Why a PCP monthly payment looks so low
Because you are not paying for the whole car. A PCP splits the price into three parts: your deposit, the monthly payments, and one large final payment the lender guarantees to accept at the end. You only fund the gap between the price and that final figure — which is roughly the depreciation over the term — plus interest on everything you borrowed, including the part you have deferred. Lower monthly, same car, more interest overall. That trade is the entire product.
The GMFV is not yours to set
The lender sets it from the model, the term and your mileage limit. Use the figure on your quote.
Mileage is priced in
A higher allowance lowers the GMFV and raises the monthly — but beats an excess charge you did not plan for.
Compare on cost of credit
The monthly figure is the marketing number. The total you hand over is the real one.
Your right to hand the car back
A PCP is a hire purchase agreement in Irish law, so section 63 of the Consumer Credit Act 1995 applies to it. You can end the agreement early by giving written notice and returning the car, and your liability is capped at half the total hire-purchase price. Paid more than half already? You hand back the keys and owe nothing further, apart from arrears and damage beyond normal wear. Paid less? You pay the shortfall up to the halfway point. You can use it even if you are behind on payments. The CCPC is explicit that you should not sign a "voluntary surrender" form instead — that leaves you liable for the whole debt once the car is sold.
The mechanics, a worked example and the one-third repossession rule are in our guide to how hire purchase and the half rule work in Ireland.
Before you sign
Get an approval in principle before you fall for a car — our guide on getting approved for car finance walks the steps in order, and the documents checklist covers what every lender asks for. Not sure PCP is the right product? PCP vs HP vs a personal loan compares all three on total cost. And if you are still setting a budget, work backwards from the monthly figure with the affordability calculator.
Frequently asked questions
How is a PCP monthly payment calculated in Ireland?+
A PCP defers a large final payment — the Guaranteed Minimum Future Value, or GMFV — to the end of the agreement, and you pay interest on it for the whole term. So the monthly figure covers the depreciation between the car price and the GMFV, plus interest on everything you have borrowed. That is why a PCP monthly payment is lower than hire purchase on the same car over the same term, and why the total cost of credit can still be higher.
What is a GMFV or balloon payment?+
The Guaranteed Minimum Future Value is the lender's guaranteed buy-back figure for your car at the end of the term. It is set by the lender, not by you, and depends on the model, the length of the agreement and the annual mileage limit you agree. A typical PCP sets it somewhere around a third to a half of the car's price on a three-year term. Use the real figure from your quote — the slider on this page is there to show you how much it moves the monthly payment.
What are my options at the end of a PCP?+
Three. Pay the GMFV and own the car outright. Trade it in — if it is worth more than the GMFV, that difference is equity you can put toward the next car, which is how the PCP cycle keeps going. Or hand the car back and walk away, subject to the mileage limit and fair wear and tear. If the car is worth less than the GMFV, handing it back is the protection you paid for.
Can I hand a PCP car back early in Ireland?+
Yes. A PCP is a hire purchase agreement, so section 63 of the Consumer Credit Act 1995 applies: you can end it early by giving written notice and returning the car, and your liability is capped at half the total hire-purchase price. If you have already paid half, you owe nothing further apart from arrears and any damage beyond normal wear. If you have paid less, you pay the difference up to the halfway point. The CCPC warns against signing a "voluntary surrender" form instead, because that leaves you liable for the whole debt after the car is sold.
What happens if I go over the mileage limit?+
Every PCP agreement sets an annual kilometre allowance, and going over it triggers an excess-mileage charge at the end. The rate is written into your agreement and varies by lender and model, so check the figure in your own contract before you sign rather than assuming a market average. If your real mileage is higher than the allowance you are being quoted, ask for a higher limit up front — it lowers the GMFV and raises the monthly payment, but it is cheaper than paying the excess charge later.
Is PCP or hire purchase better?+
PCP gives the lowest monthly payment and the most flexibility at the end, which suits people who change car every three years. Hire purchase costs more each month but you own the car at the end with no balloon to find, which usually works out cheaper if you keep cars for a long time. A personal loan is different again: you own the car from day one and can sell it whenever you like. Compare all three on total cost of credit rather than the monthly figure.
Disclaimer: This is an estimate to help you compare offers, not a quotation and not financial advice. Lenders add documentation and purchase fees and quote an APR that includes them, so your agreement will differ. Always compare the total cost of credit on the official quotation.
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