Motorbike Finance Tips

Posted: 25 Oct 2011

Looking to buy a new bike?

If so you are in an incredibly strong position. Right now the UK’s bike market is competitive, bikes sales are down and manufacturers are seeking your cash. This is great news for the buyer as there are some superb deals to be had.

Nearly every dealer/manufacturer will do a ‘finance’ package with subsidised rates. Effectively they are buying your business and paying part of the interest on the loan for you. The best of these is 0%, as that’s no interest, however even if the dealer claims it is ‘low interest’ double check with your bank to compare rates. Generally 0% finance deals are only offered for a few years, so check what the rate is at the end of it to avoid a scary surprise. Remember, the finance company doesn’t care if you crash, they just want their money back, so ensure you go fully comprehensive with bike insurance to be on the safe side.

Look at PCP deals

A lot of dealers are now offering Personal Contract Purchase (PCP) deals. With PCP you pay a deposit and a set payment every month for a set period of time (usually 3 years). To keep the monthly costs controllable there is be a final amount that must be paid at the end of the agreement.This final amount can be paid in full or you have the option to return the bike and walk away with nothing.

Effectively you are hiring the bike. BMW dealers do a lot of this and it is common in the car world. PCP is good if you want to know exactly how much you are paying a month, however you have to agree to certain conditions such as getting the bike serviced and you are encouraged to take out ‘gap’ insurance. Gap insurance looks to cover the ‘gap’ between the retail price that you paid for the bike and the trade value of the bike that the insurance company will payout in the event of the bike being written off. These extras can increase the cost of biking. Also, when the three-year period, if the bike is written off, you coulr potentially be left with paying back a loan you still have the bike.

One word of warning...

Often to qualify for the 0% or low finance deals you have to buy the bike at its RRP. It’s always worth asking the dealer what the discount is for ‘cash.’ The RRP may be £8,999 with three years 0% finance, however if you can get a £9,000 three year bank loan with 8.9% interest (£1,200 in interest) you may be able to knock £1,500 or more off the bike for ‘cash’, especially near winter.

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