Investigation: Why there's never been a better time to buy a bike on finance

Author: Bike Social Investment Specialist Posted: 04 Oct 2015

There's never been a better time to buy a new bike


AN EXPLOSION of flexible deals for buying bikes on tick is helping to drive a recovery in UK motorcycle sales making previously untenable options available to many buyers for the first time.

Few people now buy cars outright and the idea of buying a house without the aid of a mortgage is unthinkable. It seems British riders are getting over the shock of high new bike prices that came along with the financial crisis back in 2007/8 and instead focusing on the low monthly payments they could be making instead.

We’ve still got a long way to go to return to the heady sales of 2007, when 146,000 new bikes were registered in Great Britain, but 2014 showed the first notable growth since the financial crisis, with sales up around 10% from 98,000 to 108,000, and figures for the first part of 2015 show that the rate of growth is actually on the increase with like-for-like figures up 13% in the year so far.

We know that financial worries and a sharp increase in bike prices were behind the drop in sales seven years ago – pre-crisis, in 2007, the best-selling 1000cc superbikes were around £9000, but that rapidly jumped to the near-£15k prices we see today, largely as a result of a strong Yen, and sales fell off a cliff.

But what’s behind the new growth? The newspapers have still been filled with tales of stagnant wages and zero-hours contracts, few people will claim they’ve suddenly felt flush enough to splash out on a new bike, and prices are still high, but despite the continuing austerity bikes are making a comeback.

It’s not even as though the big sellers are all poverty-spec machines, either. BMW’s R1200GS has never been labelled ‘cheap’ but has remained a best-seller throughout the financial crisis, and while other hugely-popular models like Yamaha’s MT-09 and MT-07 are less expensive, they’re still large and pricy enough to represent a considerable outlay for anyone.

Never been a better time to buy a bike on financeNever been a better time to buy a bike on finance

MT-09 and MT-07 from Yamaha are hugely popular Europe-wide

The truth is that, for many, the way they’re buying their bikes has changed and new types of finance mean they’re able to get on a new model without taking a huge hit to their bank balance. Where in the old days that meant spreading payments over a handful of years in a traditional hire-purchase arrangement, now the buzzword is PCP – Personal Contract Purchase – which works completely differently to allow for far smaller monthly payments and to encourage owners to trade up to another new model as soon as they reach the end of their deal.

Steve Kenward, Chief Executive of the MCIA (Motorcycle Industry Association), told us, “Consistent growth reflects a number of stories. Firstly we are seeing the unleashing of the pent up demand we predicted with financial recovery.  Before the recession people would change their bikes every two to three years. During the recession they held on to their machines for longer.  Exciting new models and good leasing and finance deals are tempting them to buy new again.”

Kawasaki, for instance, says that its own PCP offering has seen an unimaginable upswing. The firm’s UK sales manager Craig Watson said: “We launched K-Options as the brand name for Kawasaki PCP in January 2015 and have promoted low rate PCP all year with massive success. To give a simple comparison - K-Options PCP is up a huge 600% year to date compared to the same period in 2014. I have no doubt that affordable monthly payments is the key. We see average deposits or part exchange contributions of £2900 on Ninja ZX10R's, with K-Options this would work out at just over £140 a month on a three year deal. Who wouldn't want to have a brand new Ninja ZX10R for that?

“We have some great tools available for customers like the online finance Kawasaki Kalculator - - which means you can sit at home and tailor the right finance deal for you. By using the sliders, you can change the amount of deposit, the length of finance term and annual mileage and choose whether you want a Any Bike (Hire Purchase) or K-Options (PCP) quotes - you can then print out your quotation and take it to your local dealer or send a direct enquiry through the website.”

And it’s a similar story elsewhere. KTM, which has just added options of 0% APR and a £99 deposit over 24 months or 2.5% over 36 months and zero deposit on its £10,599 electric Freeride E-SM using its traditional HP arrangement, has also seen a boom in financed sales. The firm’s Simon Belton revealed: “So far this year we have 32% of our sales on some kind of finance option when last year it was at 25%. The 125cc segment has seen a rise of 15% to 85% year-on-year. PCP options (20% deposit) have risen to 25% over 12% last year.

“PCP is on the increase because many customers have come across it before when buying a car and with finance suppliers Like Santander Consumer Finance, KTM’s partner, putting much more effort in training our dealers, there is much more of a chance that the dealer will offer this option. 

“Generally, with interest rates so low at the moment and the economic situation much more stable that it has been over the past 10 years, consumers have much more confidence in buying new bikes to make the most of their leisure time.”

Never been a better time to buy a bike on finance

KTM offer 0% APR and a £99 deposit over 24 months or 2.5% over 36 months and zero deposit on its £10,599 electric Freeride E-SM

Suzuki GB’s national sales manager, Jonathan Martin, tells a similar story, saying: “Hire Purchase and PCP deals have always been an excellent and affordable way of riding a new motorcycle every few years and more people are coming around to the idea of buying a new bike on finance because of all the benefits that come with it.

“It's the affordability element of finance deals that we have always tried to push ourselves. From January to August this year we saw over 50% of new bike sales supplied through finance and following the launch of our aggressive 0% finance offer in April that ran across a number of bikes in our range, that number increased to 76%. It's made buying a new Suzuki even easier, and the fact that it's all done through our own Suzuki Financial Services makes it even easier still. But with customers able to pick their deposit, fixed monthly repayments and, if a PCP deal, an agreed final repayment or guaranteed future value, there are no surprises and no hidden fees.”

So, what is PCP and how does it go about making buying a bike so much cheaper?

The answer is that unlike traditional hire-purchase agreements or even a straightforward cash sale, it’s skewed firmly towards the reality that most new bike buyers will be back two, three or four years down the line to trade-in for another brand new machine. To that end, PCP deals effectively ask you to merely pay the interest on the loan – which with many current offerings is 0% anyway – and to pay roughly the amount that the bike is depreciating during the period of the deal. At the end of the fixed period of the agreement, you get three options:

  1. Fork out a large final payment, called the GFV (guaranteed future value), which is equivalent to the bike’s value on the used market, and keep it. Most people won’t opt for this, although if you do, it may be possible to re-finance that final payment and keep forking out instalments instead of finding the whole lot in one go.
  2. Hand the bike back and walk away. In this instance, you’ve effectively used the PCP deal like a lease.
  3. Trade it in for another brand new bike. Usually, PCP deals are worked out so that the GFV is on the low side, and if your bike is actually worth a bit more than that final payment, you can use that difference towards the deposit on your next one.

One way to look at PCP, compared to an outright purchase or a hire-purchase, is that you’re never having to spend the lump sum that will finally be tied up in the bike’s used value. Pay for a bike in one hit, or spread over several years of HP, and you’re left with a depreciating asset that’s potentially worth thousands of pounds. But with PCP you’re never parting with that capital (unless you’re one of the tiny percentage of buyers who picks option 1 and makes the final GFV payment.)

So instead your monthly payments are only covering the interest on the loan – which is 0% or close to that on a lot of the current offers – and the depreciation that the bike is suffering during your ownership. In other words, with a 0% deal, you’re paying exactly the amount that you’d be out-of-pocket if you’d simply bought the thing outright, ridden it for three years (or however long the PCP deal is) and then sold it on, but at no stage do you have a large lump of capital tied up in the bike.

With people now increasingly used to the idea of making monthly payments for the services and good they own – mobile phones a good example, since most people will make monthly payments and expect to simply ‘upgrade’ every couple of years – the idea of doing something similar with a bike is getting increasingly easy to swallow.

Unlike an outright purchase or HP, PCP can also bring in a slightly bizarre disconnect between the bike’s actual sticker price and the amount you’re paying per month, because if you pick a model that depreciates less (and ignore the size of the GFV payment at the end, since you’re unlikely to ever pay it) the monthly cost for a more expensive (but slower-depreciating) bike can be close to, or even lower than, the monthly payments  for a model with a lower list price but greater depreciation. Yamaha’s R1 and R1M are a good example – the R1 costs £3500 less than the R1M (£15,135 vs £18,635) but after a similar deposit of around £3900, its monthly payments over the next 36 months (of a 37-month deal) will be just £30 higher than for the cheaper bike, working out to only £1080 more in total.

Never been a better time to buy a bike on finance

That’s because the R1M is expected – due in part to the restricted number of bikes on the market – to retain a bigger slice of its value in three year’s time. The GFV, or what Yamaha expects the R1M to be worth on the secondhand market in three years,  is a whopping £10,170, or 56.6% of its retail price. In comparison, a base-model 2015 R1 has a GFV of £6866, which is just 45.4% of its sticker price. That means both bikes are expected to depreciate by about the same amount; the R1M losing £8465 vs the R1’s depreciation of £8269. In fact, if both models were offered with 0% finance instead of the 9.6% that Yamaha is offering, the monthly payments for both bikes would be virtually identical.

However, calculating what the repayments would be at 0% also goes to illustrate why the current economy’s low interest rates play into the hands of PCP deals. If Yamaha was to offer the R1M on PCP with 0% APR, the monthly payments (retaining the same 37 month period, £3914.30 deposit and £10,170 GFV) would be more than £100 per month less, at £123 per month instead of the £225 that you’ll actually pay if you use the same deal as illustrated on Yamaha’s MiYamaha website:  (

Further examples of bikes that seem to have low payments that defy logic are easy to find on Ducati’s TriOptions PCP scheme. Just like the R1M, most Ducatis have a high GFV that means, allied to reasonable interest rates, they can be more affordable in terms of monthly payments than some ‘cheaper’ bikes. The 1299 Panigale, for instance, is a more expensive than a 2015 R1 at £16,831 vs £15,135, and yet it can be had with a smaller deposit (£3557 vs £3845) and lower monthly payments (£179 per month for 36 months vs £195 per month over the same period). That’s because it has a far higher GFV (and hence a far higher optional final payment) of £9520 compared to the Yamaha’s £6899, allied to a slightly lower interest rate of 7.9% APR vs 9.6% APR.

That helps explain why PCP is particularly attractive now, while interest rates are low. While you’re only paying for the depreciation of the bike (unless you opt to pay the GFV final repayment at the end of the deal), you’re paying interest on the full value of the loan. With low interest rates like we have at the moment, that makes expensive bikes with high GFVs look particularly attractive, but should interest start to climb back into double-digits (as they regularly have been in the past), the pendulum starts to swing back towards bikes with a lower overall price.

But while the deals explained by every manufacturer on their websites make for great illustrations – and we’ve listed links to most of them below – perhaps the best advice is to talk through the finance options that are available when you buy your bike. They’re almost infinitely tailorable – by altering the size of the deposit, the value of your trade-in, the length of the deal and haggling over both the overall price of the bike and the interest rate on the PCP deal – that you’ll probably reach a solution that works better for your particular circumstances better than any illustrated or advertised offer can.

Note too that all the prices and deals mentioned here are correct at the time of writing, but may well change. Again, by doing your own legwork to see which manufacturer can offer the best deal to suit your particular needs, you’ll going to hugely improve your chances of getting a spectacular deal on the bike you want.

Here’s a list of websites to start with, though:








Black Horse Finance: