Money makes the world go round and unfortunately for many, it’s a stumbling block when it comes to purchasing a new bike. However, it doesn’t have to get in your way.
PCP (Personal Contract Purchase) is a popular form of finance for the bike industry. PCP is not a new concept- it has been around for years. However it’s only recently that the big bike brands across the UK have started offering the route to help riders purchase a bike. But what exactly is PCP finance, what does it entail, and is it a good long-term deal? This expert guide will help…
WHAT IS PCP FINANCE FOR BIKES?
The customer pays a certain amount every month for a set contract period and at the end of the loan (as long as all payments have been made), the customer will have full ownership of the bike. So just as you may pay a monthly contract to use a car or mobile phone, similarly you can pay on a month-by-month basis that gives you a new set of wheels.
WHAT YOU NEED TO KNOW
What’s the APR percentage?
The dealership or brand will have their own APR representative finance offer. This may differ depending on the loan size, which tends to be lower the more you borrow. Put simply it’s the annual percentage rate, which is the yearly rate the lender will charge you for borrowing.
How much deposit do you have to put down?
The deposit amount will vary greatly, but many packages start from as little as £99. Shorter contracts will require greater deposits.
What’s the repayment period?
The PCP finance deal will be available for a set time period. On average, APR finance deals are usually two-three years. It’s important you know exactly how many years you’ll need to make the repayments for.
What happens when the contract ends?
Make sure you understand and know what your options are after you’ve made all the repayments: Can you renew your bike with a part exchange where equity is available? Can you retain your bike, pay the optional final payment and own the bike in full? Or are you able to simply return the bike.
What happens if I can’t make the repayments?
A contract is a contract, but all agreements have ‘get-out’ clauses because who knows what can happen in a few years’ time. It’s worth asking the lender in question what happens if you suddenly can’t make the repayments. Most PCP deals will have something in place to terminate the contract or settle it early.
What are the benefits of PCP finance?
One of the main benefits is that you don’t have to save 1000s of £££s before you can purchase your new bike! In difficult economic times, it becomes harder to save, but this type of finance deal gives you the flexibility to buy a new set of wheels at an affordable rate, as well as repay the monthly repayments. As long as you keep up-to-date with repayments, never miss one, or fall behind, you can continue enjoying your new vehicle.
What are the negatives of PCP finance?
The downsides are that you’ll not own the vehicle until all payments have been made and that most dealerships require a guarantee/indemnity. Also, most loans aren’t available unless you’re 18 or over.
What PCP deals are available?
PCP finance packages are available on a vast range of bikes. KTM Finance for example, makes it easier than ever to purchase a new KTM with a 0% APR representative finance offer.
Here’s some PCP examples, so you can see how much per month you’d have to repay and the amount of deposit required:
|Model||Term||Monthly Payment||Cash Price||Customer Deposit||Amount of Credit||Interest Charges||Optional Final Payment (GFV)||Total Amount Payable||Annual Mileage||Excess Mileage Charge||Fixed Rate of Interest||Duration of Agreement||Customer APR|
|390 Duke||36||£82.91||£4,499.00||£99.00||£4,400.00||£231.64||£1,646.88||£4,730.64||6000||14.9p per mile||1.29% p.a.||37 months||2.5%|
This expert guide was provided by Rocket Centre, the largest motorcycle dealership in Lancashire. Visit www.rocketcentre.co.uk for the best PCP bike deals.