SALES of new cars are up 12% on last year, according to the Society of the Irish Motor Industry (SIMI). Mind you, last year was the worst on record for car sales. There are some signs that car loans are getting a little easier to come by but banks are still not eager to fund motor deals.

Fewer dealerships
Around 100 dealership shut down last year as the motor market went into freefall. Last year just 57,000 new cars were sold. This is down from 186,000 in 2007. It is expected that between 65,000 and 70,000 cares will be sold this year.

Banks are not lending
Lack of finance was one of the main reasons people did not buy cars. Halifax/Bank of Scotland, Lombard Finance, Friends First and GE Money have all pulled out of the car finance market in the last year.
AIB, Bank of Ireland and Permanent TSB are the main banks left in the car finance market. But Volkswagen Bank, Ford Finance, Toyota Finance and Renault Finance have stepped in to try fill the breach. Some of these rates are very competitive and are as low as 5.9%.

Credit unions are cheaper
But some of the cheapest deals are from credit unions. The average credit union loan rate is 7% compared with an average of 11% for five of the leading banks, a survey carried out by the Irish Independent and the Irish League of Credit Unions has shown. Credit unions are reporting a surge in business coming to them from people who have been turned down for credit by the mainstream banks.
Almost a third of all car buyers secure a loan from their credit union, making it one of the most significant sources of motor lending. A survey of bank lending rates showed that for a €10,000 personal loan over five years the interest rate varies from 10.5% charged by Ulster Bank, to 11.47% for National Irish Bank’s variable personal loan.

Avoid hire purchase
Bank of Ireland is making anyone who needs to borrow more than €7,000 for a car take out a hire purchase agreement. With hire purchase you do not own the car until the last payment is made, you can have it repossessed if you miss payments and there are a range of fees and charges.

Scrappage deals
Some dealers are topping up the Government’s €1,500 scrappage offer with up to another €3,000.

TIP:
Check there is no money owed on a second-hand car before buying – telephone hire purchase information on 01-2600805.