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What is a PCP loan?

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We Would Use a Car Pun – But we’re Exhausted

All the recent talk about Ireland’s continued economic recovery can be somewhat hard to swallow when the benefits are not being felt in the pockets of the average worker, and it can be draining to work consistently on a punishing schedule of balancing work and family life while feeling as though there is no boost to your pocket and no disposable income.

Whilst we may continually hear year on year about more new cars being sold, it is still only a vast minority who would have the disposable income to purchase such a luxury item outright. This is where the option of PCP may be applicable. PCP finance is of course not the optimal route for everyone to go down to purchase a new vehicle, as with everything in life there is no ‘one size fits all’ fix unfortunately.

PCP is a Personal Contract Plan, which roughly translates as an agreement between yourself and a financing company (not necessarily within the car dealership themselves) in which you agree to make monthly payments on the car of your choosing for a set period (usually 3-5 years). What makes PCP financing such an attractive prospect to most, is that there is generally quite a low deposit in comparison to other car purchasing options, and the longer term also offers lower repayments.

A PCP plan is a simple and relatively no-nonsense solution to your car needs as it is split into three stages: Deposit, Payment Term and Final Payment.

Deposit:

This stage is the beginning of your contract wherein you will either pay a deposit to begin the contract or occasionally trade in your old vehicle as deposit. The larger the deposit, the smaller the repayments.

Payment Term:

This will be the period of 3-5 years during which you will make your monthly repayments. As the car is still technically under contract it will be important to ensure the car is kept well and undamaged as this may affect the final stage of the contract.

Final Payment:

Generally, for this stage there will be choices made available to you to either make the full lump sum payment (this figure will have been decided at the time of the contract), return the car with no further payments to be made, or occasionally a dealership will allow you to trade in the vehicle as a deposit off a newer model, which would then begin your payment term all over again. Final Payment may be dependent on the term of your contract and the finance company you are dealing with as not all plans will have a lump sum payment at the end.

Many PCP plans may include mileage and damage conditions, so it is vital to be aware of all details of your own plan before signing on the dotted line. PCP is relatively straightforward and there is little to no small-print to be aware of once your payments are made on time, and its lower deposit and repayments may make it a more attractive proposition to most than a hire-purchase agreement or loan. As always we would suggest using caution and ensuring that you have all information to hand before making the commitment, even if it is the car of your dreams.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Driving You Crazy

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In recent years, increasing motor insurance premiums have been widely blamed for the lower numbers of new drivers taking to the roads. As insurance prices have risen over the past couple of years, so too have the rules and regulations for obtaining a driving license in Ireland, seemingly deterring many new drivers from taking that first step. Insurance prices have continually risen by a substantial amount for the past couple of years without any additional benefits being added to premiums. In some cases, insurance premiums were seen to rise by as much as 70% on average, effectively stalling some prospective drivers in their tracks whilst also running some existing drivers off the road as their bank balances began to suffer with these increased monthly or weekly premiums.

Earlier this year, things on the motor insurance front seemed to have reached breaking point as prices continued to rise. It was suggested that prices would be set to begin to come down slowly over the course of the year following on from the resolution of the Setanta Insurance Collapse, which caused many insurers to up costs in order to make financial provisions for future collapses. Once this uncertainty was lifted, it was hoped that motorists would soon begin to feel the difference in their premiums and their pockets.

There was good news on the horizon this month, however with the news that Motor Insurance premiums were indeed beginning to show a downward trend. New figures from the CSO (Central Statistics Office) show that there has been a reduction of 14% on average in premiums from this time last year. This may seem like a minute figure but it is certainly a step in the right direction for motorists as it is the biggest drop since the insurance crisis began.

Insurance experts have been quick to warn that many will still be paying the elevated premiums and that it may take some time for renewal quotes to begin truly showing a difference for customers, but this return to profitability for motor insurance companies is another step in the walk towards financial recovery for Ireland.

If you find you aren’t seeing these reductions in your own premium, we would suggest taking the time before your renewal is due to shop around different insurers. Utilise recommendations from family and friends and collect online quotes to compare as often what we are told is a loyalty discount can in fact often be greatly reduced by utilising the online quote systems.

As always we are available for any advice or guidance you may require on business or finance matters.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

 

ZOOM, ZOOM, ZOOM – CAR INSURANCE PRICES

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If your car insurance was due for renewal in recent months, you would not be alone in having received quite the unwelcome shock when the renewal notification landed through your letterbox. Car insurance prices in Ireland are well and truly spiralling at present, and with no end in sight many motorists are now at risk of not being able to afford to keep their cars on the road. A recent meeting of the Joint Committee on Finance, Public Expenditure and Reform took place at Leinster House to focus on these issues as they continue to pose an immense threat to drivers.

Figures show that over a third of Irish drivers saw their car insurance premiums continue to rise meteorically in the last year, with many facing increases of up to 50% on their previous premiums. Whilst this is a financial issue facing the wallets and pockets of Irish drivers, it has also become an overall road safety issue which begs for rectification. As a consequence of these consistently rising costs, many drivers are unfortunately put in a position in which they must drive under reduced levels of insurance in order to manage their costs. This is both a financial issue for our country and a safety issue for all drivers as we have seen a recent 17% increase in accidents involving uninsured drivers as a result of rising costs that cannot be realistically kept up with, these rising costs do not correlate to your own claims or penalty points, but are an issue across the board for all drivers young and old. Many long-term drivers have experienced a hike of over 50% in the cost of their insurance premiums despite having never made a claim.

Conor Faughnan of the AA stated that rising costs were an issue of major urgency facing members of the AA and that

“Competition should be encouraged by the rising costs being seen, but that isn’t happening. Foreign insurers are in active retreat.”

Thus positioning this as a financial issue for the country as well as individuals. Faughnan also stated that foreign insurers fear the lack of clear information on insurance claims costs in this country and are wary on this front also. Whilst fuel costs are dropping, rising insurance costs ensure that drivers are feeling no benefit. Ireland Underground, a group of representatives of young drivers in Ireland have been quoted as saying that these rising costs have left Ireland’s younger drivers feeling

“As if they are besieged on all fronts by a sense of hopelessness.”

Once again, we are seeing our young people being hit hard by the financial issues which previously threatened their continued living in this country. It is not just our younger people here though being hit hard as older people are also finding themselves being hit by astronomical insurance premiums, and as a result are struggling to keep their cars on the road and maintain their own independence in this way.

Suggestions have been made to bring our costs and compensation in line with EU averages and allow greater competition for both Irish and foreign insurance companies in Ireland. According to the AA’s annual survey of motoring costs, the average cost of running a family car in Ireland has increased by €255.82 in the last year.

Should you require any assistance with your own finance management issues please don’t hesitate to contact us here at DCA Accountants.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

CREDIT RISK MANAGEMENT/INSURANCE

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Credit Risk immediately sounds like a term which should strike fear into business owners everywhere. Nobody wants to hear the word risk when associated with your business, but it needn’t be that way and today we are going to speak to you about managing your credit risk.

 

Credit risk can be simply defined as the potential that a borrower may fail to meet financial obligations on previously agreed terms. The main goal of the Credit risk management systems we will be speaking about today is too secure overall credit risk parameters and ensure that neither borrower nor lender suffer as a result of these risks. Managing your Credit Risk can have great benefits for your business including increasing cash flow, increasing credibility, better business development, and more secure trading options to name but a few. Having this backing may also give you peace of mind in terms of the security and longevity of your company.

 

Following the financial crisis, borrowing and lending became a financial minefield, and whilst things have since eased up and more options have recently become available for both parties, the need to be vigilant remains. 25% of all bankruptcies are caused by unpaid invoices, so you may be currently taking more risks than you were aware of. The risks associated with borrowing and lending have not eased as much as one might expect in recent years, and both parties must be aware of the dangers associated.

 

Some Credit Risk Management companies offer to advise and protect clients in order to allow safe trading, effectively insuring a company’s finances ahead of trading. The first step in Credit Risk Management is to gain a full and comprehensive picture of the company’s finances and position as well as having a solid idea of the company’s ability to lend to customers. Having this comprehensive picture then allows the creation of an appropriate action plan for managing your credit risk, having a simple plan in place will then pave the way for more sophisticated credit management solutions in your company’s future.

 

Credit insurance is one fairly simple way to manage your credit risk which may assist your company in growing profitably. Cash flow is the most important and also the most vulnerable aspect of business and credit insurance could give your company peace of mind against any bad debts. Credit insurance insures your company against the potential of your customer’s failing to pay their debts within your agreed parameters. This in turn ensures that your company finances and risk scores do not suffer when it comes to your own future borrowing. Non-payments are one of the top ways in which your business can be weakened, and Credit Insurance can be the ideal way to navigate this issue. In this way, you are assured that your company will reach its anticipated targets even if there have been some defaults.

 

If you find yourself in need of advice, support, or guidance in how to go about credit risk management in your business please don’t hesitate to contact us here at DCA Accountants where we are always happy to help.