Buying a motorcycle or scooter on finance

You’ve just passed your test, and are ready to get your hands on a new ride. Now, most people (ourselves included) don’t have unlimited budgets play with – so you’re going to have to think outside the box to find some wheels to call your own. In the last issue of O2W we looked at buying used, but this time we’re breaking down what to watch out for when buying on finance.

We know you’re excited about your shiny new wheels, but don’t be tempted to rush out and sign up for the first finance plan you see. There’s an abundance of dealers tripping over themselves to lend you money and get you on a new machine, so take your time, shop around and read the quick guide below – you might even save yourself a few quid…

Buying a bike on finance can seem like the perfect option when you’re working within a budget – but what does it really involve?

What are the different forms of motorcycle finance?

• Hire Purchase is the most common source of finance for motorcycles. Basically, you secure a loan against the motorbike, which you can then ride as you gradually pay the loan off over time. Once the final payment has been made, the bike is yours to keep.
• Personal Contract Purchase is slightly less common than Hire Purchase, but is becoming a popular choice when purchasing a motorcycle on finance. Typically available to people with good credit ratings, you’ll borrow the amount that the bike will depreciate by, meaning lower monthly payments, but at the end of the term there is a balloon payment if you’d like to keep the motorcycle. Alternatively, you can return the bike and put its value against another PCP agreement on a new motorcycle.
• A Personal Loan is the other option available when considering finance for a new motorcycle. It’s available to those with good credit ratings and typically offers the customer more flexibility and better interest rates – but can be a little more problematic to set up, as you won’t be able to deal directly with a dealership.

Why should I consider buying a bike on finance?

If you don’t have the savings, finance can help you get your hands on a new motorcycle and spread the subsequent payments over a manageable period – with a relatively low deposit (or maybe even no deposit at all). There are flexible terms, a fixed rate and once the agreement has been completed, the bike belongs fully to the customer

Of course, younger riders getting their hands on their first 50cc or 125cc motorbike or scooter probably aren’t going to have the same budget to play with as an older rider – so buying a new motorcycle on finance can be a very tempting proposition indeed. But remember, if you’re a completely new rider, there’s a good chance you’re going to drop your bike, so it could be better buying a used machine within your budget, and opting for a new shiny machine on finance further down the line, once you’re more confident on two wheels.

How easy is it to get approved for a finance deal, and what’s the typical contract length?

Finance can be arranged both quickly and easily, from as little as 24 hours from your initial enquiry – providing your credit rating isn’t too terrible. The typical contract length for a motorcycle is around 36 months – but there’s a degree of flexibility there too. You can pay a bigger a deposit and borrow less, meaning lower monthly payments – or alternatively, some lenders will allow you to overpay on your monthly payments and bring the agreement to an end sooner.

What advice would you give to anyone who’s looking to get finance on a new bike?

Always research your options; look at company reviews, and most importantly don’t rush into anything. The best thing to do is ask around among other bikers and see what good (or bad) experiences others have had when buying a bike on finance. It’s also worth checking your credit rating online, to get a better idea of what deals are within your financial reach.

Most importantly, remember that when you’re borrowing money someone else is making money out of it – so the key is; borrow as little as possible at the cheapest rate, and pay it off as quickly as you can. Remember, the longer you have a loan the more you’ll end up paying in interest.