Personal Contract Purchase

[LordShaftesbu...]

Is it just me or is this type of finance completely useless? I quite like the idea of a new bike every 3 years, but I'm struggling to grasp how PCP really works. Or, I'm grasping it, but it's actually shit.

https://www.triumphmotorcycles.co.uk/triumph-world/triumph-finance

[nowhere.elysium]

Looks a bit like an HP agreement to me; if I'm right, then it's worth steering well clear of.
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'10 SV650SF, '83 GS650GT (it lives!), Questionable DIY dash project, 3D Printer project, Lasercutter project

[P.addy]

So many cars get purchased this way, new latest plate every 3 years, pretty much forget about servicing it, 4 sets of tyres if you are lucky and about 3 oil changes if you are really cheap.

[LordShaftesbu...]

^ Can you provide any sums? How much would I pay per month on say a £10k bike?

[P.addy]

[JP7]

I used to do a roaring trade in PCP agreements when I worked for a franchise dealer. The benefits for the buyer are that they get a nicer vehicle for less money per month (because a large chunk is left until the end), and then the opportunity to change it after a given period (usually between 2 and 4 years). The better PCPs guarantee that the value of it won't be less than the final payment, and if it is, you have nothing to pay towards it, you just chuck the keys back.

At the end you choose whether to pay the payment off in one chunk and keep it, part exchange it for something else, or if it's worth less than you owe, hand it back.

It's not the best scheme if you ultimately intend to keep it for longer than the finance period because you suddenly have a big payment to make. But if you regularly change, it's not too bad.

The simplest way to look at it is a lease agreement with an option to own it at the end.

[mospeed]

This type of thing is rife with ltd companies. Pay monthly sum (tax deductable). Drive around in flash range Rover. Dont pay Tax bill or suppliers etc. When chased for money, no worries company has none and they don't own anything of value, so you cant take anything away.

[Polarbear]

As far as I can see the only advantage to you is that you get a new bike every 3 years.

Disadvantages?, well, you are stuck with Triumph or whoever you go with or you will have to buy/give up the vehicle. You never 'own' the vehicle so you can't modify it at all. No fancy pipes etc. or if you do it has to go back to standard before it's traded in. You will, I presume, have to get it serviced at Triumph or whoever.

Basically, as far as I can see it's more like renting or leasing than owning.

Car/bike manufacturers must love it. It's a no lose for them. They either 'sell' a new care every few years or get a car to flog on after renting it to you for 3 years.

Personally I wouldn't touch it with a bargepole because I can't see how it would benefit me. I bought a new bike because I could afford one. If I couldn't afford one outright and still wanted one I'd get a bank loan and own it at the end.
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Triumph Trophy Launch Edition

[j.silvs]

most super car and prestige drivers will finance this way even if they have cash. Its a smart way in my opinion.

Think of it this way - if there was a house that was worth £1million today and then next year would be £500k would you buy it or rent it? = rent it, why put money to something that depreciates?

So lets say for instance you bike is up for £5k and the finance company assumes that no matter what, in 3 years its going to be worth £2.5k and you putt in a deposit of £500.

That means £1.5k will be offset with no recurring interest.
£500 will be taken off the bike price due to your deposit
you will now only have to finance £2.5k instead of £5k, usually with a lower interest rate too.

At the end of 3 years you either trade it for a new one, finance or pay a lump sum for the remaning £1.5k or hand it back and if its worth less then they cant ask for more or if its worth more you will get what ever its worth over £1.5k back.

In regards to being stuck with someone this is not true. You can trade to a yamaha even if its honda. You are not stuck with one make at all.

I think this is one of the most smartest ways of financing vehicles out there apart from lease. It just ensures you dont get hit with depreciation and you can ride a better bike for less monthly payments

[P.addy]

[j.silvs]

What depreciates more?

A 5 year old vehicle in 3 years or a brand new vehicle in 3 years?!

Also if buying under book, then all is good

[P.addy]

[j.silvs]

Totally agree with you there.

My statement was mearly a comparison to normal HP not going and buying a used vehicle or finding one cheap.

Would never reccomend any sort of HP over outright purchase unless the vehicle is under 3/4 years old !

[dodgydog]

I've done this with Mrs D's cars for the last ten years, the advantage for me is it's worry free motoring for her.

The initial down payment for the first car was £99, and with the low mileages she does, and the fact the cars are kept mint, we've had good trade ins for the next new model every time.

The last Clio went in with 12,000 miles on the oddo after three years, the salesmans face lit up when he saw it.
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I know that you believe that you understood what you think I said, but I am not sure you realise that what you heard is not exactly what I meant

[Rogerborg]

I did consider it for Mrs B's new mummy bus, but I just can't get over the idea of paying to be responsible for keeping someone else's car in mint condition. She'll doubtless put a bunch of car park dings in it, for one thing.

Buying a bike on PCP, urgh, I'd be paranoid about dropping it and having to pay to repair it (or buy it at the end of the contract) whether I wanted to or not. With my current collection, I really couldn't care less.

If it gets nicked, who knows what happens or where the money ends up.

Which reminds me, every insurer seems to ask "do you own the vehicle?" which you most certainly do not with any form of PCP / HP / contract hire. I know, nobody really cares except me.

All that said, it does seem to be the cheapest legal way to get access to a vehicle that you can't really afford.
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Biking is 1/20th as dangerous as horse riding.
GONE: HN125-8, LF-250B, GPz 305, GPZ 500S, Burgman 400 // RIDING: F650GS (800 twin), Royal Enfield Bullet Electra 500 AVL, Ninja 250R because racebike

[Derivative]

You're basically asking the following question:

Why would anyone rent over buying?

Personally I'd only ever do it if I had no other viable option (property for most people in the UK, for example).

But then, I'd never take a loan out to buy something unless I thought of it as an investment.

It seems foolish to me to debate the merits of various schemes that involve you losing money in different ways.

[BravoCharlie]

i Work for a car dealer, and PCP deals are more and more appealing these days.

i'd have a look into the options.

bare in mind, that there is a set annual mileage aswell and if you go well over it you will be charged some 6p per mile (on most cars at least), sometimes thats not much, other times it can cost too much. an example of this was a woman yesterday who was looking at an offer where it was a 12k annual mileage limit. upon asking her how many miles she's done in the last 12 months, she told me 25k! in these instances, i recommend HP or Personal loan.

the reason people like these offers is because you can keep the payments down low and 36 months down the line you have the choice: pay the balloon payment, or trade it in and start again.

for me, i'd rather extend the term over 5 years on either HP or a personal loan. it'll probably bring the payments down to where you want them (maybe less if you keep the same deposit), and at the end of HP, you own the bike (albeit theres usually an extra £150 or so for admin charges), and with a Personal loan you own the bike outright, as the loan is tied to you.
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Current: Kawasaki ZL600 Eliminator
Past: Suzuki GZ125, Kawasaki GT550, Kawasaki GPX600R, Honda vrx400,Kawasaki Zephyr 750, Suzuki SV650 K5
Dream as if you'll live forever, live as if you'll die today.

[Turkish]

Took out an agreement like this to purchase my missus' car. We've had loads of shit luck with second hand cars and we just got sick of it. I wanted a safe car for her and my son's 80 mile-a-day journeys, which meant buying something reasonably new.

We got everything we wanted; paint, doors, trim, warranty, extras thrown in, and for a reasonable amount per month. Scraped together a reasonable deposit and drove away in it a couple of weeks later. The peace of mind is worth it, to be honest. There is no way we would have got that buying a used car with the deposit we had at the time.

You have to see it as it is. You pay a large deposit and monthly payments which add up to about 60% of the vehicles purchase price and then pay a lump sum at the end. It is stupid to hand the keys back and I would personally only do that if I got in serious financial trouble. Your best bet is to get a low/no interest credit card, pay it off with that and then continue your previous monthly payments clearing the balance. At the end of it, say 5 years from now, you'll own the car/bike outright with 0 previous owners and full dealer history (if you negotiate well you can get some/all of this thrown in).

Looking at eBay at the moment, if we sell it private (after 5 years) we'll end up with around 150% of our original deposit (in today's money), which we can use to buy a bigger share in the next car (lower monthly payments) and the cycle continues. As said above, if you intend on keeping the vehicle HP or loan is also an option, but the dealer we went to had a nice interest rate (better than the HP deal) with a more generous 'allowance' to bring the over all cost down.
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ZX-6R G2
CBR125R RW6

[LockyUK]

my opinion, too much dead money...

[Turkish]

[Polarbear]

I am still struggling to see the advantage over a personal loan and owning the vehicle at the end of the terms without having to find a huge lump sum.

Can anyone explain why paying 5 grand at the end rather than spreading it over the whole term constitutes an advantage?
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Triumph Trophy Launch Edition

[daemonoid]

[Derivative]

[3illy]

then if you write the vehicle off your fucked

[LordShaftesbu...]