WHAT IS PCP?
Personal Contract Plans are a type of finance deal that allows you to get a new (or used) bike in your garage for less. The system works by making 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 end up with such a low monthly outlay.
So what’s the catch?
At the end of the period, you don’t own anything, and instead have a decision to make: do you pay off the outstanding amount and keep the bike; give the bike back and walk away owing – and owning – nothing; or do you roll your deal over? Most will use the equity in the guaranteed future 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 you’ll need to find a new deposit.
Be aware that...
A significant proportion of the credit is deferred until the end of the contract, and it’s not the cheapest route to ownership. You need fully comp insurance, and excess mileage charges apply, while neglect will damage the GFV. It’s not perfect for everyone.