Finance houses are tightening up how they refinance car loans for fear of being caught in a negative equity trap if they allow "rolling up" of existing loans.
The move is against a background of 5-year agreements being typically ended in less than three years and car owners with 3-year deals coming in to change in two years or less.
The finance houses - which are estimated to fund half of the €6 billion annual car finance debt in Ireland - say they don't want their customers ending up with negative equity in their cars, which in turn can leave the banks themselves facing losses when disposing of the returned vehicles if they are part of a scheme with a "balloon" payment option.
Some deals which involved minimal or even no deposit were quite common in the heady days of burgeoning car sales up to 2001, but in some cases led to buyers and the banks getting their fingers burned.
Many buyers financing almost all of the original price of the car through deals aimed at moving cars quickly off the forecourts, found themselves with negative equity in their cars - a position known as being "upside down" with their deal.
Wanting a new car, they were easily tempted to amalgamate the negative equity into a new finance deal, effectively financing debt with more debt. Recent studies in the US, for instance, suggests that about a third of all car buyers are in this position.
With the steady downturn in new car sales - in the past two years some 100,000 cars a year less than in 2000 - a flood of returning used cars has flattened the value of that sector, and owners are being told their pride and joy is not as valuable as they expect.
The situation has been exacerbated by falling interest rates in recent years which have made it easier to buy new cars, and also resulted in a downward pressure on used car prices.
Finance houses in Ireland won't admit that "upside down" situations are, or were, a significant problem here, but many buyers who have in the past used 5-year deals to keep their monthly repayments low will now find that more stringent rules are being applied.
"We at Permanent TSB don't have an issue with it at the moment, but that doesn't mean it's not a feature of the market," says Chris Hanlon, managing director of Permanent TSB Finance. "We have people out there who have cars that are just worth the settlement figure, or marginally less. We deal with them on a case by case basis, and we will not be refinancing debt as we go forward."
Owen Lynam, marketing manager of Woodchester Finance, says his company is very careful about loan devalues, and rolling a loan residue into a new loan doesn't happen now. "If people are looking to borrow close to 100 per cent of the value of the car, we get uncomfortable."
"Balloon" payment schemes a few years ago represented up to 30 per cent of all forecourt finance agreements.
In settling, owners in many cases had to pay the difference between the expected residual value and what it actually was. In others, the finance houses "took a bath" on repossessed vehicles when they were later sold off at auction for less than the outstanding loan.
"Some deals suggested a 60 per cent residual value, which hadn't a hope in hell of being met," says Fingal Ford Centre's financing manager Denis Caffrey. He says that the scheme is now used in about 10 per cent of deals, but is gaining in favour again, albeit with the finance houses using it imposing very strict guidelines.
"They are now making the balloon payment a much lower percentage than they had been doing, and ignoring what some brands wanted in order to keep up their numbers."
Chris Hanlon says customers are now being actively encouraged to make their deals in such a way that they will have equity in their cars when it comes time to change.
"Even in a 5-year deal, a deposit or trade-in of 25-30 per cent will ensure this," he says.
An old maxim suggested that changing a car every two years was the most efficient way of keeping apace with depreciation. But with the first year depreciation nowadays increased by half to 30 per cent, a minimum of three years ownership is arguably the best way to avoid going "upside down".
And independent financial advice tells the buyer NOT to finance a car for more than the length of time they actually intend to keep it.