Buying a bike? The difference between PCP and Hire Purchase

You can buy seemingly anything on finance nowadays, and that extends to motorcycles, with Personal Contract Purchases (PCP) accounting for 20-30% of all new bike sales. Although it's probably the one you're most familiar with, PCP isn't the only form of finance available, there's also Hire Purchase.

They seem similar - both let you pay a deposit and a series of monthly instalments over a set period of time - but that's where the similarities end.

Personal Contract Purchase (PCP)

PCP offers low monthly payments, low deposits and a bit of flexibility - if you don't want to buy the bike at the end of the contract you don't have to. 

If you want to keep the bike you'll have to pay the optional final payment. Alternatively you could exchange it for a new model and start a new contract, or simply walk away. 

However, interest rates tend to be slightly higher than with Hire Purchase and if you exceed the mileage limit or damage the bike beyond fair wear and tear you could face extra charges.

Hire Purchase

Hire Purchase is slightly simpler than PCP. The cost of the bike is split across the monthly payments and the initial deposit. Once you've paid your final payment, the bike is yours.

HP contracts typically last longer than PCP deals which make them more affordable and since you'll automatically own the BIKE after the final payment, you don't have to worry about saving up extra cash for the optional final payment like with PCP.

It's worth noting that the bike could be worth less than you estimated at the end of the contract, which could be a problem if you plan to sell it on soon after you take ownership.

I bought my Honda Crosstourer on PCP from Hunt's Motorcycles. It was on a 0% interest deal from Honda. This deal used my Suzuki V-Strom 650 GT as deposit, gave me low monthly payments over 3 years, with a final balloon payment (I'm keeping the bike!) - due this summer.

I have been really happy with this way to buy a new bike. Hunt's were a great dealer to buy from (I will again!), and Honda build quality is as good as it gets. All happy!

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