Irish Car Debt Rises: PCP Loans Hit €2.17 Billion, Hire-Purchase €3.2 Billion
Irish consumers are taking on more debt for cars, with PCP loans reaching €2.17 billion and hire-purchase loans €3.2 billion. This trend is driven by rising car prices and the appeal of lower monthly payments offered by PCPs. However, consumer protection agencies warn about the risks of PCPs, including large final payments and inflexibility, while environmental concerns about frequent car manufacturing are also emerging.
Irish consumers are increasingly using debt to purchase cars, with Central Bank figures showing a rise in outstanding loans from hire-purchase agreements and personal contract plans (PCPs).
PCP loans increased by 20% to €2.17 billion between January 2024 and June 2025, while hire-purchase loans, predominantly for cars, rose 8% to €3.2 billion in the same period. PCPs, available for nearly 20 years, offer lower monthly repayments but require an upfront deposit and a large final «balloon payment» to own the car. Many drivers opt to return the car and start a new PCP, effectively leasing it, according to Paddy Comyn of DoneDeal Cars.
Rising car prices, particularly for hybrids and electric vehicles, contribute to increased borrowing. New car sales surged 30% to over 120,000 units in 2015, partly due to increased finance availability, and have remained stable since. PCPs are popular for their lower monthly costs and sometimes 0% APR, which can be more attractive than traditional bank loans.
However, some manufacturers are pushing consumers back to hire-purchase due to the uncertain future value of electric vehicles. With PCPs, the lender bears the risk if the car's value plummets. The Competition and Consumer Protection Commission (CCPC) warns that PCPs are «one of the least flexible forms of credit,» highlighting risks like mileage limits, condition clauses, and the substantial final balloon payment. The CCPC advises consumers to plan for this payment and be aware of negative equity.
While overdue PCP loans are low at 0.06%, hire-purchase overdue loans are 0.8%. The CCPC also reminds consumers of the «half rule,» allowing them to return a car bought with PCP or hire-purchase after paying half the price, without further obligation. They caution against signing voluntary surrender forms, which can be more costly. The environmental impact of frequent car manufacturing due to PCP rollovers is also a concern, with the EPA funding research into consumption-based emissions.