Which bank is best for a car loan in Ireland in 2025?

If you're shopping for a new or used car in Ireland this year, the bank you choose for your car loan can save you hundreds - or even thousands - of euros over the life of the loan. It’s not just about the monthly payment. It’s about the total cost, the flexibility, and how easy it is to get approved. With interest rates still higher than they were in 2022, picking the wrong lender could cost you more than the car itself.

What makes one car loan better than another?

Not all car loans are created equal. Some banks offer low interest rates but lock you into a long term with high penalties for early repayment. Others give you freedom to pay off early but charge higher rates upfront. Then there are those that approve people with average credit scores, while others demand a perfect history.

Here’s what actually matters when you’re comparing:

• Annual Percentage Rate (APR) - this includes fees and interest. Always compare APR, not just the headline rate.
• Loan term - 3 years? 5 years? Longer terms mean lower monthly payments but more interest paid overall.
• Early repayment fees - can you pay off the loan early without being punished? Many banks charge 1-2 months’ interest if you settle early.
• Eligibility rules - do you need a permanent job? A minimum income? A deposit?
• Speed of approval - if you’re buying a car from a private seller, you need funds fast.

Don’t fall for the trap of choosing the bank with the lowest monthly payment. That’s often the most expensive option in the long run.

Top 5 banks for car loans in Ireland (2025)

Based on current offers as of December 2025, here are the five banks that stand out for car loans - not because they’re the biggest, but because they deliver the best value for most people.

1. Bank of Ireland - Best overall for most buyers

Bank of Ireland offers rates starting at 5.9% APR for new cars and 6.5% for used cars, with terms from 1 to 7 years. What makes them stand out is their no early repayment fee policy. If you get a bonus, sell something, or just want to pay it off early, you can. No penalties. They also approve applicants with credit scores as low as 650, which is rare among major banks. Their online application takes under 10 minutes, and if you’re approved, funds can be in your account within 24 hours.

They also offer a free car insurance quote when you take out a loan - a small perk, but useful if you’re buying your first car.

2. AIB - Best for low deposits

AIB doesn’t have the lowest rates, but they’re the most flexible with deposits. You can get approved with as little as 5% down on a new car - even if you’re self-employed. Their standard rate is 6.7% APR for 5-year terms. They also let you defer your first payment by 30 days, which helps if your car arrives before your next paycheck. Their downside? A €150 admin fee and a 1.5% early repayment charge if you settle before year three.

3. Permanent TSB - Best for used cars

Permanent TSB has the best rates for used cars under €20,000. They offer 5.5% APR on vehicles up to 8 years old, which beats most competitors. They also allow loans up to 100% of the car’s value if you have a strong credit history. That’s unusual - most banks cap it at 85%. Their approval process is slower than Bank of Ireland’s, taking 2-3 days, but if you’re buying a used car from a private seller, this can be a game-changer.

4. Ulster Bank - Best for existing customers

If you already bank with Ulster Bank and have a good track record, you can get a preferential rate of 5.4% APR - the lowest in the market. But here’s the catch: this rate is only available to customers who’ve had a current account or mortgage with them for at least 18 months. If you’re new, you’ll pay 7.1% APR. They also have a 2% early repayment fee, so this is only worth it if you plan to keep the loan for the full term.

5. KBC Bank - Best for flexible terms

KBC lets you choose your payment date - so if you get paid on the 15th, you can set your car payment for the 16th. That’s a small thing, but it helps avoid overdraft fees. They also offer a rate lock for 30 days. If you’re waiting for a car delivery or negotiating a price, you can lock in the rate now and still use it later. Their APR starts at 6.2%, and they don’t charge for early repayment. Their downside? They only lend up to €50,000, so they’re not ideal for luxury cars.

What about credit unions?

Don’t overlook credit unions. In Ireland, they’re often the best-kept secret for car loans. Many offer rates between 5.2% and 6.8% APR - sometimes lower than the big banks. They’re also more likely to work with you if your credit history isn’t perfect. The catch? You have to join first. Most require you to live, work, or worship in their catchment area. But once you’re a member, approval can be faster than at a bank. Credit unions also never charge early repayment fees.

Check your local credit union’s website. Many now let you apply online in minutes. If you’re eligible, it’s often the smartest move.

What to avoid

Not all lenders are created equal. Some companies that advertise heavily online aren’t banks at all - they’re finance brokers or non-bank lenders. These can look tempting because they promise 0% interest or “no credit check.” But here’s what you need to know:

• “No credit check” loans - these are predatory. They charge 15%+ APR and trap people in long-term debt.
• Dealer finance - while convenient, dealer finance often includes hidden fees and higher rates. Dealers earn commission on every loan they arrange. Always get a separate quote from a bank or credit union first.
• Long-term loans (7+ years) - they sound affordable, but you’ll pay more in interest than the car is worth by year five. You could end up owing more than the car’s value - called being “upside down.”

How to get the best deal

Here’s a simple 5-step plan that works every time:

1. Check your credit report - get it from Credit Info or Equifax for free. Fix any errors. Even a 30-point boost can cut your rate by 1%.
2. Save a 10-20% deposit - it lowers your loan amount and improves approval odds.
3. Get pre-approved - apply to 2-3 banks before you start car shopping. This gives you bargaining power.
4. Compare APRs, not monthly payments - use a loan calculator. A €20,000 loan at 5.9% over 5 years costs €23,100 total. At 7.5%, it’s €24,600. That’s €1,500 extra.
5. Don’t sign at the dealership - walk away with your pre-approval and go back with it in hand. Dealers will often match or beat the rate to close the sale.

Real example: How much can you save?

Let’s say you’re buying a €22,000 used car. You put down €4,000. You need a €18,000 loan over 5 years.

• At 7.5% APR (average dealer rate) - monthly payment: €361. Total paid: €21,660.
• At 5.9% APR (Bank of Ireland) - monthly payment: €345. Total paid: €20,700.

You save €960 over five years - and that’s without even paying early. If you pay an extra €50 a month, you cut the term to 4 years and save another €500.

Final tip: Timing matters

Car loan rates change with the Central Bank’s policy. As of late 2025, rates are holding steady after the 2024 hikes. But if you see a rate drop, act fast. Banks often update their rates on the first of the month. Apply on the 2nd or 3rd - you’ll catch the new rate before competitors do.

Also, end-of-year sales in December mean dealers are desperate to clear stock. Combine a dealer discount with a low bank rate, and you can get a great car at a fraction of the cost.

Next steps: What to do now

Don’t wait. Rates are stable now, but they could rise again in 2026. Here’s what to do in the next 48 hours:

1. Check your credit report - free at Credit Info or Equifax.
2. Decide on your budget - how much can you afford monthly?
3. Apply for pre-approval from Bank of Ireland and one credit union.
4. Start looking at cars - but don’t sign anything until you have your loan offer in hand.

The right car loan doesn’t just get you wheels - it saves you money for years. Pick wisely, and your future self will thank you.