Get Sweep

Enter your mobile phone number to download the sweep app.

or get sweep from the App Stores below on your mobile

With rising inflation, increases in the cost of living, and soaring energy bills it’s really important you get the most from your money. So if planning on buying a car, how you pay for it requires careful consideration. Here are a few things you should think about in order to ensure you really are getting the best deal for you writes Geraldine Herbert.

1. Shop Around Before You Trade-in

Used cars are in short supply at the moment so if you have a car to trade in you are in a very strong bargaining position. Shop around and get as many trade-in valuations as you can and chose the one that offers the best all-around deal for you.

Shop Around Before You Trade-in

2. Do You Pay in Cash?

Some buyers may have built up savings over the pandemic so if you are one of those in a position to pay in cash then the main benefit is you don’t have to pay any interest on the transaction. But always remember buying in cash may mean that you could be left with little or no savings to cover unforeseen expenses.

Paying in Cash for car

3. What about a Personal Loan (PL)?

While some buyers have savings to fall back on others may find themselves car buying due to a looming repair bill. The simplest way you can finance a new car is by getting a personal loan from your bank or credit union. You can typically take out this type of loan with repayment terms ranging from three to five years and you can borrow the amount you want to pay for the car or make up any shortfall with savings or your car’s trade-in value.

The main advantage of a personal loan is that you own the car from the outset so you can, if necessary, sell it to repay the loan should you fall behind on your repayments. The best way to compare loans is on APR ― the annual percentage rate ― as essentially this is the real cost of borrowing money because it includes interest and charges. The lower the APR, the better the finance deal. 

Personal Loan

4. What about Hire Purchase or Personal Contract Plan?

With Hire Purchase (HP) you repay, by installments, the total cost of the car, plus interest. At the end of the contract, the car is yours Personal Contract Plans (PCPs) are a form of car finance based on a HP agreement. However, unlike traditional HP or a bank loan, the repayments are typically lower, as you are paying off the depreciation of the car and not its entire value.

At the end of the agreement, you have the choice of whether to make that final payment to own the car or not. The non-refundable deposit is typically between 10% and 30% of the value of the car and can be paid in cash or if you already own a car, you can trade this in for part or all of the deposit. PCP agreements are usually made for terms between three and five years. A guaranteed minimum future value (GMFV) represents what the car will be worth at the end of the contract and this, plus the deposit you choose to put down, is taken away from the total cost of the car, and you pay monthly payments (plus interest) on the remaining balance. PCPs are a very popular option with car buyers but it is important to check the mileage limitation.

Ways to pay for your car

5. Live Within Your Means

With inflation rising it’s more important than ever that you know how much you actually spend monthly so check bank statements and receipts to see exactly how much money is going out each month.  Realistically assess how much a car is costing by calculating both the standing costs and running costs for your car. Standing charges are the charges you pay whether you use the car or not and include Insurance Motor Tax, Loan repayments and depreciation. Running costs include fuel or electricity costs, NCT, Servicing and repairs, parking, and toll charges.

Live Within Your Means

About the Author

Contributing Editor and Motoring Columnist for the Sunday Independent and editor of wheelsforwomen.ie. Geraldine Herbert is also a regular contributor to Good Housekeeping (UK) and to RTÉ, Newstalk, TodayFM and BBC Radio. You can follow Geraldine on Twitter at @GerHerbert1.


Searching for your next vehicle? Click here to find it on Sweep.

Sweep is a better way to buy and sell cars in Ireland. Browse over 20,000 new and quality used cars from more than 550 trusted dealerships.

The new easy-to-use app is now available in the App Store and on Google Play, see here.