Do the maths

MCN in­ves­ti­gates the best way to buy a new bike

Motorcycle News (UK) - - This Week -

PCP deals have been in the news re­cently. In the last few weeks the papers have been talk­ing about how the sale of car PCP plans to sub-prime cus­tomers who then de­fault could has­ten an­other fi­nan­cial cri­sis.

While that may well be a long way off, there is no get­ting away from the fact that PCP (which stands for Per­sonal Con­tract Plan) al­lows peo­ple to ride mo­tor­cy­cles that they thought were out of their price bracket and their com­mon three-year cy­cle of re­place­ment is great for the bike in­dus­try, too. It also gifts deal­ers with lots of well-cared-for used stock for peo­ple who don’t want to buy new. For all these rea­sons we like PCP.

You put down a de­posit on the ma­chine and then ‘lease’ it from the fi­nance com­pany at a monthly amount. Af­ter the lease pe­riod is up you ei­ther make a large fi­nal pay­ment to ac­tu­ally own the bike or trade it in, hop­ing that the value is enough for the de­posit on your next ma­chine. It’s ever-more pop­u­lar – 90% of new cars are ‘bought’ this way and PCP is grow­ing fast with new and used bikes too.

How­ever, it’s not for ev­ery­one. If you want to keep your bike for longer than three years or you clock up high mileages (some poli­cies are re­stricted to 5000 miles or be­low), you may be bet­ter look­ing at other al­ter­na­tives.

There are two main other op­tions here – the first is old-fash­ioned hire pur­chase, se­cured on the value of the bike, which is owned by the fi­nance com­pany. You put down a de­posit and then pay off the value of the bike, plus in­ter­est. Once you’ve paid off the full amount, you own the bike and are free to keep it or sell it and buy a new bike.

The other route is a per­sonal loan – this isn’t se­cured on the bike it­self and if you shop around you can ac­quire some favourable rates. Many deal­ers of­fer loan fa­cil­i­ties, al­though it does pay to shop around for the low­est rate.

It’s pos­si­ble to se­cure a lower in­ter­est rate than with some PCP deals, but be­cause you are pay­ing off the full value of the ma­chine, monthly re­pay­ments are higher. The ad­van­tages are that there are no fi­nal pay­ments and you own the bike from the word go. Many bank loans of­fer the flex­i­bil­ity of al­low­ing you to make ex­tra pay­ments.

To see which is cheaper, we com­pared buy­ing a Yamaha on PCP and with a per­sonal loan to see which was the cheaper, both in the short and the long term. The de­posits come from our buyer trad­ing in a bike worth £2000 and us­ing that for the new bike – it’s hard to com­pare with higher de­posits as PCP deals nor­mally only al­low a de­posit of 25%. The fig­ures come from ex­am­ple rates for Yamaha’s yama­ha­fi­ scheme and from run­ning an anony­mous search on mon­ey­su­per­mar­ket. com for the best rate per­sonal loan, which was with TSB.

One thing is for cer­tain: You have plenty of buy­ing op­tions

WORKOUT WHAT’S FOR BEST YOU ■ Con­sid er chang wheth e bikes er you ■ ev­ery want to Work out three how years af­ford much to pay you can ■ Shop each month aroun d and all the op­tion look at s comm be­fore it­ting

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