Bikes bought on PCP?
Discussion
There is the basic rule that no-one is out there to give you, the punter, charity. Everyone is out there to make money and if you are the one "buying" the bike then it's you they are making money from. The more people involved in the process the more money that has to be made.
As a bike is depreciating asset, there is a gamble on the final value of the bike at the end of the PCP deal. The risk around that final value is generally on you but, very occasionally, there can be deals where the risk is more on the seller/PCP provider. Those don't happen to often as the seller/PCP provider would make a loss and that is not long term sustainable. That means that in addition to normal profit, your payments also have to allow for that risk to be covered.
That means you are almost always paying more for the PCP deal than you would for an outright purchase. However, you don't need the same amount of money up front so those who wight struggle to get the full purchase price up front can still get a nice shiny new bike.
It's not an approach for me but then I do understand that it may be an approach for some.
As a bike is depreciating asset, there is a gamble on the final value of the bike at the end of the PCP deal. The risk around that final value is generally on you but, very occasionally, there can be deals where the risk is more on the seller/PCP provider. Those don't happen to often as the seller/PCP provider would make a loss and that is not long term sustainable. That means that in addition to normal profit, your payments also have to allow for that risk to be covered.
That means you are almost always paying more for the PCP deal than you would for an outright purchase. However, you don't need the same amount of money up front so those who wight struggle to get the full purchase price up front can still get a nice shiny new bike.
It's not an approach for me but then I do understand that it may be an approach for some.
black-k1 said:
There is the basic rule that no-one is out there to give you, the punter, charity. Everyone is out there to make money and if you are the one "buying" the bike then it's you they are making money from. The more people involved in the process the more money that has to be made.
As a bike is depreciating asset, there is a gamble on the final value of the bike at the end of the PCP deal. The risk around that final value is generally on you but, very occasionally, there can be deals where the risk is more on the seller/PCP provider. Those don't happen to often as the seller/PCP provider would make a loss and that is not long term sustainable. That means that in addition to normal profit, your payments also have to allow for that risk to be covered.
That means you are almost always paying more for the PCP deal than you would for an outright purchase. However, you don't need the same amount of money up front so those who wight struggle to get the full purchase price up front can still get a nice shiny new bike.
It's not an approach for me but then I do understand that it may be an approach for some.
PCP is for used vehicles too, not just new. Although there can be age restrictions on what qualifies.As a bike is depreciating asset, there is a gamble on the final value of the bike at the end of the PCP deal. The risk around that final value is generally on you but, very occasionally, there can be deals where the risk is more on the seller/PCP provider. Those don't happen to often as the seller/PCP provider would make a loss and that is not long term sustainable. That means that in addition to normal profit, your payments also have to allow for that risk to be covered.
That means you are almost always paying more for the PCP deal than you would for an outright purchase. However, you don't need the same amount of money up front so those who wight struggle to get the full purchase price up front can still get a nice shiny new bike.
It's not an approach for me but then I do understand that it may be an approach for some.
Can you provide an example of a PCP deal that doesn't have a guaranteed value? I'm no expert, but it isn't something I've seen. Being that I thought that was the entire point, that you can simply hand the car back at the end of the term if you so wish.
300bhp/ton said:
black-k1 said:
There is the basic rule that no-one is out there to give you, the punter, charity. Everyone is out there to make money and if you are the one "buying" the bike then it's you they are making money from. The more people involved in the process the more money that has to be made.
As a bike is depreciating asset, there is a gamble on the final value of the bike at the end of the PCP deal. The risk around that final value is generally on you but, very occasionally, there can be deals where the risk is more on the seller/PCP provider. Those don't happen to often as the seller/PCP provider would make a loss and that is not long term sustainable. That means that in addition to normal profit, your payments also have to allow for that risk to be covered.
That means you are almost always paying more for the PCP deal than you would for an outright purchase. However, you don't need the same amount of money up front so those who wight struggle to get the full purchase price up front can still get a nice shiny new bike.
It's not an approach for me but then I do understand that it may be an approach for some.
PCP is for used vehicles too, not just new. Although there can be age restrictions on what qualifies.As a bike is depreciating asset, there is a gamble on the final value of the bike at the end of the PCP deal. The risk around that final value is generally on you but, very occasionally, there can be deals where the risk is more on the seller/PCP provider. Those don't happen to often as the seller/PCP provider would make a loss and that is not long term sustainable. That means that in addition to normal profit, your payments also have to allow for that risk to be covered.
That means you are almost always paying more for the PCP deal than you would for an outright purchase. However, you don't need the same amount of money up front so those who wight struggle to get the full purchase price up front can still get a nice shiny new bike.
It's not an approach for me but then I do understand that it may be an approach for some.
Can you provide an example of a PCP deal that doesn't have a guaranteed value? I'm no expert, but it isn't something I've seen. Being that I thought that was the entire point, that you can simply hand the car back at the end of the term if you so wish.
anonymous said:
[redacted]
6% was up to 2016 but 5% was up to Oct 2019.https://www.thisismoney.co.uk/money/saving/article...
NS400R said:
Funny how everyone knows what I got better than me..... But hey, why not argue with an accountant 
I think people are just trying to understand how you got such rates when is "non-accountant lesser mortals" get lesser deals. We'd all much rather be getting the better deals.Edited by NS400R on Wednesday 24th February 12:00
Killboy said:
bulldong said:
I agree with you, it does seem like a victim arrangement. I live in Austria, where riding between end October/end February is really neither sensible or done. I was at the BMW shop the other day and a 1250gs is €27k with some extras. €330/month pcp with x down and 8k km/year. The purchase price is one thing but €330/month seemed like a lot considering that it doesn’t include insurance, tax, fuel, tyres. Probably at least €500/month all in plus 4 months of winter.
Considering most of the trips I do are round the mostly local area (up to 100km away) it’s probably better to rent it when you need an ADV bike and have something more nimble.
27k over 3 years would be about 800 per month on a normal repayment right? Add the 170 per month you estimated for fuel, insurance etc, and you nearly at 1k per month. 500 is looking like a bargain for something that will be worth a lot less in 3 years.Considering most of the trips I do are round the mostly local area (up to 100km away) it’s probably better to rent it when you need an ADV bike and have something more nimble.
Decent deals can balance out great. If it works out you are mostly paying off depreciation there is very little difference doing it either way.
ETA: sorry just re-read what you wrote and think I misunderstood. It’s one way of looking at it, although €500 per month leaves you with nothing at the end.
Biker 1 said:
I've had several cars on 0% PCP. Worked out favourably to loan/HP over the years, but the mileage restrictions on bike PCP don't stack up IMO.
Its the mileage restrictions that put me off too. I ended up getting a loan for my bike which probably works out more expensive (although won't bother to compare as its of no relevance to me). The whole thing with a bike is the sense of freedom, having to worry about how many miles I've done or about using miles for more mundane journeys it just seems very unappealing. I would potentially consider PCP'ing something special for the weekends but never my main bike
bulldong said:
No, the €330/month included a downpayment and a balloon payment. Think it was financing around €13k.
ETA: sorry just re-read what you wrote and think I misunderstood. It’s one way of looking at it, although €500 per month leaves you with nothing at the end.
Paying 1k for 36 months and for something that ends up worth 15k is not any better.ETA: sorry just re-read what you wrote and think I misunderstood. It’s one way of looking at it, although €500 per month leaves you with nothing at the end.
anonymous said:
[redacted]
I have 2.75% on my First Direct Regular Saver account but that's limited to a maximum of £3,600 paid by 12 x £300 payments. As far as I know, this is the highest rate they currently offer.As for PCP, if you've got a good price for the bike and you've got 0% interest, why wouldn't you use PCP? Is there are better method of acquisition than not having to pay interest and deferring a final payment?
I think some people get confused and assume you must return the bike at the end of term or must exchange it for another, which simply isn't the case. PCP is a method of purchase, not a method of leasing.
As has been said, its all down to each deal, the way I view it is if the total cost of funding the bike is equal to or less than what I would expect to get for it 3 years down the line then I PCP knowing its easy in / easy out, have done this with my last 3 commuter bikes on 10k per annum and even upon upgrade or in the last case, handback, I have come out either neutral or slightly ahead with no further liability, that includes any excess mileage charges.
I don't want to own my workhorse, I want it for a fixed period and then either change or get rid, regardless of how I fund it there will be depreciation to pay, this way if I get the numbers right I'm no worse off than if I got the money out the bank, my cars and track bikes are cash and paid for and our little i3 car is on an all inclusive medium term rental plan, method of acquisition is wholly dependent on circumstance.
My next road bike will either be up to 8k cash and used or will be a c15k new bike and PCP, all depends on what the world does and my requirement to return to riding in and out of London.
Horses for courses really ....
I don't want to own my workhorse, I want it for a fixed period and then either change or get rid, regardless of how I fund it there will be depreciation to pay, this way if I get the numbers right I'm no worse off than if I got the money out the bank, my cars and track bikes are cash and paid for and our little i3 car is on an all inclusive medium term rental plan, method of acquisition is wholly dependent on circumstance.
My next road bike will either be up to 8k cash and used or will be a c15k new bike and PCP, all depends on what the world does and my requirement to return to riding in and out of London.
Horses for courses really ....
Killboy said:
bulldong said:
No, the €330/month included a downpayment and a balloon payment. Think it was financing around €13k.
ETA: sorry just re-read what you wrote and think I misunderstood. It’s one way of looking at it, although €500 per month leaves you with nothing at the end.
Paying 1k for 36 months and for something that ends up worth 15k is not any better.ETA: sorry just re-read what you wrote and think I misunderstood. It’s one way of looking at it, although €500 per month leaves you with nothing at the end.
black-k1 said:
However, if the bike is actually only worth £4000 then you end up either paying more for the bike than it's worth, or carrying over a larger debt to your next purchase, thus getting a lesser deal, than you would if you simply turned up with £5000 in cash.
This bit I don't understand, there is no debt if the bike is worth less than the final repayment, you just hand it back, the gamble with the GFV is the finance companies problem, not yours, or mine, there is nothing to carry into the next deal, or am I missing something??hucumber said:
Its the mileage restrictions that put me off too. I ended up getting a loan for my bike which probably works out more expensive (although won't bother to compare as its of no relevance to me). The whole thing with a bike is the sense of freedom, having to worry about how many miles I've done or about using miles for more mundane journeys it just seems very unappealing.
I would potentially consider PCP'ing something special for the weekends but never my main bike
They don't really matter unless you are planning to hand the bike back to the finance company and walk away and not take another PCP, or PX for something else, my Z1000SX was 6k over the 'allowed' miles at 26 months into a 36 month pcp, I just traded it in against a new bike and the dealer was happy to get my signature on a new contract, there was no equity in the bike as I changed early but there was no penalty either, the dealer got a mint average mileage 3 year old bike to retail and sold me a new one.I would potentially consider PCP'ing something special for the weekends but never my main bike
Edited by Jazoli on Wednesday 24th February 14:59
black-k1 said:
I'm not sure I understand the question. The point about the risk is that the guaranteed value is a gamble. If, by chance, you get to the end of the term and the balloon payment is, say, £5000, but the bike as actually realistically worth £7,500 then you've won on the risk gamble. You can pay off the balloon payment and sell the bike, immediately pocketing £2,500. However, if the bike is actually only worth £4000 then you end up either paying more for the bike than it's worth, or carrying over a larger debt to your next purchase, thus getting a lesser deal, than you would if you simply turned up with £5000 in cash.
The clue is in 'guaranteed value'. If you get to the end of term and the bike is only worth £4,000 then you can walk away from it and you're effectively £1,000 up because you haven't lost that in depreciation compared to a hire purchase or cash buyer over the same term. Whilst you can carry over credit to another bike at the end of term, you cannot carry debt over.Not targeting you directly, black-K1, but It's worrying how ignorant some people are when it comes to finance, how it works and how its managed yet still have opinions on it.
TinyMonster said:
black-k1 said:
I'm not sure I understand the question. The point about the risk is that the guaranteed value is a gamble. If, by chance, you get to the end of the term and the balloon payment is, say, £5000, but the bike as actually realistically worth £7,500 then you've won on the risk gamble. You can pay off the balloon payment and sell the bike, immediately pocketing £2,500. However, if the bike is actually only worth £4000 then you end up either paying more for the bike than it's worth, or carrying over a larger debt to your next purchase, thus getting a lesser deal, than you would if you simply turned up with £5000 in cash.
The clue is in 'guaranteed value'. If you get to the end of term and the bike is only worth £4,000 then you can walk away from it and you're effectively £1,000 up because you haven't lost that in depreciation compared to a hire purchase or cash buyer over the same term. Whilst you can carry over credit to another bike at the end of term, you cannot carry debt over.Not targeting you directly, black-K1, but It's worrying how ignorant some people are when it comes to finance, how it works and how its managed yet still have opinions on it.
TinyMonster said:
anonymous said:
[redacted]
I have 2.75% on my First Direct Regular Saver account but that's limited to a maximum of £3,600 paid by 12 x £300 payments. As far as I know, this is the highest rate they currently offer.As for PCP, if you've got a good price for the bike and you've got 0% interest, why wouldn't you use PCP? Is there are better method of acquisition than not having to pay interest and deferring a final payment?
I think some people get confused and assume you must return the bike at the end of term or must exchange it for another, which simply isn't the case. PCP is a method of purchase, not a method of leasing.
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