Thomas Byrne (Meath East, Fianna Fail) | Oireachtas source

For the past few years consumers have been offered all sorts of deal to entice them to buy cars. Some deals are better than others. Personal contract plans, PCPs, encompass the initial front-loading cost of buying a new car and an expected residual value to reduce the amount borrowed. Dealers in Ireland are saying that as many as 70% of new car sales are based on PCPs. They are saying also that up to 30% of car finance packages are based on PCPs. Some car loan providers have better practices than others. Some require a 20% deposit, while others require less. A customer normally makes a monthly payment and must at the end of the term of the plan make a final substantial payment. Ownership does not transfer until the last payment is made. The plans normally last for about three years. There was a surge in car sales in 2014. Many of those who bought cars in 2014 are coming to the end of their PCPs and, as per the contract, are now being forced to make a bubble payment.

Now it appears US regulators are very worried about this issue and some in the United States financial services market are predicting a possible financial collapse as a result of the number of defaults on car loans. The car loan market in the United States is worth $1.3 trillion, but the big banks seem to be pulling back a little because many consumers have taken on more debt than they can handle. We know that the Bank of England is also concerned about the issue and examining it in terms of the impact it could have on the financial market. According to media reports, the Society of the Irish Motor Industry is carrying out its own report on the issue. We also know that in Ireland PCPs are completely unregulated. The story I have set out for the Tánaiste which I have set out before about nervousness in the United States and the United Kingdom and the Government looking the other way is one we have heard before. What is the position on PCPs for consumers purchasing cars? What is the answer for those who may not be able to make the bubble payments that are now arising or will arise next year or the following year? What is the remedy for consumers who have been mis-sold these products in the past few years or who have not received the professional advice they might have expected? That professional advice has not been required by the State because the sector is completely unregulated.

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