The Sunday Independent looked at car financing offered by AIB, Bank of Ireland, Permanent TSB and Ulster Bank, as well as lease offers from some dealers. We`ve found that you normally pay by the nose when you buy it with a car loan – the interest rate on car credits can be more than twice as high as when buying a rental. Let`s say you borrow €30,000 over five years to buy the Land Rover you`ll need for your ruthless off-road driving. According to our investigation, the most expensive way to borrow this money is a car loan from the Bank of Ireland. A car loan of 30,000 euros over five years costs the Bank of Ireland 9,047 euros. Ulster Bank calculates €8,114 for its car loan, which has made its loan the second most expensive way to get €30,000, followed by AIB`s car loan, which costs €7,998. Like leasing, lease purchase agreements allow companies with inefficient working capital to use assets. It can also be more tax efficient than the standard credit, as payments are accounted for as expenses – although any savings are offset by tax benefits resulting from depreciation. The risk of holding the asset: in case of lease purchase, there is an option called “The Half-Rule”, which states that the user can return the asset and terminate the contract at any time by sending a written notification to the seller/financier. While in credit financing, the user of the asset must bear the overall risk of asset devaluation due to technological change. Choosing a private loan could mean that you can afford to update a better model at the same monthly cost as a more advantageous model when buying a rental. You can set the duration of your contract (up to 60 months with Admiral) and there is no mileage limit, installation fee or document transfer fee at the end of the contract – only fixed and predictable refunds. Do you want a stress-free, low-cost option that you`re happy to commit to for a few years? So go for a rent purchase.

The store normally requires you to make a deposit and sign an agreement. The agreement states that a lease purchase loan is granted for the item you are buying. The item will not be returned to you until you have paid the last instalment. However, if you buy a vehicle financed in whole or in part by an uninsured loan, it is your property and you can throw it away as you please. Such an unsecured loan may be described in the loan documents as “credit agreement governed by the Consumer Credit Act 1974” or “fixed-rate loan regulated by the Consumer Credit Act 1974”. The two are not an HP deal….