Motorcycle Finance Calculator
Compare Hire Purchase and Personal Contract Purchase options to find the best deal for your motorcycle
Monthly Payment
£0.00
Total Amount Repayable
£0.00
Total Cost of Credit
£0.00
What This Means
Monthly Payment
£0.00
Optional Final Payment
£0.00
Total Amount Repayable
£0.00
Total Cost of Credit
£0.00
What This Means
How Motorcycle Finance Works
Motorcycle finance allows you to spread the cost of your bike over time rather than paying the full amount upfront. There are two main types of motorcycle finance available in the UK: Hire Purchase and Personal Contract Purchase. Both options have their advantages depending on your circumstances and preferences.
Hire Purchase (HP)
Hire Purchase is the most straightforward form of motorcycle finance. You pay an initial deposit followed by fixed monthly payments over an agreed term, typically between 12 and 60 months. Once all payments are made, including any option to purchase fee, you own the motorcycle outright. HP is ideal if you want to own the bike at the end of the agreement and prefer predictable, fixed monthly payments.
Personal Contract Purchase (PCP)
Personal Contract Purchase offers lower monthly payments compared to HP because a portion of the loan is deferred until the end of the agreement. This deferred amount is called the optional final payment or balloon payment, which represents the predicted value of the motorcycle at the end of the term. At the end of your PCP agreement, you have three options: pay the final payment to own the bike, return the bike to the lender, or trade it in for a new motorcycle on a new finance agreement.
HP vs PCP Comparison
| Feature | Hire Purchase (HP) | Personal Contract Purchase (PCP) |
|---|---|---|
| Monthly Payments | Higher monthly payments | Lower monthly payments |
| Ownership | You own the bike after final payment | Three options at end of term |
| Flexibility | Less flexible | More flexible at end of term |
| Mileage Limits | No mileage restrictions | Annual mileage limits apply |
| Total Cost | Usually lower total cost | Higher if you pay the final payment |
| Maximum Term | Up to 60 months | Up to 49 months |
Factors Affecting Your Motorcycle Finance
Annual Percentage Rate (APR)
The APR represents the total cost of borrowing expressed as an annual percentage. It includes the interest rate plus any additional fees. A lower APR means you pay less overall. Your APR depends on factors such as your credit score, loan amount, and the lender’s policies. Representative APRs for motorcycle finance in the UK typically range from 6.9% to 17.3%, though rates can be higher for those with poor credit history.
Deposit Amount
A larger deposit reduces the amount you need to borrow, which lowers your monthly payments and the total interest you pay. Most lenders require a minimum deposit of 10% of the motorcycle’s value, though paying 20% or more can often secure better interest rates. A substantial deposit also demonstrates financial stability to lenders, potentially improving your approval chances.
Loan Term
The loan term affects both your monthly payments and total cost. Longer terms result in lower monthly payments but higher overall interest costs. Shorter terms mean higher monthly payments but less interest paid overall. Choose a term that balances affordable monthly payments with minimising total cost. HP agreements can extend up to 60 months, whilst PCP agreements typically max out at 49 months.
Credit Score
Your credit score significantly impacts the finance options available to you and the interest rate you receive. Lenders view applicants with higher credit scores as lower risk, offering them more competitive rates. Before applying for motorcycle finance, check your credit report for errors and take steps to improve your score if needed, such as registering on the electoral roll and ensuring bills are paid on time.
Step-by-Step Guide to Getting Motorcycle Finance
Step 1: Determine Your Budget
Calculate how much you can afford to pay each month without straining your finances. Consider not just the finance payment but also running costs including insurance, road tax, fuel, and maintenance. A good rule is that your total monthly transport costs should not exceed 15-20% of your take-home income.
Step 2: Check Your Credit Score
Obtain your credit report from agencies such as Experian, Equifax, or TransUnion. Review it for accuracy and address any errors before applying for finance. A better credit score can qualify you for lower interest rates, potentially saving hundreds of pounds over the term of your loan.
Step 3: Choose Your Finance Type
Decide whether HP or PCP better suits your needs. HP is simpler and usually cheaper overall if you want to keep the bike. PCP offers flexibility and lower monthly payments but may cost more if you exercise the option to purchase at the end. Consider how long you typically keep motorcycles and whether you prefer ownership or changing bikes regularly.
Step 4: Shop Around for Deals
Compare offers from multiple lenders including dealer finance, banks, and specialist motorcycle finance companies. Look beyond just the monthly payment to compare APRs and total amounts repayable. Some dealers offer promotional rates on certain models, which can represent significant savings.
Step 5: Submit Your Application
Once you have found the best deal, submit your application with required documentation such as proof of identity, address, and income. Many lenders provide instant decisions, though some may require additional verification. Avoid making multiple applications in a short period as this can negatively impact your credit score.
Step 6: Review and Sign the Agreement
Before signing, carefully read all terms and conditions. Pay particular attention to the APR, total amount repayable, any fees, and for PCP, the mileage limits and condition requirements. You have 14 days to withdraw from the agreement if you change your mind after signing.
Frequently Asked Questions
What credit score do I need for motorcycle finance?
Whilst there is no minimum credit score requirement set in law, most lenders prefer applicants with a credit score of 600 or higher. Those with scores above 700 typically qualify for the best rates. However, specialist lenders work with people across the credit spectrum, including those with poor credit or no credit history, though at higher interest rates.
Can I get motorcycle finance if I’m self-employed?
Yes, self-employed individuals can obtain motorcycle finance. You will need to provide evidence of your income, typically through tax returns or accounts covering the past two to three years. Some lenders specialise in finance for self-employed applicants and may have more flexible criteria.
What happens if I want to pay off my finance early?
You have the legal right to settle your finance agreement early at any time. However, lenders may charge an early settlement fee, typically equal to one or two months’ interest. Contact your lender to request an early settlement figure. Paying off your finance early saves you interest and means you own the motorcycle sooner.
Are there mileage restrictions with HP finance?
No, Hire Purchase agreements do not include mileage restrictions. You can ride your motorcycle as much as you like without penalties. This is one advantage HP has over PCP, which does impose annual mileage limits. Exceeding PCP mileage limits results in excess mileage charges at the end of the agreement.
What deposit do I need for motorcycle finance?
Most lenders require a minimum deposit of 10% of the motorcycle’s purchase price. However, paying a larger deposit of 20% or more can help you secure lower interest rates and reduce your monthly payments. Some promotional deals may offer low-deposit or even zero-deposit finance, though these typically come with higher APRs.
Can I part-exchange my current motorcycle?
Yes, the value of your current motorcycle can be put towards the deposit on your new bike. The dealer will assess your current motorcycle’s condition and mileage to determine its part-exchange value. If you still owe money on your existing motorcycle finance, the settlement figure will be deducted from the part-exchange value.
What happens at the end of a PCP agreement?
At the end of your PCP term, you have three choices: pay the optional final payment to own the motorcycle, return it to the lender with nothing more to pay (subject to mileage and condition), or trade it in against a new motorcycle. If the motorcycle is worth more than the final payment, you can use this equity as a deposit on your next bike.
Is motorcycle finance regulated?
Yes, motorcycle finance is regulated by the Financial Conduct Authority (FCA) in the UK. This means lenders must treat customers fairly, provide clear information about costs, and conduct affordability assessments. You also have protection under the Consumer Credit Act 1974, including a 14-day cooling-off period and the right to make complaints to the Financial Ombudsman Service.
References
- Financial Conduct Authority. (2023). Consumer Credit Sourcebook. London: Financial Conduct Authority. Available at: www.handbook.fca.org.uk
- Consumer Credit Act 1974. London: The Stationery Office. Legislation governing consumer credit agreements in the United Kingdom.
- Black Horse Ltd. (2024). Motorcycle Finance Guide. Comprehensive guide to motorcycle finance options including HP and PCP agreements.
- Auto Trader. (2024). Finance Explained: A Guide to Bike Finance. Educational resource covering various motorcycle finance products and their features.
- Finance & Leasing Association. (2024). Motor Finance: Point of Sale Disclosures. Industry guidance on transparent finance information provision.