PCP deal 3 years you decide to change to another bike after 18mths do you pay the outstanding balance so could move or sell the bike private, or if you are unlucky enough for health reasons cannot use or afford the repayments on a pcp deal,
unless you pay 50% then you can hand it back, is a pcp deal as good as it seems, or is that not how it works !!!!
No, that's not how it works. What you are describing is the mathematics of a personal loan that you might take out for a bike, rather than PCP.
With personal loans, each month you pay back a fixed amount consisting of capital repayment and interest payment in unchanging parts. After 18 mths into a 3 year finance arrangement, you will have paid off 50% of the capital. If at that time you choose to settle by paying off the additional 50% of the capital then (small additional early settlement fee aside), you've no more interest to pay.
Of course, under this arrangement, there's no option to 'hand the bike back', though you could settle and then look to sell the bike.
PCP works differently. It works like a mortgage arrangement. In order to reduce your monthly outgoings, the finance is structured such that repayments earlier in the loan period go against the interest calculated on the remaining unpaid capital, more than paying down the capital.
Your later repayments are largely made up of payments against capital, so that the monthly amount owed for interest is reduced. This means that as time passes, you more quickly build up equity in (and pay down debt on) your bike.
As the earlier payments go more against interest accumulated on the capital than paying down the capital, at 18 mths you will not have paid 50% of the capital owing on your bike. Any finance you take out to purchase the bike will need to reflect this. And were you to look to hand in your bike within the first 6 mths or so, you’d actually have to hand over the dealer cash as well as the bike, since so little of the accumulated interest will have been paid off.
The actual percentage of outstanding finance on the bike at any one time depends on three variables: the deposit you are required to make (or choose, if making a higher deposit), the APR, and the Guaranteed Future Value of the bike.
Ok it was fully loaded but my word that's a lot is it not ? 21 grand ! Anyone bought one at that price yet ?
