There’s no doubt that two wheels make for a less expensive commute than four, but the initial outlay can be off putting. One answer may be a PCP.
At any point in time, between 80 and 90% of all new cars sold in the UK are financed by Personal Contract Payment (PCP). As costs rise and belts get tighter, PCPs have moved out of the traditional new car market into used vehicles, motorcycles and even scooters. It’s now viewed as a mainstream product with several banks offering it alongside more traditional methods of finance. It’s a product that you’re likely to be offered more and more in the future but, what is a PCP and is it right for you?
In simple terms a Personal Contract Purchase (PCP) agreement is a method of financing the cost of a vehicle. An initial deposit is paid and that’s followed by fixed monthly payments, usually over 2 to 4 years. Unlike a loan, the payments only cover the vehicle’s depreciation, not its full value so it’s closer to a rental agreement than hire purchase. At the end of the agreed term, you can choose to return the vehicle, trade it in for a new one, or pay a large optional final ‘balloon’ payment to own it.
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The advantages of a PCP are that the monthly costs are significantly lower than a conventional loan, and when times are tough that can be very attractive. On the downside, compared to traditional finance, the savings get smaller the less a vehicle costs, modifications are generally frowned upon, yearly mileage is agreed in advance with penalties for exceeding it, damage beyond reasonable wear and tear will also incur penalties, and unless you’re prepared to pay the final ‘balloon payment’ the vehicle isn’t yours at the end of the PCP term.
This all makes sense in the world of high end motorcycles, where a fully loaded Adventure Bike can cost as much as a family car, but unless you’re considering a maxi-scooter the figures probably don’t add up for most scooter purchases.
That said, if your budget really is tight, Honda is currently offering PCP on their Vision 110 with an initial deposit of £255.51 and 36 monthly payments of £39.00, which makes for very cheap commuting.
As the old saying goes, “You pay your money and make your choice.” Just make sure a PCP is for you before signing on the dotted line.
More information: www.Honda.co.uk
