Understanding Car Finance

Recent research has revealed that more than 27 per cent of consumers in Ireland who have a car loan have no idea what interest rate they are paying on their motoring finance.

The research was commissioned for Volkswagen Ireland last month, who questioned consumers on how they feel about motoring finance.

More than one in five consumers surveyed pay between 4 per cent and 5 per cent, more than one in seven pay between 6 per cent and 7 per cent and almost one in eight pay between 2 per cent and 3 per cent.

When it comes to access to competitive interest rates, 18 – 24 year olds are the savviest shoppers with 64 per cent paying less than 5 per cent interest.

Understanding Car Finance

The survey also found that:

  • 25 to 44 year olds are 20 per cent most likely to have a car loan
  • Almost 31 per cent would consider upgrading to a better-equipped car if it meant reducing running costs
  • One in 12 motorists borrows more than €20,000
  • Car financing is most common for those in the 25 to 54 age bracket
  • Just 15 per cent of those aged 55 or over borrow to finance their car
  • 53 per cent of motorists say they do know their total monthly and annual motoring costs

Almost every car dealer will offer you car finance – it's a big source of profit for many of them – and the choice can be confusing. The real key is to understand which one best suits your finances.

Unsecured loan:

  • Pros: Not secured on the car, so they can’t take it if you go into arrears on payments
  • Cons: Loans can be hard to get as many lenders have very tight credit scoring criteria

Credit card:

  • Pros: Added Section 75 protection, done right you can borrow for free
  • Cons: Getting a high enough credit limit, dealer might not accept credit cards


  • Pros: You'll own the car once you’ve made all the payments; might get deposit contribution from manufacturer
  • Cons: Higher monthly payments than other methods of buying; the finance company can repossess the car


  • Pros: Cheaper monthly payments
  • Cons: You don’t own the car unless you make a one-off ("balloon") payment; it's generally more expensive than HP if you want to own the car


  • Pros: Cheap option; maintenance of the car often included
  • Cons: You can never own the car; you need to keep to an agreed mileage limit; you have to pay a deposit

The most important thing to check before agreeing to any loan is the total amount you will pay over the loan period.

Alex Todd Brand Manager at BoxyMo commented "Whatever type of finance you’re offered, always shop around and haggle hard."

About BoxyMo

BoxyMo.ie is Ireland's first telematics dedicated insurer. This new concept is simple, we fit a telematics device, known as “BoxyMo” to your car. BoxyMo will then tell us how you drive and how far you drive. In addition to this “BoxyMo” will show you each month how to improve your driving and reduce your insurance costs. read more...

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