BAG YOUR DREAM BIKE

Buying a new or used machine has never been more affordable thanks to Personal Contract Plans

While we used to save up for years, or take out a personal loan or straight finance, the greatest number of financed new bikes are now bought on PCP. Why? MCN readers who’ve done it mainly cite one of two reasons: cost, or ease. The overall outlay is certainly less with PCP; as long as you don’t pay that final balloon figure(which means you never actually own the bike). Equally, if you want to change bikes during the contract period or even swap brands during the process, that’s pretty easy, too.

This flexibility and low monthly outlay makes PCP about as close to a win-win situation as you’reever likely to get where motorcycles and bank balances are involved. But it might not be right for you, so make sure you fully understand what it is and how it works. The upshot is that you can ride these new bikes for less than you might ever have imagined. And what’s more you can have another new one in three years’ time, probably without increasing your monthly outlay, or having to find afresh deposit. The big catches are that you won’t ever own the bike and there’s no guarantee you’ll

have enough equity to use as a deposit when it’s time to upgrade. PCP doesn’t suit everyone.

The system works by letting you pay for the bike’s depreciation (plus the interest), rather than the full retail price. Add in a decent deposit, and you’re only paying back a small chunk of the loan value, which is how you get such a temptingly low monthly figure.

So what’s the catch?

At the end of the contract, you don’t own anything. Now you have to decide whether to pay off the outstanding amount and keep the bike; give the bike back and walk away owing, and owning, nothing; orroll your PCP deal on to a new bike. Many use the equity in the guaranteed final value (GFV) as a deposit, and roll onto a new PCP deal. But be aware that you might not have enough equity to do this, meaning more outlay.

What am I really paying for?

You’re effectively entering into a long-term hire agreement, so if you run the bike into the ground you’ll end up having to pay more than the agreed value at the end. But if ownership doesn’t bother you, and you stick to the contract terms, you can’t go far wrong.