PCP/Finance - The facts

[Ninthbike]

Following on from some posts in "Bikes-Talk and Issues"
To address some of the recent posts;
"But the bike still isn't yours until the end" - This is true of any Hire Purchase agreement, of which PCP is just one. Hire Purchase is exactly that - Hire with an option to purchase which is exercised by making all of the payments under the agreement including the "Option to Purchase" fee (usually about £10) at the end. So PCP is no different. The only way to own the bike from day one but still spread the cost is via a personal loan. These can be a minefield as lenders advertise "Representative APR". This is usually a headline figure which is offered to 51% of SUCCESSFUL applicants, which is usually about 50% of applicants. Others that are accepted will be offered a higher rate "based upon their circumstances". This means that the underwriting for personal loans is much tighter than HP where the loan is secured by the goods. Also, on HP the customer is protected under the Consumer Credit Act. The main parts of this refer to the right to terminate the agreement (the halves rule) and the need for a court order before the goods can be repossessed (the thirds rule). Under these rules, if a customer has paid more than half of the total amount payable (TAP - usually when the goods are not worth the remaining half) they can surrender the goods and terminate the agreement. If they have paid more than one third of the TAP then the lender will need a court order before they can repossess.

"let's say the vehicle in question looses 25% of value the moment you take possession and continues to fall then it gets written off within 6 months, obviously the insurance company won't pay the "as new" price so I guess you'd end up paying the shortfall for nothing" - this perfectly illustrates why lenders will usually ask for at least 10% deposit which means that the borrower is less likely to be in negative equity for long. Finance companies don't just lend to anyone, they have to lend responsibly and need to establish that the customer can and will actually repay the loan. Many insist on fully comprehensive insurance to mitigate their losses - it is not in their interest to place their customer in difficulty. Most insurance companies pay "new for old" for the first year of a bikes life which means that they will supply a replacement bike and dispose of the written off one. If a bike is on finance and is written off then the insurance company will establish this via an HPI check and will then repay outstanding finance first. Finance companies rebate any remaining interest for early settlement after charging one month's interest as an early settlement penalty. So if the write off occurs early on then the majority of the interest will not be paid.

"The bikes not yours at the end unless you can stump up the final payment. Made to look like your getting it at half price. These deals ...... double the monthly cost and ask yourself can you afford it? You dont own it. Its like a 'hire' deal." This is no different to a longer HP deal. What borrowers have tended to do is to spread their loan over a longer period in order to afford the monthly payment. If they settle early it is exactly the same as making the final payment on a PCP deal except for the fact that the PCP is properly designed to generate equity in the bike at the end so that the customer has a deposit for their next bike.

"My thoughts, if you cannot pay cash. Bung it on a 0% card and at the end of the deal term, transfer the balance to another 0%. Just pay off a couple of hundred each month, don't use the cards for anything other than balance transfers and if the deals dry up. Talk to the bank manager." - An excellent way of avoiding any interest at all and something that is growing in popularity. However, there are pitfalls - namely that if you do buy anything in addition to the balance transfer, it will be added to the balance and interest charged for as long as there is a balance on the card - this relates to the order in which credit card companies apply your payment to the outstanding balance - the interest-bearing part (i.e the amount that you have added) will always be paid last so the interest will be substantial and usually at a high rate. Even if you don't add anything, you must be completely disciplined and ensure that any remaining balance is either paid off or moved to another card before the interest-free period expires. If not, you will be charged interest on the remaining balance backdated to the day it was added to the card.

"In 4 years you wont want to shell out £4400 on that old bike you have had for ages as the grin factor will of worn off years ago. So if times are hard you may not have the option of another bike if you give it back without getting back into another finance deal and actually never owning anything" Which is why the Guaranteed Future Value (GFV) is always conservative. If you did take the agreement over 4 years (most are 2-3 years) then the final payment would be around 25% of the original retail price making it very unlikely that you would be in negative equity and therefore are more likely to have a deposit for another agreement. The truth is that nobody actually NEEDS to won a bike, car etc but in the UK we have a thing about ownership. Ask yourself - why would you want to own something that continually depreciates? What you actually want is full and unrestricted use of the bike, which is exactly what you are getting.

PCP main benefits:
GUARANTEED minimum future value - which means that even if something goes horribly wrong with the bike trade and your bike is worth less than the GFV, you get the option to give the bike back which pays any outstanding amount off.
Shorter agreements - agreements are usually more in line with buyers change habits, i.e. 2-3 years
Lower payments - more affordable payments (which is actually how the majority of buyers budget) meaning less likelihood of default.
Lower maintenance costs - because the bike is usually new or late used, maintenance is lower and defects are covered by manufacturer warranty. Also, no MOT for the first three years.
In order to protect the best interests of the customer (a legal requirement under new FCA guidlelines) the agreement should be set up with no more than 10-15% deposit and a conservative GFV so that the customer has equity equal to their original deposit when it comes to change time.

Let me know if anyone would like any other myths exploded!!:)

[thefallenangel]

Most of the people on here won't like PCP because they actually care for their bike, not just ride like the Litre sportsbike warriors.

Also it's easier for people to find sub £2k to buy a bike and look after it than £200-£300 a month on what is essentially a toy. So i just can't buy the saving on 3 MOT's at £90, not servicing breakdowns etc . . . . Teach people to look after what they got not treat it like a throw away toy.

[Ninthbike]

The thing is that people want new stuff and, like it or not bike maintenance can be expensive - especially for things that are beyond the scope of the average spanner wielder. Like most people on here, I've already spent a substantial amount on maintaining and improving my bike. Caring for the bike is actually a requirement of a PCP agreement and the buyer has a vested interest in making the bike as desirable as possible at the end so that they achieve the best price for it and thereby generate the biggest amount of equity.
"Also it's easier for people to find sub £2k to buy a bike and look after it than £200-£300 a month on what is essentially a toy. So i just can't buy the saving on 3 MOT's at £90, not servicing breakdowns etc" - I agree - but you will then only ever have a bike that is worth less than £2k and costs you more to maintain. It's an interesting exercise to add up the original cost of your bike, the cost of all your maintenance (including your own time) and then add the amount by which your bike has depreciated and then see what you are left with sitting in your garage. Having ridden a new bike today, I can confirm that new ones are streets ahead of old ones in terms of technology, performance, handling and safety. But as I say, each to their own - if money were no object, I suspect that you probably wouldn't have an SV in your garage?

[Spank86]

If money were no object I'd still be on my speed four.

[Ninthbike]

If money were no object I'd still be on my speed four.

Liar!

[Spank86]

Liar!

Nope.


If I really wanted to prioritise that way I could go out and buy a new bike but there isn't one I like more and there's a lot to be said for getting to know your bike and how it handles.

If money were really no object I might have additional bikes but the 4 would still have pride of place.

[Ninthbike]

Nope.


If I really wanted to prioritise that way I could go out and buy a new bike but there isn't one I like more and there's a lot to be said for getting to know your bike and how it handles.

If money were really no object I might have additional bikes but the 4 would still have pride of place.

That's great and I'm glad that you like it so much. Which new bikes have you ridden lately?

[Spank86]

That's great and I'm glad that you like it so much. Which new bikes have you ridden lately?

All the triumphs (apart from the new tiger)

But I don't really have to ride most of them, I don't even like the looks of most bikes.

[Ninthbike]

All the triumphs (apart from the new tiger)

But I don't really have to ride most of them, I don't even like the looks of most bikes.

Then it sounds like you have found your perfect match - congratulations. I, unfortunately can't stop changing my mind. If money really were no object, I would have one of each!

[Specialone]

I use personal loans to buy my bikes and other large ticket items, been buying stuff like this for 25 years, suits me perfectly.

Being self employed, I treat a bike as an asset, I can afford it, but if I got injured at work or my earnings dropped off a lot, I wouldn't hesitate to sell it and clear the loan, of which the loan balance is way lower than what the bike is worth.

Sometimes I could buy big stuff outright without loans but still choose to buy with a loan so I don't use my savings up, the savings are there for hard times just in case.

[Ninthbike]

I use personal loans to buy my bikes and other large ticket items, been buying stuff like this for 25 years, suits me perfectly.

Being self employed, I treat a bike as an asset, I can afford it, but if I got injured at work or my earnings dropped off a lot, I wouldn't hesitate to sell it and clear the loan, of which the loan balance is way lower than what the bike is worth.

Sometimes I could buy big stuff outright without loans but still choose to buy with a loan so I don't use my savings up, the savings are there for hard times just in case.

Which is another individual-specific approach. As I say, everyone will have their own view based upon their preference and circumstances.

[EssexDave]

Ninth, cool post really good stuff.

In terms of the credit card though - they changed this and so the banks/credit card companies now have to apportion payments to the highest amount of interest.

E.g. if you were to take cash out on a credit card, and have purchases on there, as the cash is typically at a higher rate, this would be what your payments would go to reduce first.

[Ninthbike]

Ninth, cool post really good stuff.

In terms of the credit card though - they changed this and so the banks/credit card companies now have to apportion payments to the highest amount of interest.

E.g. if you were to take cash out on a credit card, and have purchases on there, as the cash is typically at a higher rate, this would be what your payments would go to reduce first.

Yes, you could be right. However, there is now no such thing as a "free" balance transfer as the companies charge a %age fee for the transfer, usually around 2-2.5%. The "credit sluts" as they have been dubbed just need to be really disciplined to ensure that the balance is zero or is transferred before the interest-free period expires.

[Littlepeahead]

If money were no object I'd buy that Ducati Diavel from the Wolverine movie but insist it came with Hugh Jackman in the tight vest as one of the extras, then I'd just keep both in the garage to look at, and I might ride one of them.

Ahem, right enough of my little fantasies, that is really useful info as I'd never really understood how those finance deals worked and now I do.

[Ninthbike]

If money were no object I'd buy that Ducati Diavel from the Wolverine movie but insist it came with Hugh Jackman in the tight vest as one of the extras, then I'd just keep both in the garage to look at, and I might ride one of them.

Ahem, right enough of my little fantasies, that is really useful info as I'd never really understood how those finance deals worked and now I do.

Thanks LPH. That was my intention. Because many dealer salesmen actually don't know the finance products that well themselves it means that buyers end up with misleading information about their options. :D

[TheRamJam]

Great post Ninthbike.

I think PCP is a good product and an affordable way to temporarily own the latest bike. Lets face it the bonus of no MOT, no maintainence costs etc is defo an incentive and i think it can bring a lot of new bikers to the market. IMO a good thing.

I am paying £132 a month for my blade on finance. I put a sizeable deposit down at the start so in 3 years I will own the bike outright with only £234 single payment at the end.

For me that sum is easily affordable each month. I don't smoke or drink alcohol on a daily basis so I do have some expendible income to spend on luxury items. I mean what would one spend on a night out with friends?? Maybe £50 in drinks and say £20 for the takeaway and taxi home. Thats £70 and if you go out every Friday that's £280 a month :smt048

So basically what I'm saying is I don't have any friends and I sit in and watch telly :)

[Ninthbike]

LOL!!! But you do have a nice bike which you don't need friends to enjoy!!

[thefallenangel]

I don't think we are saying it's a bad thing but most of us on here would never need to use it as it's expensive compared to what we pay for riding now.

And on the "labour" cost. I earn £13.25 an hour as a dual skilled electrician so working on a motorbike isn't out of my skillset. So in my eyes my labour is £13.25 an hour not £60 an hour from thunder road my local dealers which i've had nightmare experiences from and so has my brother. So why would i fork out probably £200 a month on a street triple then at the end about £4k to buy it when i can buy a 3 year old one for £4k. I'm sure my running costs for 3 years won't be £2.5k i've be paying in finance (+ GAP). Even someone with minimal engineering knowledge would be able to do the numbers and with a local reliable friend/mechanic be able to save a fortune.

[NTECUK]

On PCP your still have to shell out on a service unless you get one with that included .
My Qashqai does not.
So

[Ninthbike]

I don't think we are saying it's a bad thing but most of us on here would never need to use it as it's expensive compared to what we pay for riding now.

And on the "labour" cost. I earn £13.25 an hour as a dual skilled electrician so working on a motorbike isn't out of my skillset. So in my eyes my labour is £13.25 an hour not £60 an hour from thunder road my local dealers which i've had nightmare experiences from and so has my brother. So why would i fork out probably £200 a month on a street triple then at the end about £4k to buy it when i can buy a 3 year old one for £4k. I'm sure my running costs for 3 years won't be £2.5k i've be paying in finance (+ GAP). Even someone with minimal engineering knowledge would be able to do the numbers and with a local reliable friend/mechanic be able to save a fortune.

But the point is that you get to enjoy a brand new bike for three years and then get the choice, if you want to, to buy a 3 year-old bike for £4k - one that you have actually had from new so you know everything about it - something that you cannot claim about a random used bike. The real (rather than made up) figures are actually this.
A new Street can be had for a deposit of £1600 and £95 per month, then £3549 to buy it if you want to. This also assumes that you pay full retail. Details here http://www.triumphmotorcycles.co.uk/offers/uk/extra-street
As the bike will probably be worth somewhere over £4500 you would then have around £1000 equity to do with as you please.

[Ninthbike]

On PCP your still have to shell out on a service unless you get one with that included .
My Qashqai does not.
So

First service at 600 miles is free, after that every 4000 miles or 1 year. Costs around £150 a time.

[NTECUK]

Not round hear
£230, first proper service 6000 miles 1Year daytona 675 2013 model

[Ninthbike]

Sorry, yes it is now 6000 miles or annually. The Daytona is more expensive to service but £230 sound a little OTT for a standard service.

[NTECUK]

2 main triumph on independent.
Fortunately next year's I'll do it. No longer under wt :D

[yorkie_chris]

Thanks LPH. That was my intention. Because many dealer salesmen actually don't know the finance products that well themselves it means that buyers end up with misleading information about their options. :D

Cos they get more commission from the finance agreement than selling the bike so will say owt to get you onto it mebbe?

Something to do with the profit on 150 on a fookin oil change* cos they've got you over a barrel from the HP agreement.

£150 every 4000 miles... ouch. That's about £600 a year saving to be made, would you not be better off just taking the hit on the "equity" at the end? Over 3 years you might as well have just bought it in first place lol.



*Awaits sarah to turn up and tell me what they actually do and the rest of them *should* do on a service.

[Ninthbike]

Cos they get more commission from the finance agreement than selling the bike so will say owt to get you onto it mebbe?

Something to do with the profit on 150 on a fookin oil change* cos they've got you over a barrel from the HP agreement.

£150 every 4000 miles... ouch. That's about £600 a year saving to be made, would you not be better off just taking the hit on the "equity" at the end? Over 3 years you might as well have just bought it in first place lol.



*Awaits sarah to turn up and tell me what they actually do and the rest of them *should* do on a service.

As I keep saying, it's not for everyone. Qualification is the key - if you do 12000 miles P.A. then it's probably not for you (but you can reduce the final GFV by up to 50%).
Most salesmen are now salaried to prevent them from mis-selling under new guidance from the FCA. They cannot be seen to favour one type of finance agreement over another but should lay out all options for you and allow you to choose. Many new bikes are now on fixed, low-APR finance or 0% too. Depends on your preference. As for the profit on an oil change, that is a huge exaggeration but you can get this done at any VAT registered business and still maintain your warranty. Would you not expect your dealer to make a profit? How would you feel if you called them when your bike broke only to find that they have gone out of business? I'm sure your wages probably come from the income made by your employer so why is it unreasonable to expect the same from a dealer? Like I say, the choice is yours.
P.S. Finance also offers more protection as the finance company are jointly liable for merchantable quality and fitness for purpose which means that if you have a serious issue with your bike that your dealer cannot resolve, they usually reach for their cheque book.

[yorkie_chris]

We've had the debate about workshop rates on here before, repeatedly.

They end up subsidising the shiny showroom with the workshop. Why this? I don't need to buy tyres and oil from a "prime location" or pay for some cnuts 10 grand carpet on the floor. They want a prestigious business... alright fine, not my problem. I'm happy to go to someone in an industrial estate with fair rates. If that puts them out of business, then the problem is with their business model not fitting reality not mine.
Or is drinking crap coffee in a glitzy showroom so important to everyone's state of well-being? :-P

I take issue with your comments that nobody needs to own anything. It's this throwaway society attitude that isn't good. The only winners in that game are the bankers and insurers.
Owning something that depreciates, or paying for the depreciation and never owning it! If I bought a new un I'd expect to keep it until it was fooked and the average depreciation wouldn't be too painful.

Suppose I shouldn't complain really, my shagged secondhand vehicles probably all started out life that way.

[Ninthbike]

We've had the debate about workshop rates on here before, repeatedly.

They end up subsidising the shiny showroom with the workshop. Why this? I don't need to buy tyres and oil from a "prime location" or pay for some cnuts 10 grand carpet on the floor. They want a prestigious business... alright fine, not my problem. I'm happy to go to someone in an industrial estate with fair rates. If that puts them out of business, then the problem is with their business model not fitting reality not mine.
Or is drinking crap coffee in a glitzy showroom so important to everyone's state of well-being? :-P

I take issue with your comments that nobody needs to own anything. It's this throwaway society attitude that isn't good. The only winners in that game are the bankers and insurers.
Owning something that depreciates, or paying for the depreciation and never owning it! If I bought a new un I'd expect to keep it until it was fooked and the average depreciation wouldn't be too painful.

Suppose I shouldn't complain really, my shagged secondhand vehicles probably all started out life that way.

You hit on a very good point. At the moment, the UK is suffering a shortage of good, used bikes. This is due to two things, namely:
Very poor new bike sales during the last three-four years, and
The number of used bikes that were sold to buyers in Europe when the pound was really weak. Buyers took containers full of bikes into Europe and made a killing because they had bought them so cheaply.
This means that everyone is now having to pay more for decent used bikes as there are (relatively) so few about.

[Specialone]

The facts are, buying any vehicle new is expensive however you choose to purchase it, pcp is an expensive way to ride or drive that vehicle.

If you like riding new bikes and want to change them regular then it may work for you, but do the maths on all forms of finance, you'll find it's not the cheapest by a long way.

I have changed my bikes regular since I started riding and haven't lost that much in depreciation tbh, that will change on my current bike though as I paid more for it, pay more =lose more, it's that simple.

[Ninthbike]

The facts are, buying any vehicle new is expensive however you choose to purchase it, pcp is an expensive way to ride or drive that vehicle.

If you like riding new bikes and want to change them regular then it may work for you, but do the maths on all forms of finance, you'll find it's not the cheapest by a long way.

I have changed my bikes regular since I started riding and haven't lost that much in depreciation tbh, that will change on my current bike though as I paid more for it, pay more =lose more, it's that simple.

All true but most current PCP offers are sub 10% APR (including about £200 in fees) which could be difficult to achieve on a different loan unless you have a gold-plated credit record. Also, this rate is fixed for the duration of the loan and we all know that interest rates are only going one way during the coming years............:(

[Littlepeahead]

If you really want depreciation buy a nice BMW 7 series all shiny and new. I bet mine was £50k+ out of the showroom. Ten years later and still in great condition I bought it as my little runabout for less than £5k and it's been no less reliable or expensive to maintain than other friends' Meganes and Focuses but so much more comfortable and fun. I might buy a Bentley next :)

[NTECUK]

Thing is cars generaly last a long time.
Bikes get thrashed, wheelied and chucked down the road.
If you can get it new, cheap enough and known you can unload it 2 to 3 years down the line knowing what it's going to cost (like my car) It looks like a fair way to get a Shinny new bike.

[Littlepeahead]

You've not seen me take my car down the twisties. Then again I did manage to put my bike onto its side today in a dry river bed. If I had it on pcp I might not take it down the byways like I can at the moment.

[NTECUK]

Ops.
But if you had it on PCP you couldn't have its suspension and exhaust modified either ;)

[shurm]

Bought yesterday a Brand New SV650S put down 1k deposit (which I got from mis sold card protection) and it's £30 odd quid a month for 3 years. I've just sold a Tiger and Wife said get a cheaper bike for 2k cash to keep your hand in, but this is a no brainer to me even if I pay the GFV the total payments are less than the RRP. Pick up Weds :-D

[Ninthbike]

Ops.
But if you had it on PCP you couldn't have its suspension and exhaust modified either ;)

Yes, you could. The only time stuff like this would affect the contract is if you decide to hand it back at the end. This is so unlikely that any modifications (if done sensibly) would only add to it's value.

[Ninthbike]

Bought yesterday a Brand New SV650S put down 1k deposit (which I got from mis sold card protection) and it's £30 odd quid a month for 3 years. I've just sold a Tiger and Wife said get a cheaper bike for 2k cash to keep your hand in, but this is a no brainer to me even if I pay the GFV the total payments are less than the RRP. Pick up Weds :-D

Perfect example of how it should work. And the chances are that you will have equity at the end so if Suzuki come out with anything decent during the next few years you will have the chance to do the same again at the end. You may, however have put in a bit too much deposit.

[Littlepeahead]

Bought yesterday a Brand New SV650S put down 1k deposit (which I got from mis sold card protection) and it's £30 odd quid a month for 3 years. I've just sold a Tiger and Wife said get a cheaper bike for 2k cash to keep your hand in, but this is a no brainer to me even if I pay the GFV the total payments are less than the RRP. Pick up Weds :-D

I misread that and thought you'd sold the Tiger and your wife to pay for a new bike! Now there's some on here have probably already tried that :-D

[Spank86]

I misread that and thought you'd sold the Tiger and your wife to pay for a new bike! Now there's some on here have probably already tried that :-D

£4k for the tiger, £3k with the wife included.

[Wideboy]

I take issue with your comments that nobody needs to own anything. It's this throwaway society attitude that isn't good. The only winners in that game are the bankers and insurers.
Owning something that depreciates, or paying for the depreciation and never owning it! If I bought a new un I'd expect to keep it until it was fooked and the average depreciation wouldn't be too painful.


Nail on the head. There is so much wrong with societies attitudes towards goods these days. People now aspire to drive PCP Audi's and live in their new barratts "made from cheese" house, then spend their life living out of paying monthly payments. All really for the sake that they care what people think when they look at them. That might get some people's backs up but it's true. No one NEEDS to buy a new car or bike they just want to, which is fine, but then when they loose their income it's the governments fault for not paying enough job seakers.

Buying something on a loan/credit card fair enough if you can afford it, as SP1 said if all goes t!ts up you actually own the vehicle with no loans/finance secured against it, if you can still keep it great but if not just flog it to cover the repayments or pay it off. Purchasing things on finance on the other hand i just don't see the appeal. You don't own it until the end, you're locked into owning it until the end, realistically not many people will buy it off you until the finance is cleared, if it's written off you loose **** loads of money... ect ect.

I think alot of people look at buying stuff on finance because it's easy. The credit checks are easily passable for a child, everything gets arranged around you and all you have to do is sign your name and you never get to see what you're paying over the odds for.

As i said in the other thread, maybe I'm just old fashioned but I like owning stuff 100% and I like to hand over my money when I buy it.

[Littlepeahead]

Nail on the head. There is so much wrong with societies attitudes towards goods these days. People now aspire to drive PCP Audi's and live in their new barratts "made from cheese" house,

It's a good job they are not really made from cheese or I'd never get a mortgage as they know I'd have eaten most of eat 6 months after purchase.

[Ninthbike]

Nail on the head. There is so much wrong with societies attitudes towards goods these days. People now aspire to drive PCP Audi's and live in their new barratts "made from cheese" house, then spend their life living out of paying monthly payments. All really for the sake that they care what people think when they look at them. That might get some people's backs up but it's true. No one NEEDS to buy a new car or bike they just want to, which is fine, but then when they loose their income it's the governments fault for not paying enough job seakers.

Buying something on a loan/credit card fair enough if you can afford it, as SP1 said if all goes t!ts up you actually own the vehicle with no loans/finance secured against it, if you can still keep it great but if not just flog it to cover the repayments or pay it off. Purchasing things on finance on the other hand i just don't see the appeal. You don't own it until the end, you're locked into owning it until the end, realistically not many people will buy it off you until the finance is cleared, if it's written off you loose **** loads of money... ect ect.

I think alot of people look at buying stuff on finance because it's easy. The credit checks are easily passable for a child, everything gets arranged around you and all you have to do is sign your name and you never get to see what you're paying over the odds for.

As i said in the other thread, maybe I'm just old fashioned but I like owning stuff 100% and I like to hand over my money when I buy it.

By and large, I agree with you but credit is, unfortunately the way of the world now. Nobody actually needs an iphone but millions of people are paying £500+ so that their kids can have one.
I do take exception to the "credit checks are easily passable for a child" - you clearly have no idea about the systems, reports and information that finance companies have access to, which is why we decline at least 30% of applicants (and even more get "termed"). In order to get finance you need to be registered on voters role for at least three years at the current address and also at previous addresses. You need to have established yourself as a good payer and have no adverse information at disclosed or undisclosed addresses (and we can find all linked addresses whether disclosed or not) - yes, big brother is watching!
Biggest issue with the credit card/personal loan is that even when people find that they can't afford the payments they still don't sell the goods to repay their loan. Also, the comment regarding "you're locked into owning it until the end", that is just wrong. If you want to pay off the outstanding amount you get most of the interest removed and can do this or a partial early settlement at any time during the agreement. As an indicator, taking all of our 36 month loans into account, only 25% are still live after 2 years. People just do whatever is convenient for them at the time.

[thefallenangel]

Nail on the head. There is so much wrong with societies attitudes towards goods these days. People now aspire to drive PCP Audi's and live in their new barratts "made from cheese" house, then spend their life living out of paying monthly payments. All really for the sake that they care what people think when they look at them. That might get some people's backs up but it's true. No one NEEDS to buy a new car or bike they just want to, which is fine, but then when they loose their income it's the governments fault for not paying enough job seakers.

Buying something on a loan/credit card fair enough if you can afford it, as SP1 said if all goes t!ts up you actually own the vehicle with no loans/finance secured against it, if you can still keep it great but if not just flog it to cover the repayments or pay it off. Purchasing things on finance on the other hand i just don't see the appeal. You don't own it until the end, you're locked into owning it until the end, realistically not many people will buy it off you until the finance is cleared, if it's written off you loose **** loads of money... ect ect.

I think alot of people look at buying stuff on finance because it's easy. The credit checks are easily passable for a child, everything gets arranged around you and all you have to do is sign your name and you never get to see what you're paying over the odds for.

As i said in the other thread, maybe I'm just old fashioned but I like owning stuff 100% and I like to hand over my money when I buy it.


Yes, Yes, Yes. I can understand companies doing this as breakdowns of their company cars can cost them a blokes labour at £30+ hour and customer problems but people don't need a new car every 3 years because the warranty has run out and it needs 2 new tyres.

[Wideboy]

By and large, I agree with you but credit is, unfortunately the way of the world now. Nobody actually needs an iphone but millions of people are paying £500+ so that their kids can have one.
I do take exception to the "credit checks are easily passable for a child" - you clearly have no idea about the systems, reports and information that finance companies have access to, which is why we decline at least 30% of applicants (and even more get "termed"). In order to get finance you need to be registered on voters role for at least three years at the current address and also at previous addresses. You need to have established yourself as a good payer and have no adverse information at disclosed or undisclosed addresses (and we can find all linked addresses whether disclosed or not) - yes, big brother is watching!
Biggest issue with the credit card/personal loan is that even when people find that they can't afford the payments they still don't sell the goods to repay their loan. Also, the comment regarding "you're locked into owning it until the end", that is just wrong. If you want to pay off the outstanding amount you get most of the interest removed and can do this or a partial early settlement at any time during the agreement. As an indicator, taking all of our 36 month loans into account, only 25% are still live after 2 years. People just do whatever is convenient for them at the time.

I know the basics for passing a credit check as i have a mortgage and i couldn't have been accepted for it unless I had some sort of credit at some point, But i don't necessarily think it's difficult to get credit or find a way round the checks. One of my friends car went pop and he went to a local popular vauxhall dealer and got accepted on a 6 grand finance deal on a zafira. All good and well, but this person had 2 maxed out credit cards, lived in his over draft, wasn't a home owner and had a number of other purchases on finance which he didn't pay on time all to the point where he had credit companies ringing him all over the place. There is no way on earth he should have been acceptable on finance for £60 quid let alone £6000. I can only think that him as his misses got the finance signed in one of their parents name. I remember watching the essex car dealer program on c4 not long ago where a woman was trying to by some over priced merc on finance, she had all sorts of out goings and bad credit so of coarse she was rejected..... then so was 2 of her friends when finally her sister just scraped the checks and took the agreement. Whilst I appreciate that the credit check system can't take into consideration the lengths some people will go to get something they can't afford I do think its fundamentally flawed in that sense. There should really be some sort of clause in the T&C's to stop people doing this.

In regards to the "locked in" thing, I understand that there usually isn't anything signed in to stop you "paying out" of the agreement, what i meant was that you are locked into owning the vehicle, most people would walk away from a sale if the vehicle came up as having outstanding finance. I know the buyer can pay the funds direct to the finance company but really how many buyers can be bothered with all that? chances are the seller with finance won't accept a lower price than someone without as they have a price to clear that, depending on how long the finance has been running, could be more than the bike is worth second hand. Most buyers will walk as they'd possibly get a better deal else where.

[Ninthbike]

"There should really be some sort of clause in the T&C's to stop people doing this" - there is. This is known as an accommodation deal and, if discovered can result in the perpetrators being prosecuted for fraud. We also run overnight checks for any links between accepted and declined deals so that an acceptance can be withdrawn if, for instance the original customer gets their mum, dad, uncle, aunt etc to take the finance for them. If someone was stupid enough to take out a finance agreement for someone like your friend then they deserve all they get. The finance company would be coming to them for the money when payments are missed and when they say "the car was for my "........" they also risk being prosecuted.

Lenders now have a legal duty to ensure that they are lending responsibly and will shortly be confirming income and outgoings before lending as this will soon be required by the FCA. In addition, the "£99 deposit" deals will probably become a thing of the past to ensure that the customer has shown some financial commitment to the agreement and is far less likely to find themselves in a negative equity situation.

[JamesMio]

Real life example then.

I was looking at a new Tiger 800, £8199 from a dealer, free top box / heated grips / screen.
They offered me peanuts for my old bike in P/X (£1000), so I'd be looking at £7199 to swap.

£1739 down, plus £240 various credit fees. (£1979)

1 x £175 then 35 x £99 p/m (£3640) on PCP, plus a final payment of about £4315 at the end to own it.

Total: £9694 (less £1000 p/x), = £8694.

OR...

Find a spotless, well cared for, sub 9000 miler 3 year old one, ride it home for half that cost and keep the old bike.

Saved: £4500 (easy!!), and all I'd notice in reality between that and a new bike is the number plate says 11 and not 14.

[NTECUK]

If your going to put some proper milage on the Tiger. Your get stung at the end. They only allow about 3,000 miles p/a
So second hand is looking better.

[thefallenangel]

Real life example then.

I was looking at a new Tiger 800, £8199 from a dealer, free top box / heated grips / screen.
They offered me peanuts for my old bike in P/X (£1000), so I'd be looking at £7199 to swap.

£1739 down, plus £240 various credit fees. (£1979)

1 x £175 then 35 x £99 p/m (£3640) on PCP, plus a final payment of about £4315 at the end to own it.

Total: £9694 (less £1000 p/x), = £8694.

OR...

Find a spotless, well cared for, sub 9000 miler 3 year old one, and ride if home for half that and keep the old bike.

Saved: £4500 (easy!!), and all I'd notice in reality between that and a new bike is the number plate says 11 and not 14.

Ah yeah but it's shineysssssssss.

To OP, I think you are in the wrong place to try and convince people. This forum is for bikes which are converted to peoples tastes with suspension, cosmetic etc . . .mods. We aren't about going as fast as we can, it's more enjoying the ride as most of us don't have power ranger suits which would be the only reason I could see use for PCP.

[JamesMio]

If your going to put some proper milage on the Tiger....

1000 miles in the first 7 days... I like this bike! ;)

[Ninthbike]

Real life example then.

I was looking at a new Tiger 800, £8199 from a dealer, free top box / heated grips / screen. So no discount then??
They offered me peanuts for my old bike in P/X (£1000), so I'd be looking at £7199 to swap. Nothing stopping you from selling your own bike.

£1739 down, plus £240 various credit fees. (£1979) These are included in the payments below so you have over-estimated.

1 x £175 then 35 x £99 p/m (£3640) on PCP, plus a final payment of about £4315 at the end to own it. Or swap it for a new one, use the equity as deposit and carry on paying £99 per month.

Total: £9694 (less £1000 p/x), = £8694.

OR...

Find a spotless, well cared for, sub 9000 miler 3 year old one, ride it home for half that cost and keep the old bike.

Saved: £4500 (easy!!), and all I'd notice in reality between that and a new bike is the number plate says 11 and not 14.

...........unless something goes wrong with it and you end up asking forum members for clues on how to fix it! As I said before, if you took the new one you then get to do exactly what you've just done in 3 years time with a bike that you've had since day one (so you KNOW it has been cared for, not just suspect). Everyone has their own preferences and neither is right or wrong but people should be (and are) free to make their own choices.:)

[Ninthbike]

If your going to put some proper milage on the Tiger. Your get stung at the end. They only allow about 3,000 miles p/a
So second hand is looking better.

Wrong! Standard mileage is 6000 p.a. and we are currently looking at a range between 2000 and 10000.

[Spank86]

I know the basics for passing a credit check as i have a mortgage and i couldn't have been accepted for it unless I had some sort of credit at some point,

I was.


My mortgage is the only loan or debt I've ever had.

Didn't even have an overdraft till the week before when I set one up.

[Ninthbike]

Ah yeah but it's shineysssssssss.

To OP, I think you are in the wrong place to try and convince people. This forum is for bikes which are converted to peoples tastes with suspension, cosmetic etc . . .mods. We aren't about going as fast as we can, it's more enjoying the ride as most of us don't have power ranger suits which would be the only reason I could see use for PCP.

I'm not trying to convince anyone, just to correct some of the misconceptions regarding PCP. If you go into a purchase convinced that it is not for you then that's fine. Remember also that it is not only for new bikes and used up to 4 years old can also be bought with very low payments and the majority of depreciation already done. Completely don't understand the logic behind your last sentence.:smt017

[NTECUK]

Or buy a warranty. And take it to the dealer.
New bikes that go wrong usually do it in the first 3,000 miles.

[Ninthbike]

Or buy a warranty. And take it to the dealer. Only to find that they don't deal with that warranty company so you'll need to take it to one of their approved repairers. Most franchised dealers only recognise the manufacturer-backed warranty unless they get paid up front.
New bikes that go wrong usually do it in the first 3,000 miles.
.

[JamesMio]

I'd like to think any of the 3 good, local independent bike garages I have near me would be able to fix anything that goes wrong, and for well under the £4500 I saved by buying a great used bike rather than a brand spanker.

BTW - I'm not having a go, it's great having someone on board who knows the details of PCP/Finance inside out, and the Orgs a better place for having you here! Different strokes for different folks, I personally didn't 'get' the need to spend double on what ultimately was an identical bike, minus a top box, plus 9000 miles.

[Ninthbike]

I'd like to think any of the 3 good, local independent bike garages I have near me would be able to fix anything that goes wrong, and for well under the £4500 I saved by buying a great used bike rather than a brand spanker.

BTW - I'm not having a go, it's great having someone on board who knows the details of PCP/Finance inside out, and the Orgs a better place for having you here! Different strokes for different folks, I personally didn't 'get' the need to spend double on what ultimately was an identical bike, minus a top box, plus 9000 miles.

Thanks. Like I said, it's not for everyone but I hate it when people make choices based upon incorrect information or understanding. I personally would probably not take a PCP agreement but only because I can buy new bikes very cheaply which mitigates the depreciation. Fortunately lots of people still buy new bikes, otherwise there would be no used ones about for others to buy.

[shurm]

Real life example then.

I was looking at a new Tiger 800, £8199 from a dealer, free top box / heated grips / screen.
They offered me peanuts for my old bike in P/X (£1000), so I'd be looking at £7199 to swap.

£1739 down, plus £240 various credit fees. (£1979)

1 x £175 then 35 x £99 p/m (£3640) on PCP, plus a final payment of about £4315 at the end to own it.

Total: £9694 (less £1000 p/x), = £8694.

OR...

Find a spotless, well cared for, sub 9000 miler 3 year old one, ride it home for half that cost and keep the old bike.

Saved: £4500 (easy!!), and all I'd notice in reality between that and a new bike is the number plate says 11 and not 14.

If you haven't got £4500 though in cash a 5% flat loan over 5 years its £93.75 a month for a 3 year old bike.

I got a new Tiger with ABS and all that kit for £99 a month with no deposit on a pcp, it was a no brainer for me.

[NTECUK]

I got a new Tiger with ABS and all that kit for £99 a month with no deposit on a pcp, it was a no brainer for me.

At the end though what have you got to show for £1200 pa
Ok it's a good idea if like me you want a tiger as a intrum bike (till I get a replacement knee).
I can get shot of it no px or selling agro but most on hear like to keep a bike more than two years.

[shurm]

I've only had it since August just sold it and covered the finance, I get bored with bikes quickly I usually get 1 or 2 a year, I try and get a great discount put little or no deposit in and sell again in 6 months and cover the outstanding finance. I've done it for years sure it's like renting a bike I never own one but if I can afford the payment I'm happy to do this.
If you have the cash your only watching it depreciate each month anyway by about the same amount, why do people want to own a depreciating asset ?

[NTECUK]

Because feteling and hoaning a bike is a hobby too.
When you find the right one its a relationship.
Daytona 675 2013 :makelurve:

[Paul the 6th]

some genuinely interesting insights into PCP on this thread, thank you OP.

[Matt-EUC]

May I suggest making this a sticky thread?