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PCP – The Good, the Bad and the Ugly

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Personal Contract Plan (PCP) – The Good, the Bad and the Ugly

Recently, we spoke about PCP (Personal Contract Plan) finance options which have recently become so widely available. With today’s increasing cost of living this may be an incredibly attractive option for the majority who cannot afford an upfront payment on such luxury options as cars. This week, we have decided to follow up on this, with a view from the other side of the coin.

Whilst PCP Finance may seem like the ideal option, with its low deposit, low but long term repayments and the possibility of starting all over again with a new model at the end of your payment term. As we have recently discussed, these financing plans have become increasingly popular and more widely available in recent months, but while they are an attractive option, they are also unregulated and as recent reports suggest, may be heading into dangerous territory.

New research conducted recently by the Central bank seems to suggest that the model of PCP Financing may begin to create a finance bubble due to the wildly increasing popularity of this model over other financing options and cash purchase. It is estimated that at present, one in three cars is purchased via a PCP and we have certainly seen a larger amount of new cars drive off the forecourt since this option came about.

The issue arises once we consider the level of loans outstanding via these financing plans. In Ireland, it has been estimated that there is currently €1.5billion outstanding debt in car finance alone, an eye watering figure that makes a car purchasing bubble loom ever closer. It has recently been suggested that this industry needs to be regulated in order to prevent issues going forward, as we are already seeing issues arise in the housing market which we do not want to see repeated across the board. At present, PCP is the biggest growth market in the country (not including mortgage credit) and this creates an atmosphere of nervousness for an unregulated industry, particularly as the industry is not covered under the Central Bank’s Consumer Protection Code.

These are of course just the concerns which arise from our little island having been in the position of economic crisis in the past. We will always have a level of wary concern for anything that seems too good to be true. As always our advice remains to do your research before agreeing to any financing options, and ensure that the deal you get is the best deal for you and one which you can afford long term to avoid any issues.

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

 

The Wheels on the Company Car Go…

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In our ever shifting modern landscape it can be hard to stay consistently abreast of small changes to rules and regulations and amendments to costs we don’t often consider (is anyone else lamenting the increasing cost of stamps and feeling like their grandmother when admitting it? No? Just us?) Occasionally, changes to important parts of our everyday lives can be implemented almost without our knowledge as they may not be widely publicised or may simply fall beneath the din of the other news of the day. Here at EcovisDCA we want to ensure that you are always aware of changes which may affect your pocket whether positively or negatively, and today we want to inform you about a change to motor travel rates for Civil Servants which may have escaped your notice as these changes have not been massively advertised.

The motor travel rates for Civil Servants apply where employees use their private vehicles for business purposes. In these cases the costs can be reimbursed through the flat-rate mileage allowances which have been amended per a general review as of April 1st 2017.

  • Key changes to previous arrangements include:
  • Distance bands increased from 2 to 4, which may benefit workers who do a great deal of driving for business.
  • Lower recoupment rate for the first 1,500km.
  • Increased recoupment rate from 1,500 to 5,000km which again may benefit those who do a lot of business driving.
  • More beneficial compensation rates for cars with lower engine sizes and emissions, benefitting those workers already conscious of their carbon footprint and encouraging others to be more aware.
  • Changes to the mileage formula apply and rates will be locked in for a period of 3 years.

Should you require further information or guidance on how this may affect you and your business or any other business or financial issues, please don’t hesitate to contact us.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY