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What is a PCP loan?

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 PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Help To Buy Scheme for First Time Home Buyers

A Helping Hand onto an Elusive Ladder

We have spoken at length in the past about the multitudinous issues facing prospective first time home buyers in our current climate in Ireland. From saving deposits amidst paying skyrocketing rents, to being effectively written out of the narrative due to stricter borrowing rules and increasing home prices across the country. As a result it was recently reported that owning their own home has become more of a distant dream for many, rather than a feasible option for the future, with many saying that it would take them many years to save a deposit and even then they may not be able to afford the costs on current salaries. Rather than sticking with the unpopular opinions of recent months, of giving up avocado toast and living on your parents couch while asking for a loan of €30,000 we decided that today we would take a look at the more positive side of being a first time or prospective first time buyer. Believe it or not there are some options available to you out there, and we hope that access to these may make your dream more of a reality.

We all know about the all-important 10% deposit required to get your foot onto the first rung of the property ladder, as well as the additional funds required on top of these for legal costs etc. As mortgage relief is no longer an option, this all adds up quickly and when paired with every increasing house prices which don’t seem inclined to start falling any time soon, can lead to a number of hopeful buyers who simply cannot afford the costs. Whilst seeking a loan from a local authority may be an option for some, there is still the matter of a deposit to be raised and countless costs to be taken into account. The recent installation of the Help to Buy (HTB) Initiative may be a saving grace for some buyers, and has already helped many families find their new homes.

Essentially, the Help to Buy (HTB) scheme is an income tax rebate scheme now in place in order to help first time buyers buy new or self builds, and does not apply to second hand dwellings. This scheme allows buyers a rebate of their income tax paid over the previous 4 years as well as a refund of DIRT and will run until the end of 2019.

Naturally there are a number of stipulations on this as follows:

  • You must take out a mortgage of at least 70% of the cost of the property.
  • Applies only to properties costing €500,000 or less.
  • Applies only to new builds.
  • You must occupy the property for 5 years or more from the date it is habitable.
  • You must be fully tax compliant for the 4 years prior to your claim, complete a tax return form (Form 12) and pay any outstanding taxes that may be owed.
  • PAYE employees can apply using Revenue’s My Account system whilst self-assessed employees will apply through Revenue’s online system (ROS).

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 PARTNERSDECLAN DOLAN & EAMONN GARVEY

Should You Fix Your Mortgage Rate?

Keeping that Roof above Water

We have spoken recently about the struggles facing prospective homeowners and their long term range of effects on the market at large. Something we haven’t touched upon thus far is the struggles facing those who already have a foothold on the property ladder, existing homeowners currently holding a mortgage. Whilst this may seem like the ideal status for those struggling to buy their first home, there are of course issues which apply here that may not be considered.

It has been reported recently that homeowners could see a marked increase on their mortgage bills in years to come. This is due to the fact that European interest rates are set to begin to rise from 2019 to 2020 as the European Central Bank is expected to increase its main refinancing rate. Depending on the rate of mortgage and the loan size, this could see mortgage payments possibly increase by a couple of hundred euro.

These European interest rates have been at a stable low for many years, with many homeowners likely to not have experienced excessive rises in their time. In the atmosphere of uncertainty as we wait for the confirmation of these changing rates, what action can be taken either on new or old mortgages to limit the amount of damage to your pocket?

Fix it Up:       

A fixed rate mortgage can often seem like the most expensive option on the surface when choosing your mortgage, but can be quite the saving grace at times like these when rates are in flux as this option fixes your mortgage rate at one price for a certain period of time.

Whether choosing your mortgage or switching, a fixed rate might be the perfect option during these uncertain times and may offer you a slight buffer.

Pay, Pay, Pay:

Although it can be tempting when funds are low to take out further loans to replenish emptying pockets, this is likely to be damaging in the long run as your repayments begin to stack up. Instead of this, it is advisable to keep your mortgage payments up to date, and even overpay whenever possible in order to reduce your overall term.

In addition to this, clearing off any other debts you may have from loans or credit cards is advisable as the goal is to reduce your monthly repayments to as few as possible, with your mortgage being the ultimate priority. This will avoid you paying higher interest rates on other loans as well as your mortgage.

Should you be in a position of struggle when these rises come into play, be sure to discuss with your provider and solicitor options for restructuring your mortgage in order to avoid any long term 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 PARTNERSDECLAN DOLAN & EAMONN GARVEY

Finance options in wake of Brexit

Here at EcovisDCA our focus is always firmly on making life and business simpler for our clients and friends. We want you and your business to be a success just as you do and that all important work: life balance can sometimes only be achieved through the acceptance of a helping hand when in need. We have often spoken about funding options and opportunities available in order to either get your business off the ground or plan for an expansion and today we will be discussing a financing option with a twist: Growcap Finance.

Brexit is a word that has faded away into the middle distance somewhat in recent months after the term exploded into our general usage not too long ago. With Britain’s planned exit from the European Union still very much on the cards there is still some cause for concern for Irish businesses who may rely on foreign export or have had dealings with the UK. When engaging in global trade, one of the downsides for many business is the inevitable dealings with customs and VAT. Whilst many people sourcing goods may now look as far afield as China due to a newly improved quality of product, and lower pricing, there is always the issue of customs and VAT obligations when dealing outside the EU. It remains to be seen if Ireland will now face these issues in the future when dealing with goods from the UK once it is outside of the EU.

As a business owner it is your responsibility to ensure that any goods you have sourced from outside of the European Union get safely through the customs process and that the appropriate VAT is paid in full on entry. This can be quite a time consuming and painful process for business owners who have other issues to contend with as well as being an additional drain on vital cash flow to the business as VAT can add an extra 20 to 23% on to your existing payment. This is an issue especially for SMEs who may rely heavily on every penny of working capital available to them.

This is where Growcap Finance come in and can be of benefit to many businesses. Growcap Finance can assist you in funding your products sourced outside of the European Union, taking that additional headache away from you and freeing up some capital for your business. At present, Growcap can fund everything from the purchase price of the product to the logistics and VAT, while also ensuring that the product lives up to expectations before issuing payment. This may be an excellent option for businesses feeling the stress and headaches of dealing with VAT payments and shipments from outside the EU. It may also be a viable course of action in the event of a sudden Brexit.

Should you require any help, advice or guidance on any financial or business matters, please don’t hesitate to get in touch with us here at EcovisDCA, where we will be happy to support you in getting your business to the next level.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Links that make the Chain

Funding is something which is often at the forefront of every business owners mind. Whether yours is a large fully functioning company in need of some modernisation or upgrading or you are just starting out as an SME (Small or Medium Enterprise) and you require that extra financial push to get your fledgling business to leave the nest, finance is an essential part of business life. We would all like to think of ourselves as fully independent and to think of our business as being our baby, belonging only to us, but no company is an island and no company can exist and thrive in a vacuum, particularly during difficult financial times so seeking finance is often an ideal way to give your company an essential push to either get off the ground, or gain new ground for an existing company.

Recently, we have focused primarily on SMEs and we have discussed the newly widening availability of funding for these companies during Ireland’s continued recovery. Where in the past funding was a commodity in scarce supply, now there are more options available to choose from. This is welcome news for all business owners as gaining access to credit may be the ideal method to prevent your business from stagnating. Currently, many SMEs still struggle to gain finance and fail to realise the true potential of their business.

One new method of gaining funding comes from Linked Finance who pride themselves on connecting hard-working business owners with thousands of individual lenders, ordinary Irish people willing to lend to deserving companies who may otherwise not have the option of progressing. Linked Finance are happy to snip that tangle of red tape and reinvigorate P2P (Peer to Peer) lending to, in their own words

“Bring business lending back to basics; real people with savings lending to great local businesses at attractive interest rates.”

If bypassing the banks and gaining funding for your business through P2P lending sounds like something you could benefit then Linked Finance might be your first port of call. Providing approval for SME loans from €5000 to €250000 in just 8 hours, the process couldn’t be simpler. Your loan request will be auctioned to lenders and once approved by you, your funding can be processed within 48hours.

The requirements for Linked Finance are as follows:

  • Your business must be trading for 2 years
  • Have turnover in excess of €100,000
  • Positive cash flow
  • No history of missing payments
  • No outstanding judgements

Visit www.linkedfinance.com for more information.

Should you require any further guidance please do not hesitate to get in touch with us here at EcovisDCA where we will be happy to assist you in starting 2018 on the right foot.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

PAYE Changes

Unfogging the Small Print

The new year period is a time of change each year and whilst so often many of our ‘New Year, New Me’ promises may not stick, there are certain changes in the financial field that are occurring this year that it would be easy to miss. As always, we want to keep you as fully informed as possible.

Until recently, some tax assessment was on what is known as the “earnings basis” and was calculated regardless of whether or not the income was paid to the individual during that assessment year. The PAYE system operates on what is known as the “receipts basis” as in the employer deducting tax from the income at the time of payment to employee. New changes to the Finance Act of 2017 will bring order to confusion and bring all in line with the PAYE system of operations, meaning that all assessments will be moved to the “receipts basis” of assessment.

Changes have been made to the PAYE (Pay As You Earn) system from January 1st 2018 that not everyone may be aware of. As of the beginning of this year, the statutory basis of assessment for most employment income is the actual amount of income received, thus placing the basis of assessment for Schedule E income in line with the operation of PAYE.

Further changes will be in effect from January 1st 2019 including a further modernisation of the PAYE system. From next year, employers will be required to report relevant payroll data to Revenue no later than the date of payment to the employee. There will then be an automatic end of year review carried out on all PAYE customers for the year 2019 and subsequent years.

There are a number of exclusions to the receipts basis who will not see this change, proprietary directors will not be required to make this move, and where there is a PAYE exclusion order in place, no changes will occur. The changes will be required of all other employers and employees.

It is hoped that these moves will have a minimal or non-existent effect on employers, who will still be required to make the deductions when payments are made using the PAYE system. Similarly, this move should also not affect employee wages. As we have discussed in the past, Revenue are eager to clamp down on outstanding tax issues, and are now making the positive move to bring everything in line on a statutory basis and bring parity where there was confusion.

For further information, we advise reading through the recently published Tax and Duty Manual Part 05-01-08 found at the Revenue website at your leisure.

Should you require any further guidance please do not hesitate to get in touch with us here at EcovisDCA where we will be happy to assist you in starting 2018 on the right foot.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Affordable Mortgage Scheme

The First Time Ever you saw your Own Home

We have spoken many times in the past about the ongoing increase in house prices and the ways that these rises combined with stricter mortgage rules have begun to effectively squeeze many first time buyers out of the market. Similarly, the rapid increase of rental costs has dampened many prospective buyers hopes as these costs make it increasingly difficult to get a deposit together. In recent years it has become very difficult to be a hopeful first time buyer, but it seems that there might be a blink of hope on the horizon for prospective buyers on lower incomes.

It was announced this week that the Government has set aside €200m to fund a new scheme entitled the Affordable Mortgage Scheme to offer relief to first time buyers on lower incomes. The scheme will see local councils offer mortgages at lower interest rates than the majority of lending banks and crucially, will be fixed for the duration of the loan. This is said to save buyers up to €10,000 over the duration of their mortgage. The scheme is set for a relatively immediate start, with a start date of February 1st and is sure to offer some hope for lower income buyers.

Interestingly, the scheme’s loan can be used for second –hand as well as new properties, and to build your own home. This is a departure from all other recent schemes which were available only to new homes, and did not apply to building your own home. Previously, there was a local authority mortgage scheme in place for those who had been previously turned down, but this was offered at a variable interest rate and did not offer the long term savings that the Affordable Mortgage Scheme promises.

Under this scheme first time buyers will have access to loans of up to €288,000 at a fixed interest rate of 2.25% for 30 years. This offers first time buyers the security of knowing their repayments for the duration of their mortgage. Minister for Housing Eoghan Murphy has said of the scheme:

“What this means essentially is that a person or couple can purchase a home, while ensuring that they can still keep their monthly repayments to one-third of their net disposable income – with no risk of their mortgage rate rising and so no threat to their ability to afford repayments, giving them certainty and security.”

The loan will be subject to the same lending rules as the banks, in that buyers will require a 10% deposit on the property. Buyers will need to have evidence of being turned down by two lenders and there is also an income cap of €50,000 per year for single buyers and €75,000 per year for joint buyers. There will also be a limit on the overall price of the home as in the Greater Dublin, Cork and Galway areas the maximum market value of the property cannot exceed €320,000 whilst elsewhere in the country this limit will be €250,000.

Should you require any guidance on any financial or business matters, please do not hesitate to contact us here at EcovisDCA, where we will be happy to assist.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Remembering the Importance of Saving

Don’t Break the (Piggy) Bank

As January gets into full swing and we all settle back into the daily grind of working life, some of our New Year resolutions may be left behind or pushed aside in favour of those resolutions promising more longevity or better return of investment. High on people’s lists of resolutions is often the vow to save more money in the coming year. Whilst the increasing cost of living might make this quite a difficult task, it is often one of the most rewarding resolutions as the results can be clear to see. We have spoken recently about some of our top tips for saving in the New Year, and it seems like you will not be alone in your savings endeavours.

The Bank of Ireland Savings and Investment Index, published on 15th January shows that over half of Irish consumers were regularly saving during the December period. December is of course a rather difficult time for savings, and this sentiment was also reflected in the findings. Tom McCabe, global investment strategist with Bank of Ireland Investment Markets was quoted as saying:

“”Irish sentiment towards savings and investments eased in December mainly as a result of a weaker outlook for the savings and investment environment. This may be temporary given recent trends in the index but could also be an early indication that savers are looking for better returns on their money and are willing to consider alternatives to their savings account.”

This shows that although Irish consumers are continuing to save, there is a lingering fear that savings are no longer generating enough of a return in their traditional savings methods. This may see a shift in the Irish market towards investments rather than traditional saving. The Index found that 34% of Irish consumers also invested regularly during the month of December, much like the savings findings this could be either temporary or indicative of a new trend in Irish savings.

Hinting towards this being a possible new Irish trend is the fact that investments were more prevalent in the younger generation with 39% of under 50s regularly investing whilst only 26% of over 50s were found to be investing during the same period. Perhaps unsurprisingly, investment numbers were higher in November than December, which is to be expected as December is often a month in which consumers have less disposable income.

These findings also found that the Irish population have a strong preference towards saving should they encounter any windfall gain, but also a new move towards considering investments with windfall amounts.

Should you require any help or guidance on any savings, investments, business or personal finance matters please don’t hesitate to get in touch with us here at EcovisDCA.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Bad Investment Makes no Cents.

We have spoken at length in the past about various forms of funding and investment in business and the importance of the availability of funding for all businesses in particular small and medium enterprises who may rely on outside funding. Something which is rarely touched upon is the importance of choosing the right investor for your business, and one which can go the distance alongside your company. Failure to choose a sustainable investor can cause serious problems for both your business and the investor.

This issue is especially important this week as it was revealed that many Irish investment firms have been found to have failed to meet the required standard of investors by the Central Bank of Ireland. The bank recently conducted a review of suitability requirements for investment firms and found many companies to be sorely lacking, which is not encouraging news for business owners wishing to secure funding. Michael Hodson, Director of Asset Management has been quoted as saying of the findings:

“The review highlighted that firms need to improve the quality of information collected and how this information is utilised in the suitability process. With the introduction of higher suitability standards, the quality of the information collected is all the more significant.  Boards are reminded that they are responsible for implementing an appropriate governance framework that meets the suitability regulatory requirements and embeds a client-centric culture across the firm.  Investor protection is at the core of the Central Bank’s mandate.” 

The review found that many firms were unable to demonstrate that the required suitability policies and procedures were implicated whilst also pointing out that many application forms were incomplete. Some firms were also found to be reliant on self-assessment alone and had little to no tools in place for assessing suitability for investment, relying heavily on technology. In perhaps the most worrying finding, many companies were found to have nothing in place for dealing with potentially vulnerable clients and companies.

Thankfully, the Central Bank assure companies that in any areas that the findings may be damaging to consumers formal supervisory requirements have been implemented which should reduce risk greatly for prospective clients.

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

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Who’s going to Drive You Home?

During the economic downturn, there was a significant period of time in which seeing a brand new car straight off the forecourt could have been seen as a novelty. Oftentimes people looked out for brand new cars on the roads, just to take a look and see what new treats loomed on the horizon of hope. In more recent times however amidst Ireland’s continuing recovery it is becoming more and more common to see brand new cars on the roads, particularly since the licence plates are now split into two halves of the year and it is easier to distinguish the latest models. This might lead us to believe that there is more disposable income available to workers, but the reality may be quite different.

Personal Contract Purchase (PCP) finance has fast become one of the most popular methods of car financing available in Ireland. PCP is an increasingly popular method of car finance due to the low repayments offered. Utilising a perceived expected residual value at the end of the term to reduce monthly payments, it seems a much cheaper and easier option for many car buyers. Many dealers also offer the option to upgrade to a new car at the end of the term using the expected value left on the previous, making this a popular option for anyone hoping to upgrade on a regular basis without having to empty their pockets on the spot.

Recently, The Society of the Irish Motor Industry (SIMI) has commissioned a report on PCP finance to be completed by Grant Thornton. In the US defaulting on these types of loans has spiked in recent years and there is a fear that falling into the same traps could have serious negative results for the Irish car market. This fear is expounded by the fact that PCP finance is done through car dealers and not through the usual financial avenues. There are no specific regulations for PCP finance in Ireland and this increases the worry around this product, and it is often left in the hands of either dealer or borrower to ensure that all parties are fully informed. Naturally, seeing a brand new car at a low monthly cost can often cloud judgement, sometimes leaving buyers in more debt than the car was worth. This lack of regulation is troubling for both buyers and dealers as Fianna Fáil finance spokesman Michael McGrath recently stated:

“As of now, nobody in the CCPC [the Competition and Consumer Protection Commission], Central Bank or Department of Finance knows how many PCPs exist and, crucially, how many customers are defaulting.”

As with all industries there is the fear that a lack of regulations may lead to a serious slip in standards. PCP is obviously an attractive option for those wishing to stay abreast of the latest models and stay loyal to one manufacturer, but with so much uncertainty plaguing the ideologies of this finance option there can be no guarantees. Our advice is to ensure that you have all of the information available and if in doubt get a second opinion on the deal you are being offered to ensure that the payments are feasible and you will not be left struggling.

Should you require any help, guidance or assistance on any business or financial matters please don’t hesitate to contact us here at EcovisDCA where we will be delighted to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY