Buying a new bike on PCP

[O8ride]

Travelled to Reading and back with a mate today and we were chatting about purchasing a vehicle (bike or car or other) through PCP. My initial reaction to PCP has always been - WTF? I still have to pay off that much at the end!

But my mate explained it. At £99 a month over 3 years, you are paying £3600 for a new bike for 3 years, that probably costs £8,500, and is now worth £4k. So you've lost more money through depreciation (in UK, you lose 20% immediately on VAT as you ride it off the forecourt) than on having the bike for 3 years and handing it back. No MOT issues after 3 years either.

So you just hand it back and move onto another new bike, as you have saved money on the bike by using it and handing it back. He explained this is how it happens across France.

I hadn't thought of it that way, and solely thought about emotional attachment and ownership of that bike and how much it would cost at the end to buy the rest of it out. But that is totally the wrong way, and the expensive way to look at it. Just get a newer one on PCP.

Anyone got any views on this?

 

[RoninK6]

Isn't PCP a drug ???

 

[dandoolittle]

This is something that I've thought about but I found the terms to be a little confusing and when I asked I had to do under 5k miles a year

 

[renegadebiker24]

Travelled to Reading and back with a mate today and we were chatting about purchasing a vehicle (bike or car or other) through PCP. My initial reaction to PCP has always been - WTF? I still have to pay off that much at the end!

But my mate explained it. At £99 a month over 3 years, you are paying £3600 for a new bike for 3 years, that probably costs £8,500, and is now worth £4k. So you've lost more money through depreciation (in UK, you lose 20% immediately on VAT as you ride it off the forecourt) than on having the bike for 3 years and handing it back. No MOT issues after 3 years either.

So you just hand it back and move onto another new bike, as you have saved money on the bike by using it and handing it back. He explained this is how it happens across France.

I hadn't thought of it that way, and solely thought about emotional attachment and ownership of that bike and how much it would cost at the end to buy the rest of it out. But that is totally the wrong way, and the expensive way to look at it. Just get a newer one on PCP.

Anyone got any views on this?

08ride, I am curious, what is "PCP"? Here in the states, it's meaning is considered as an illegal drug. Otherwise known as "Angel Dust".
Is that meaning something like a Powersport Company, or a motorcycle buying association in England?

 

[O8ride]

PCP is a "personal contract purchase" finance plan, sort of in the same mould as a company car arrangement.

You agree terms, such as annual mileage and low per month payments, for a period of months (36 or 48, say).

At the end of that term, you can choose to pay a lump sum (or take a bank loan) to buy what is owed on the bike, or you can choose to hand it back and walk away. Or start a new PCP contract on a new bike.

I think that is how it works. I always thought it was not for me as I was looking at it with the lens of the final payment and owning a (depreciating) asset. My mate let me look at it as a different proposition, where the conscious decision to hand back the vehicle is upfront

 

[renegadebiker24]

PCP is a "personal contract purchase" finance plan, sort of in the same mould as a company car arrangement.

You agree terms, such as annual mileage and low per month payments, for a period of months (36 or 48, say).

At the end of that term, you can choose to pay a lump sum (or take a bank loan) to buy what is owed on the bike, or you can choose to hand it back and walk away. Or start a new PCP contract on a new bike.

I think that is how it works. I always thought it was not for me as I was looking at it with the lens of the final payment and owning a (depreciating) asset. My mate let me look at it as a different proposition, where the conscious decision to hand back the vehicle is upfront

Thanks for clearing that up. I have never heard of that term before. It sounds like a lease program here in the USA, I think. Is the depreciation that much once the term is up?

 

[Kevin1123]

I bought my 750R for cash, £7,000. Eighteen months later, it's worth £3,500 as a trade in, so with all the taxes and rubbish, I lose 50%... of any bike that I buy. I'm not a rich man I cant afford that, So trade in is out the window. I set by a lump out of my wages every month, out of that 'fund' I maintain my bike and save for the next... changing bikes, yearly or even two yearly can be a very expensive hobby.

PCP wont touch me because of the mileage restriction, so I'd be paying a third of my bike fund every month on a machine I wouldn't be able to use... which would be pretty grim.

Save for the bike you want, there's enough taxes in this country without paying interest on loan agreements as well. Tough news, but sensible. You will appreciate your bike more if it starts off as yours

Riders ethos.. ' I want a working bike, ready to ride at any time, for as long as I can get my leg over a saddle'

What do I need to sacrifice to achieve that goal... top tip, set aside a bike fund every month, and be realistic.

 

[Arctic Pride]

Leasing of a motorcycle just sounds like a horrible idea...

 

[TriumfAnt]

PCP seems great if you like to change you bike regularly and want a guaranteed value on your bike after 3 years. Downsides are the restrictions on mileage and if it's a brand new model the dealers can only guess as to the bikes future popularity, therefore tend to charge higher monthly payments. Just in case their guaranteed future value is too high.