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The temptation of the New Car

Smell….

another 30% increase in sales from
last year’s figures.
So, what are the factors leading to
this rebound in car sales? There are a
few to choose from:


As the days get shorter and the
countdown to Christmas festivities
begins, many people’s thoughts will
also turn to January and the
possibility of having a shiny new car
with a 161 registration plate sitting in
the driveway.
If industry estimates are accurate,
over 125,000 151/152 cars will have
been bought this year and the
estimate is that 140,000 161/162
cars will be bought next year. This is
a remarkable turnaround for an
industry that has faced significant
challenges since the start of the
Financial Crisis.
While 2009 was the worst year for
car sales in this period with sales of
only 57,118 units, 2012 and 2013
were also poor years with only
79,574 and 74,364 units sold
respectively. These figures were a
reversal of the uptick in sales of just
under 90,000 units achieved in 2010
and 2011.
However, 2014 saw a jump of 30% in
sales to 96,280 units and if the
estimates of 125,000 sales for 2015
are achieved, dealers will see

The recovering economy.
The introduction of the 2
registration periods during the
year
The increase in new models on
sale from all the car marques
Availability of finance to
purchase these new cars

While undoubtedly, the upturn in the
economy is having a positive effect
on people, the availability of Finance
to fund these new car purchases is
probably the most significant factor
of all.
One finance option which is certainly
increasing in popularity is the PCP
contract that all car makers are now
offering in some shape or form.
Indeed, it is impossible to open a
newspaper or magazine these days
without seeing some car ad or other
dangling the prospect of a new car in
front of the reader for “a low monthly
payment of €xxx per month”.
Of course, upon reading the fine
print, the model pictured is never the
model that the low monthly payment
applies to and to ensure that you
receive the low repayment
advertised, requires a significant
deposit from you the punter.
However, this still hasn’t stopped
significant numbers of car
“purchasers” from using this method

Melrose House, Dundrum Road, Dundrum, Dublin 14.
Tel +353 (01) 2988266 Fax +353 (01) 2980631 Email info@jdmfinancial.ie
www.jdmfinancial.ie
DIRECTORS John D Murphy, Christine O’Shaughnessy, Helen Murphy
Registered in Ireland No. 481162. Registered Office: Melrose House, Dundrum Road, Dundrum, Dublin 14.
JDM Financial Services T/A JDM Wealth Management T/A JDM Financial Services T/A JDM Life & Pensions is
regulated by the Central Bank of Ireland.

Registered Office: Melrose House. there was still a chunky sum to be financed. The straight financing option required a significant monthly payment. Dundrum Road. if the condition of the car is worse than would be expected. The first thing that that stood out was the differential in the monthly repayments. While every car will be subject to normal wear and tear. You also have to use the main dealer for this service. Dublin 14. Christine O’Shaughnessy. you end up in debt in perpetuity. In other words. Finally. Dundrum. while still high. We dealt with a very efficient and knowledgeable salesman in the dealership who appeared genuinely interested in ensuring that if we did proceed with a purchase. Helen Murphy Registered in Ireland No. Tel +353 (01) 2988266 Fax +353 (01) 2980631 Email info@jdmfinancial. Dundrum Road. Dublin 14. purchasing a new car for my wife – her car is 10 years old in January. You have to ensure that the car is serviced according to the set maintenance schedule as per the vehicle manual. perhaps the biggest issue that you need to take into consideration before signing up for a PCP contract is that you may end up in continuous debt without once ever owning the car that you are driving. However. We decided to take a look at both the straight financing option and the PCP option to compare the costs. was over €100 less per month and obviously was more attractive from an affordability perspective. JDM Financial Services T/A JDM Wealth Management T/A JDM Financial Services T/A JDM Life & Pensions is regulated by the Central Bank of Ireland. This is to help ensure that you achieve the Guaranteed Minimum Value when the contract expires. Firstly. The PCP. Including the couple of extras that we were happy with and allowing for a trade in for my wife’s car. I visited a local garage in the last couple of weeks to enquire about While one half of my brain did the mental arithmetic trying to work out Melrose House. The PCP contract also offered a 4 year term which again helped with the monthly affordability.ie www. then this will affect the Guaranteed Minimum Value. While there were upgrades recommended and a little bit of the “this offer has only been launched today and you’re getting in early on the deal” sales speak. the make and model we chose was appropriate for our circumstances. you have to agree to restrict your annual mileage to a certain level. any dents or scrapes on the car that you may be prepared to live with will also be taken into consideration when the plan reaches its expiration date. Once we had gone through the sales pitch. the sales person allowed the car to speak for itself.to fund their “purchases” even when you consider the restrictions that these contracts impose on you. .ie DIRECTORS John D Murphy. Dundrum. even over 5 years. 481162.jdmfinancial. in general terms. Let me explain what I mean. Additional mileage above this amount will incur usage penalties for every kilometre above this agreed figure. we then moved on to pricing.

JDM Financial Services T/A JDM Wealth Management T/A JDM Financial Services T/A JDM Life & Pensions is regulated by the Central Bank of Ireland. Dundrum Road.ie DIRECTORS John D Murphy.752 in immediate debt.752. 481162.752 plus deposit we paid) Stump up the guaranteed future value to own the car outright (which would mean either financing that amount in 4 years or saving the money in the meantime) Trade in the car for a 2020 model with a new PCP contract and start the whole process again It is the 3rd option that the car manufacturers hope you will choose as it means a lift in new car sales at that time. Helen Murphy Registered in Ireland No. Dundrum Road. there was a tiny voice in the back of my head questioning the whole proposition.how the payment fitted into our overall monthly budget and the other half was filled with new car smells and pictures of the car sitting in the driveway. We decided not to proceed with the purchase for a couple of reasons:   The PCP payment was outside our budget Taking on €22. This may mean that you are not able to avail of the trade up to a new car when the PCP contract expires thus leaving you in the situation that you have to return the car and receive no cash back You could end up in an ongoing cycle of debt I will finish this article with a couple of statistics from the American Car market which relate to Q1 2015 and which echo the points I have made in this article:   The average loan term for new cars is now 67 months – a record Loans with terms of 74 to 84 months made up 30% of all Melrose House. At that stage. . leaving aside the €22.ie www. Dublin 14. Therefore.752 in debt with nothing to show for it didn’t sit well However. Tel +353 (01) 2988266 Fax +353 (01) 2980631 Email info@jdmfinancial. Dundrum. What this voice was basically saying was the total payments that we would make over the next 4 years would be €22. it was the potential multiples of this debt that we could end up paying if we fell into the cycle of endless PCP renewals. Dublin 14. Dundrum. it’s the total amount that you will repay over the term of not only this contract but future contracts as well The terms on offer with future PCP contracts may not be as attractive as the contract you are on.jdmfinancial. They are there as a way of helping car manufacturers sell more stock It’s not the monthly repayment that you need to consider. Registered Office: Melrose House. Christine O’Shaughnessy. we would have 3 choices:    Return the car (thus effectively losing the €22. if you are in the market for a new car at the moment you need to carefully consider the following points:     PCP contracts were not introduced for the benefit of the person buying the car.

Therefore. Specifically. This report may not be reproduced (in whole or in part) altered. Past performance is not a reliable guide to future performance. Dublin 14. the information. timeliness or accuracy of the information provided or its transmission. Dundrum. make sure that it’s in your best interest to do so. suffered or incurred in consequence of any use of. Any person acting on the information contained in this report does so entirely at his or her own risk. Dundrum Road. completeness.a record Loans with terms of in excess of 60 months and the increased use of leasing arrangements are made for only one reason . Dundrum. the information contained in this report should not be taken as an offer or solicitation of investment advice or encourage the purchase or sale of any particular investment.to make it look like the monthly cost of the car is actually affordable and to convince you to buy the car.  new vehicle financing – a record Average amount financed was $28. JDM Financial Services gives no warranty or guarantee as to. Registered Office: Melrose House. Dundrum Road. Helen Murphy Registered in Ireland No. claims. Melrose House. or reliance upon. demands or expenses of any kind whatsoever. costs. JDM Financial Services T/A JDM Wealth Management T/A JDM Financial Services T/A JDM Life & Pensions is regulated by the Central Bank of Ireland.ie DIRECTORS John D Murphy. and does not accept responsibility for the correctness. Christine O’Shaughnessy. The information in this report has been obtained from sources which JDM Financial Services believes to be reliable and all reasonable efforts are made to present accurate information. Not all recommendations are necessarily suitable for all investors and JDM Financial Solutions recommends that specific advice should always be sought prior to investments based on the financial circumstances of the investor. whether direct or indirect. 481162. transmitted or made available to any other person without the prior written permission of JDM Financial Services.46% . damages. .711 – a record The percentage of all new vehicles financed with a leasing arrangement (PCP) was 31. Investors should be aware that forward looking statements and forecasts may not be realised.ie www. Tel +353 (01) 2988266 Fax +353 (01) 2980631 Email info@jdmfinancial. Nor shall JDM Financial Services or any of its employees be liable for any losses. The value of your investment may go down as well as up.jdmfinancial. Dublin 14. This report has been prepared by JDM Financial Services for information purposes only to assist investors to be more informed about their investment decisions and is not intended to and does not constitute personal recommendations nor provide the sole basis for any evaluation of the investment options discussed. before you sign up to an offer dangled in front of you by a car dealership.