Finance fell through!!

Without going into to much detail my finance deal fell through today and after speaking to a few people on this forum i was well gutted cos i really want to get back into bikes.

Just want to check something before i commit as the finance guy at the shop i want to buy my sv650 sport from said i can get a deal where i get three options at the end of the period i commit to....

1. Hand the keys and the bike back to the shop and walk away.
2. Hand the bike back and get an upgrade.
3. Pay the remainder of what i owe and then the bike belongs to me.

Its called Personal contract plan (PCP) and something to do with a bubble payment at the end. After the 3 years is up he thinks my bike will be worth £1800. He said many bikers do this so they never have to MOT their bikes and some even do it before the warranty runs out.

Am i being ripped off or is this as good as it sounds???

sounds about right this kind of scheme has been around in the car world for years! depends what you want doesnt it!! you are basicaly renting a bike, however alot depends on what condition the bike is in after three years.

Its common with cars as well but I'm not sure how good a deal. But thats finance too in a way, so how can he do that for you and not a straight finance deal? Is it becasue its basically rental?

Originally Posted by pupdog123

Am i being ripped off or is this as good as it sounds???

He's talking about "Guaranteed Future Value" and it's common in the car trade for private buyers.

The idea is that you use the bike/GFV as the deposit on your next bike in three years time. So, in theory, for about the same monthly payment you could "upgrade" to a bike with a retail price about £1800 more than you paid for your SV.

There are upsides, and downsides:

Upsides:
You payments are lower because you are not repaying capital to the value of the GFV

Usually, the GFV is set at rock bottom, and what your bike is really worth in three years will be more than that = even better new bike or lower repayments next time.

You get a new bike every three years

Downsides:
You will never completely own your bike (unless you stump up a cash amount = GFV at the end of the deal).

You are committed to the deal, i.e. you have to find £1800 in three years time if you want to keep your bike. If you haven't got £1800 you have to sell the bike or go for another deal.

You will be committed to that dealer and his make of bikes.

There will be mileage limits/penalty payments for excess mileage

You will almost certainly have to have the bike serviced at the dealers (some deals might include servicing in the payments).



If it's what you want then go for it, but go in with your eyes wide open

Originally Posted by pupdog123

Without going into to much detail my finance deal fell through today and after speaking to a few people on this forum i was well gutted cos i really want to get back into bikes.

Just want to check something before i commit as the finance guy at the shop i want to buy my sv650 sport from said i can get a deal where i get three options at the end of the period i commit to....

1. Hand the keys and the bike back to the shop and walk away.
2. Hand the bike back and get an upgrade.
3. Pay the remainder of what i owe and then the bike belongs to me.

Its called Personal contract plan (PCP) and something to do with a bubble payment at the end. After the 3 years is up he thinks my bike will be worth £1800. He said many bikers do this so they never have to MOT their bikes and some even do it before the warranty runs out.

Am i being ripped off or is this as good as it sounds???

Have you tried anywhere else for the finance? Or a bank loan? Your own bank is very likely to support you unless you've been as bad a boy as I have, that is.

Thanks for the response I have been told that one of the main reasons I didnt get finance is because I have a bit of a divorce ( get out of my life forever loan) and that I may have been a bit of a risk for 0%. I have a contract phone and have no further debts so I was well shocked and embarresed when they told me today. I will double check on all the downsides, he is also trying to persuade me to go for gap insurance which sounds like a good ide but not sure>

once again thanks

When you say you can use your bike's GFV as a deposit of £1800 on a new bike, isn't that incorrect as you haven't paid off the finance on the bike (by £1800)?

This is all dependent that the monthly payments are specifically intended to be matched, so they don't leave you in either positive or negative equity.

For example....

You buy the SV at £4400, and pay £72.22/month on the PCP. After 3 years, that leaves you £1800 to pay off still, and a bike worth £1800.

But I don't know how you can use that bike as a deposit against one with an RRP £1800 higher than the SV's £4400 (so £6200) - because to use that bike as deposit, you have to own it, and to own it you have to pay £1800.

Anyway, as mentioned you are basically renting but never own.

this sounds odd.

What exactly "fell through"?

The dealer is still offering you finance, but as previous poster has mentioned tying you in. Was it a Hire Purchase agreement through someone else? Was it a bank loan?

I just don't get how your finance deal can collapse and then be offered another type of finance.

If you're a bad risk (as the industry would say) then you're a bad risk and wouldn't generally be accepted at any other finance company, less those specialising in ripping the bad risk folk off with higher interest charges

Edit - It sounds like they're talking ********. If you've kept up payments on the loan then you're not considered bad risk.

Originally Posted by muffles

But I don't know how you can use that bike as a deposit against one with an RRP £1800 higher than the SV's £4400 (so £6200) - because to use that bike as deposit, you have to own it, and to own it you have to pay £1800.

I should clarify, I don't know how you can use that bike as a deposit against one with an RRP £1800 higher than the SV's £4400 and still have the same monthly payments.

got it for £4000 and put deposit down of £400 so i owe £3600, he is qouteing me £92.00 a month with gap insurance, good or bad????