Electric vehicle finance options

A personal loan delivers a one-time payment directly to you, the borrower. That amount plus interest is repaid in regular instalments over the lifetime of the loan. 

A personal loan is not secured against the vehicle. A borrower can therefore; 

• borrow more than the value of the vehicle if required. 
• sell the vehicle without being obliged to settle the agreement. 
• spread the load over a longer term than Personal Contract Purchase (PCP) or Higher Purchase (HP). 
• not limited by any mileage agreement. 

Personal loans can be found in high street banks, online banks, credit unions and financial advisors/brokers. 

With hire purchase, you repay one fixed payment for an agreed term of up to 5 years.  

• The funds are paid directly to the car dealer, not you. 
• The amount borrowed cannot exceed the value of the vehicle. 
• The loan is attached to the vehicle. The vehicle will be in your name but title ownership only passes to you after the final payment. 
• The vehicle cannot be sold unless the agreement is settled at the same time.  

There is no mileage restriction in a hire purchase agreement. The car will be in your name from the start, but it will remain the property of the lender until the final payment is made. 

Hire purchase can be found in some high street banks, online banks, and car dealers and financial advisors.  

Personal contract purchase (PCP) offers buyers a lower monthly payment compared to a Hire Purchase contract over the same period. Contracts are for up to 4 years. PCP divides the cost of the vehicle into three sections:  

1. Deposit  
2. Monthly payment 
3. Optional final payment 

The optional final payment also known as guaranteed minimum future value (GMFV) is a guarantee that the vehicle will be worth at least that amount at the end of the agreement. The GMFV is decided by the lender before signing the agreement based on the age and expected mileage of the car at the end of the agreement.  

Optional final payment 

At the end of the personal contract purchase, there are 4 options: 

1. Option to purchase the vehicle by paying the GMFV to the lender. 
    
2. Re-finance the final payment. Speak to the lender and re-finance the final payment on Higher Purchase. Shop around with other lenders too to ensure a competitive deal. 
    
3. Trade in the vehicle. Where the value of the vehicle is more than the GMFV, the value of GMFV will go to the lender and anything above that belongs to the borrower. The Dealer will manage that process on the buyers behalf. 
   
   Vehicle trade in value - €27,000 
   GMFV to lender - €22,000 
   Buyers Equity (Cash back or new vehicle deposit) - €5,000 
    
4. Return the vehicle to the lender. There is no obligation to purchase. If the vehicle is worth less than the GMFV, the buyer is not responsible for the shortfall. In this scenario if the vehicle is worth more than the GMFV, the borrower forfeits that equity. 

If a vehicle is returned with more than the agreed mileage, a price per KM will be charged. The price per KM will be outlined in the contract that is signed at the beginning of the agreement. If you return a vehicle that has been damaged beyond "reasonable wear and tear", there could be a charge attached to that too. Choosing options 1-3 above will avoid these additional charges. 

Hire purchase and personal contract purchase are both secured loans. Failure to pay could lead to the seizure of the vehicle. If you consider yourself at risk of missing a payment, you should contact your lender immediately. Lenders will, where possible, avoid seizing a vehicle. Communication is key. 

PCP can be arranged through car dealers and financial advisors. 

Customers who use personal contract hire (PCH), also known as personal lease, pay a deposit and a fixed monthly payment for an agreed term of up to 5 years. The monthly payment is determined by the contract term and the agreed contract mileage, like PCP. PCH features include:

• Your monthly payment includes the road tax 
• There is an option to add a maintenance contract 
• The only additional costs are fuel and insurance 
• There is no option to purchase at the end of the agreement 

If at the end of the contract the vehicle is within the agreed mileage and undamaged, it is handed back and a new vehicle is selected. Fees will be applied for any excess mileage and damage on the vehicle. 

PCH can be arranged through lease companies, car dealers and financial advisors. 

A shared benefit of PCP and PCH is the buyer is completely protected from the risk of depreciation.  

Car clubs offer short term rental in easily accessible locations. Vehicles can be hired by the hour, day, week, or month. Vehicles are parked on street and accessible via an app. Members of car club can choose the type and size of vehicle to suit their needs on any given day.  

Car club members may have to pay for annual membership, but they will avoid many costs associated with vehicle ownership such as maintenance, road tax, insurance and vehicle depreciation.  

Car clubs also offer an affordable alternative to vehicle ownership. Be mindful of mileage limits to avoid surprise excess mileage penalties. 

Look out for the 'car club' vehicles already parked in your neighbourhood or search online.