Figuring out HP and PCP finance

Finance is a popular way of buying a motorbike but have you figured out the difference between HP and an increasingly popular option – PCP?

First, let’s spell them out. HP is hire purchase, while PCP is personal contract purchase.

Basically, the difference is that HP finances the complete cost of the bike but PCP finances the difference between the actual cost of the bike and a guaranteed future value (GFV) which is agreed at the start of the term over which the PCP runs – normally two, three or four years.

Sales manager Mark Trench said: “With PCP, you can trade in against another bike, hand it back or choose to pay the remaining value of the bike to buy it outright at the end of the agreed term.

“PCP is growing and now nearly half of new bikes are being sold on PCP which only came into the motorcycle market in recent years, having been launched in the car industry.”

You can also finance both brand new and late registration and nearly-new bikes on a PCP.

“The advantage of PCP is you have a guaranteed future value of the bike at the end of the agreed term.

“You have to set your annual mileage at the beginning of the agreement but you can pay an affordable extra mileage fee if you go over. You can also choose to change your mileage halfway through the agreement but it will alter your monthly PCP charge.”

Most people opt to trade the bike in or return it at the end of the agreement but, in order to get the GFV, it has to be in an acceptable condition, undamaged and been serviced according to the manufacturer’s schedule.

A lot of people change their bike before the end of their PCP agreement but those who choose to keep it for the full term can also opt for an extended warranty for peace of mind and to help budget running costs. Suzukis have a standard three-year warranty, while the two-year Kawasaki warranty can be extended to four.

“That's the real selling point of PCP,” said Mark. “The customer can tailor it to suit their needs.”

And, because with PCP you are not financing the total price of the bike, the monthly payments are lower.

“You can get into a newer, more reliable motorbike for a smaller monthly payment and you have that guaranteed future value.

“PCP also upsells people into a bike that is better than they could afford if they were buying it outright on HP.”

If you want to find out more about whether HP or PCP is the best bet for you, feel free to speak to a member of our sales team.

[Photo: The ‘Kawasaki Kalculator’ is a good way of comparing HP and PCP payments on a chosen Kawasaki.]