Financing for adapted vehicle

ClaireH

Registered User
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1
I have been granted the primary medical cert, meaning a new/used car will be exempt from tax and VRT, taking into consideration the cost of the adaptions.
We've decided to go the new car route as it allows me to get the car specifically built to my needs with a lot of extra equipment that will make it easier and more comfortable to drive. I read the sticky on PCP versus credit union and HP so here's my questions:

1) What's the best way to finance this deal given my situation?
a) PCP
which offers the lowest interest rate but with a view to saving the extra required to cover the balloon payment in the credit union each month to buy the car outright at the end of the 3 years, thus over 3 years the cost of the interest on PCP is €500 versus €2,000 with the credit union's interest rates. Essentially using the PCP deal to get a lower rate of interest over 3 years.

b) Credit union:
will own the car but higher monthly repayments. This would be an issue if I fell ill and needed a month off work. On PCP the monthly repayment is more manageable and should I fall ill then we can catchup on our 'balloon/final PCP savings' the following month. I'm a very disciplined saver.

2) Does it really make financial sense to trade this car in ever 3 years as many people in receipt of this allowance do?
So if going for PCP the answer here is probably no. But say I go with the credit union loan, would it make sense to buy a new car every 3 years, offset by the value of the 3yo car. I would be happy buying a new car outright after PCP and keeping it for several years if I like it unless it makes more long-term sense to go this route.

There's so many variables I'm massively confused by it all.
 
Availing of PCP as you suggest is a great way to obtain a low interest rate for those first 3 years, some dealers will even offer 0% deals.

If value is a concern, buying a new car every 3 years is not a good way to go, as you will repeatedly be absorbing the worst of their depreciation.
 
2) Does it really make financial sense to trade this car in ever 3 years as many people in receipt of this allowance do?
It can make sense.

Roughly speaking, about 1/3 of the price of a new car is VRT and VAT. I'm using rounded figures here, but the principle applies if you plug in real numbers.

Say you buy a car for 30k, and get the 10k rebate. You've bought a car for 20k, that should be worth about 15k in 3 years time. So in 3 years, you can trade in your car and but a new one, availing of the rebate again, for an extra 5k. So it's costing you less to get a new car than the depreciation would have been on the old one. And you've the peace of mind of having a new car.
 
It can make sense.

Roughly speaking, about 1/3 of the price of a new car is VRT and VAT.

That's a good point!

You'd need to factor in the cost of the adaptions involved, and perhaps reversal of those to make the car appeal to a wider market.
 
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