I spotted my first 231 car registration at the weekend; it was on a shiny new range rover which is something far outside my budget, but while I’m still looking to replace my own modest motor later this year, I’ve already decided it definitely won’t have the 2023 registration plates.
I always buy second hand, because a car is a depreciating asset, often worth less than the loan that’s on it, and I hate debt for non-essential purchases.
Nevertheless, despite all the new bus and cycle lanes peppering our road-works at the moment, most of us still like to drive, even if we hope to do so less often. 105,252 new cars were registered last year, but the big news was that the number of electric cars was up 81.3pc on the previous year, albeit off a low base.
With 15,678 brought onto the roads in 2022, that’s phenomenally off our very ambitious targets of 945,000 in the national fleet in just 7 years’ time.
Imports were down almost 27pc, unsurprisingly, since they now represent poor value with a raft of extra charges and obligations on motorists buying from the UK.
So, if you’re in the market for new, or second hand, what should you know?
A huge number of new cars these days are sold via personal contract plans (PCPs), a form of hire purchase with a balloon payment at the end.
Typically sold over a three-year period, interest rates can look attractive (although they are increasing on these products as on all loans).
The reason is that the car remains the property of the bank until the final payment, so it’s a win-win for the finance house, given then can repossess the car if payments are missed.
The market is huge. By 2020 over €1.7bn was outstanding in PCP loans – a whopping 573pc increase over the six years cars have been marketed this way in Ireland
PCPs are now included on the Central Bank’s Credit Register, so your loans can be viewed by banks and credit card companies to inform future lending.
Even where you buy second hand, you can come a cropper with PCPs, because up to one-third of all vehicles under three years old still have outstanding finance when sold on to an, often unsuspecting, new owner.
Research from Cartell.ie has found that the newer the car, the more likely it was to have a loan registered against it. The difficulty is that as interest rates increase, people in arrears may attempt to sell the car they can no longer afford without telling the buyer it is financed.
These private sales (a garage should always inform customers if finance is outstanding on a car) may result in someone buying a motor in good faith, only to realise that in fact they don’t own it at all, as it’s still out to a bank. You should always check for outstanding PCP before committing your money.
You can do this via Cartell.ie or MotorCheck.ie for less than €50.
The panel shows the key differences between borrowing via PCP and using a regular loan from a bank.
Electric Vehicles
Changes to how EVs are charged mean it is now more expensive to buy, import or use. Despite ambitious climate change targets, many of the financial incentives toward owning an EV are being done away with while charging vehicles has become more expensive.
Brian Cooke, Simi director general, says: “Growth will be determined not only by supply but also Government support in extending the current EV grant support and supporting investment in the national charging infrastructure.
“We have a huge challenge in reaching emission reduction targets over the next decade and this can only be achieved with the right economic and taxation environment that support the sales of new low and zero emissions vehicles.”
Workers accepting an EV from their employer as a company car used to pay no BIK on it, however under new rules BIK is being phased in between now and 2026, meaning there will be little advantage to taking on an EV over a diesel or petrol car.
Buying Second Hand
If you need to borrow for it, maybe you’d be better off buying second hand. Most people do this by using a trade-in and personal loan. But interest rates are beginning to increase on all loans at the moment, so shopping around is important.
Personal loans are typically, though not always, on a fixed-rate, fixed-term basis, but many banks are happy enough to let you pay it off early if you can.
Although you can borrow for as little as 6.4pc (AIB, PTSB), there are restrictions. For 7.2pc to 7.5pc (An Post, BoI) you can borrow €15,000 over five years but if you borrow over €20,000 you’ll generally get a lower rate – just 5.9pc with An Post and 6.1pc with Avant Money.
With interest rates on a sharp upward trajectory I’m being asked by tracker mortgage holders whether they should opt for a fixed rate.
A couple of years ago I’d have scoffed, but these days there’s nobody left on the bus who doesn’t know how a tracker works and they see their repayments rising every few months. There’s more bad news to come, because the monetary policy measures are having little effect across Europe.
The answer really depends on the terms of your tracker.
According to MoneySherpa.ie, the average borrower could save €5,000 by switching, based on the last ECB rate rise and the lowest current fixed rate (although these are beginning to creep up now for new borrowers).
It claims up to €12,000 a year may be shaved off repayments by the end of 2023 if rate rises continue apace. But it does depend on your circumstances.
If, for instance, you have an early tracker, offering 0.5pc over the ECB rate, then you’re still getting good value. The cheapest fixed rate is 3.17pc.
However, if you were late to the game and ended up on 2pc or more over ECB, then you should seriously consider it. That’s because you’re currently paying more than you would do under a lower fixed rate.
Most switchers have excellent loan-to-value ratios and are attractive to lenders. In addition, since they bought, new lenders have entered the market and offer good rates for switchers compared to risky first time buyers. It might be worth a visit to a mortgage broker this month.
Rent credit is going unclaimed
IT’S not often people turn away free money, but that’s exactly what’s happening with the new rent credit, with seven in 10 tenants unaware they can claim back €1,000 in rent relief from Revenue.
With an estimated 600,000 tenants, that means the potential saving forms part of the €300m left unclaimed in 2022, on everything from medical expenses to uniform allowances, according to experts Taxback.com.
The credit, introduced on Budget Day, is available to tenants, or parents paying rent on behalf of a student child, and is worth up to €500 a year for single people, and up to €1,000 a year for married couples and civil partners from 2022 to 2025. It isn’t available for HAP tenants but each tenant in private accommodation can get it.
