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Looking at new motorbikes and money doesn't talk like it used to so have got some details on PCPs
They look OK cost of finance is around £2.5k and the GMFV seems reasonable in fact the theoretical collateral towards another bike in 3 years time is quite appealing.
But does it work out in practice?
Any advice/experiences welcome
Ta
WTF is a PCP and a GMFV?
PCP, essentially a hire-purchase.
They work out OK usually, but depends on the bike often
Guarenteed monetary final value ?
Why would you want to keep it for 3 years?
Depends on the value of the bike tbh.
£2500 cost for finance is not cheap. £10k at 5% flat rate is going to cost between £1500 and £2000 between 36 & 48mths.
£10k buys you a lot of bike these days but also you don't own this bike at the end. You work on the premise that there is some equity in the GFV which is a guess. No guarentees.
You have to ask a few questions
1) Would it be easier for you to just take the finance over a further 12-24mths and own the blooming thing
2) Are you getting a better deal going on the PCP deal. PCP is THE NUMBER ONE way for manufacturers to sell vehicles of any ilk. They should be the heaviest supported deal available
3)Be carefull you are not just going to be renting the bike for 3-4yrs and have nothing to show for it.
To give you a contrast. I wanted a fiat 500 3yrs ago. I bought it on pcp for the following reasons
1) Finance rate worked out at 0.2%.
2) I fully intended to own it outright
3) I set the mileage and monthly payments as high as their computer would allow so the GFV was as low as possible
4) I paid the last payment with a smile on my face.
Is disappointed, I thought PCP was a drug.....
Hmm if I go down the PCP route I would have no intention of keeping the bike. I don't need the finance but the dealers/finance are being a bit vague about the future market value vs the GMFV (as you might expect)
Assuming I stick to the mileage/servicing and the vehicle is in appropriate condition does the deal work out favourably (in terms of using the collateral to start a new PCP)
I know this is a how-long-is-a-piece-of-string question but any experiences with PCPs cars or bikes would be welcome
I thought it was a chest infectionIs disappointed, I thought PCP was a drug.....
I don't need the finance ...
Why use it then ?
You will be paying interest you don't need to, and stuck in for a set amount of time. Then relying on the finance company's valuation of the bike at the end.
Surely you are better off not using it, having the flexibility to sell privately (on your terms, at your price) whenever you want. Then buying another bike.
Hmm if I go down the PCP route I would have no intention of keeping the bike.
As above, Why not???
I don't need the finance but the dealers/finance are being a bit vague about the future market value vs the GMFV (as you might expect). Asuming I stick to the mileage/servicing and the vehicle is in appropriate condition does the deal work out favourably (in terms of using the collateral to start a new PCP).
As you said, how long is a piece of string? If you stack it up with the lowest mileage possible and return it in A1 condition then you can get away with having really cheap monthly payments or a bit of equity in it. But if you return it in less than A1 condition with a excess mileage bill to pay and less than legal tyres with a service due, then you may find yourself out of pocket just returning the bike.
I hinted above at how you can protect yourself from this whilst being no worse off. Either don't take the PCP and take a longer term HP or stack the pcp up so that you are always in the positive. Big deposit, big contract mileage and low GFV. It costs you more on the monthlys but you will be in a great position to make a choice at the end of the contract rather than the dealer 'getting you out' of the contract if done on the cheap
[b]Caution[/b]: the below is from the POV of a punter only. I'm sure there are more knowledgeable people on here.
PCP is a really useful tool for buyer, seller, manufacturer and finance company.
IME, as a buyer the things to care about are:
1. Minimise overall purchase price.
2. Minimise interest charges on financed portion.
3. Don't pay finance on things like delivery charges, road tax, etc.
4. If you don't want to keep it but will continue with a new bike*: Pay a low deposit, choose a low to moderate mileage allowance, choose a longer term (i.e. 4 years instead of 3)
As with all vehicle purchases (running costs aside), what you're paying for is depreciation.
I think it's a great way to own a new vehicle and have some certainty over how much you pay.
*This is the variable bit - depends what your long term plans are. Also depends if you can get more return on your money in the bank than the interest charges on the finance cost you.