don’t own.
- Mileage penalties — PCP contracts limit annual mileage (typically 15,000–20,000 km). Go over, and you pay 5–10 cent per excess km. That adds up fast.
- Condition charges — hand the car back with any damage beyond “fair wear and tear” and you’ll be charged. The definition of “fair” is decided by the finance company, not you.
When HP Makes More Sense
- You want to own the car outright
- You plan to keep it for 5+ years
- You do high mileage (>20,000 km/year)
- You want simplicity with no balloon surprise
When PCP Makes More Sense
- You want a newer/better car than you could afford on HP
- You change cars every 3 years anyway
- You stay within mileage limits
- You have a plan for the balloon payment
The Best Option: Cash + Motorly
If you can buy with cash (or a credit union loan at 5–6% APR), you’ll always pay less in total. Browse 280,000+ listings on Motorly, use the price checker to negotiate, and keep the interest for yourself.