Thousands left without repaying the money after buying new cars on a PCP loan

DUBLIN: Thousands of people have been left without paying back the money after purchasing a new car on a PCP loan. According to the Central Bank, 76153 PCP loans have to be repaid. As of September 2019, the debt stood at €1.457 billion.

Both Irish banks and non-banks have provided such loans. Sean Sherlock, Labour TD, asked finance minister Paschal Donohoe to break down the amount of PCP loans actually in operation in Ireland and the cumulative sum of such loans.

“The latest data published by the Central Bank indicates that, at the end of February 2020, the outstanding amount of car finance consumer credit advanced to households by Irish resident banks by way of PCP was €1.171bn. This related to 62,078 PCP contracts,” the finance minister said. The demand for Cork East TD came against the backdrop of the COVID-19 pandemic and economic hardship.

Higher purchase institutions in Ireland are considered to be operating without proper conditions. The bank revealed that providers of higher purchase agreements, including PCP contracts, do not currently need the approval of the Central Bank. Therefore, the Central Bank has stated that these are not subject to the Consumer Protection Code 2012 either.

A spokesman said the finance department was considering legislation to authorise higher purchase providers. The central bank is in talks with the finance department in this regard, the spokesperson said.

Sean Sherlock points out that the soft approach of the central bank is one of the reasons why borrowers leave without being repaid. The TD demanded that the Central Bank be prepared for clear communication on the economic problems in this sector. He asked for clarification on these matters in the instance of a loss of income in the COVID context.

The spokesman explained that the Central Bank of Ireland is closely monitoring how COVID-19 affects families and institutions.

The Central Bank also advises all borrowers who are facing financial difficulties to repay the loans to contact their lenders as soon as possible.