To answer the question of Can you return a financed motorcycle, we make reference to UG-Motorbike terms and condition as stated in General Term 2.
Can you return a financed motorcycle?
Most riders would leap at the chance to acquire another motorcycle, but it’s not always that straightforward unless you’re a millionaire.
That is why financing a motorcycle may appear to be the ideal answer, but what exactly does it entail?
You may be able to stretch out the expense of your new bike over time with the help of financing.
Finance comes in a variety of forms, and it can be challenging to understand how they differ from one another. Once the financial abbreviations begin to flow, it’s very simple to become confused. Our bike financing terminology can be useful in this situation.
Types of motorcycle finance explained
Hire Purchase (HP)
In a hire purchase, the buyer makes a down payment and then makes monthly payments until the purchase price is paid in full, plus interest. Once the contract is through, the motorcycle is yours to keep.
Your hire buy monthly payments might be reduced by making a larger initial payment. Although the payments are typically greater than those of other financing options, there is no final cost to buy the bike and the payments remain the same until the conclusion of the agreement.
If you keep up with your payments, you’ll own the motorcycle at the conclusion of the agreement and be clear on exactly how much you owe and for how long.
Personal Contract Purchase (PCP)
With a Personal Contract Purchase (PCP), you put down a small down payment and then make monthly payments, but you don’t pay off most of the debt until the contract is over. Pay the remaining balance to take ownership of the motorcycle, return it, or enter into a new agreement.
You can return the motorcycle to the dealer and walk away if you haven’t gone over the agreed-upon mileage or if the bike hasn’t been damaged beyond normal wear and tear. Alternatively, you can trade it in for a new motorcycle from the same dealer and put the money you’ve saved toward the down payment.
You are free to customize every aspect of your agreement, from the initial deposit and monthly payments to the final payment and length of time committed. Generally speaking, the monthly payments are less than those of Hire Purchase, allowing you to either upgrade to a fancier bike or save money in the long run.
Personal Contract Hire (PCH)
The PCH technique is more akin to renting a motorcycle than really buying one. You’ll have to put down a little sum plus a manageable monthly payment, but you won’t actually own the bike.
Still, it’s a method to acquire a brand new bicycle at manageable biweekly or monthly rates. Deposits and monthly payments are often less than they would be with HP or PCP, but keep in mind that this is because you do not actually own the motorcycle at any point in the arrangement.
You can either return the motorcycle at the conclusion of the lease (if you haven’t gone over the agreed-upon mileage restriction) or enter into a new lease.
To answer the question of, can you return a financed motorcycle? You need to know some important terms such as:
Annual Percentage Rate (APR)
APR is the amount of interest you’ll pay yearly on the money you’ve borrowed, including the fees that apply – this enables you to accurately determine and compare the overall annual cost of your agreement.
The amount of interest you’ll pay yearly on the money you’ve borrowed, including the various fees that apply, so that you can accurately determine and compare the overall annual cost of your agreement.
APR should not be confused with the ‘Flat Rate’, which is the rate of interest not including fees. When comparing finance deals, always make sure you’re comparing like-for-like.
Balloon payment
This is the large final payment at the end of a PCP agreement that you pay to own your motorbike outright.
Essentially it’s a portion of the loan amount that’s deferred until the end of the loan, this often makes your monthly payments lower.
You can always choose not to pay the balloon payment but this means you won’t own the bike. Usually, the balloon payment is the same amount as your motorcycle Minimum Guaranteed Future Value or MGFV.
Credit agreement
A credit agreement is the document which details the terms of the finance offer you enter into with the finance company.
Credit history/rating/credit/record
This is information on your previous borrowing record, which a lender will check in advance to decide if you’re a reliable person to lend to. Your credit history is checked frequently for other purchases such as mobile phones, insurance and also for taking out financial products such as credit cards or bank accounts.
Depreciation
The value that your bike loses over time due to things such as age, mileage and wear and tear.
Equity
Equity can be positive or negative. Equity is when the market value of your bike is more than what you still owe on it. When this is the case, you can either pocket the difference or use it towards a deposit on your next bike.
Also Read: How much does a financial consultant make
Negative equity is when you owe more on the bike than it is worth. Unfortunately, you’ll be liable for the difference. Sometimes you can settle the amount yourself, or you may possibly be able to carry the amount you owe across to a new deal for another bike.
Financial Conduct Authority (FCA)
The FCA are a body who regulate the UK’s financial services industry. Their aim is to protect consumers and monitor the conduct of lenders to help ensure stability.
Fixed rate
When you have a fixed rate, your monthly payments won’t be affected by changes in the interest rate (e.g. Bank of England Base Rate) and will always remain the same.
Flat rate
The flat rate is the amount of monthly interest you’ll pay, not including fees. That’s what makes it different from APR, it doesn’t include fees.
Guaranteed Asset Protection insurance (GAP insurance)
If your bike is stolen or written off during your finance agreement, you’ll still be legally liable to pay off any outstanding finance on it.
You’d assumer your insurance would take take care of that, but this isn’t always the case. Regular insurance will usually only pay out the market value of the bike at the time of the incident, factoring in depreciation, regardless of what you paid for it or how much you still owe, and that means there can sometimes be a shortfall.
GAP insurance is designed to protect you against that shortfall by making up the difference between your insurance payout and the balance owed.
Mileage allowance (or excess mileage)
A mileage allowance or excess mileage is a pre-agreed mileage limit imposed, designed to protect the bike’s value, which lasts for the duration of your agreement. The size of your deposit, monthly payments and (if applicable) final payment will be calculated based on this.
Minimum Guaranteed Future Value (MGFV)
This is the absolute lowest amount that your bike will be worth at the end of your agreement. This is important because this value (calculated by the lender) will be used to calculate the amounts of your deposit, monthly payments and (if applicable) balloon payment.
Part-exchange
Part ex is when you trade-in your existing bike you can use its value as part of the payment for a new one.
Residual (or resale) value
The value of your bike at the time you part ways with it.
Term
The term is the period or duration that you are required to make repayments. You’ll find this in your agreement, as the number of months over which your payments are spread.
Total amount payable
The total amount you’ll have paid come the end of your finance agreement. This figure includes your bikes’ on-the-road price, plus any interest and charges which may be applicable.
CAN YOU RETURN A FINANCED MOTORCYCLE
To answer the question of Can you return a financed motorcycle, we make reference to UG-Motorbike terms and condition as stated in General Term 2:
The Hirer shall return the motorcycle on the agreed date, as specified in your online reservation form, before 7:00 PM, unless the Owner has specifically agreed otherwise. No refunds shall be given for early returns.
This simply means you can return a financed motorcycle.
Returning a financed motorcycle to private sellers
In general, after making a payment and signing an agreement of sale, you cannot return a motorcycle to a private seller. When you purchase a motorcycle privately, you acknowledge that you are accepting it “as is” and that the seller has no duty to accept the motorcycle back or refund your money. It is now your responsibility because you choose to purchase it.
Frequently asked questions on financing a motorcycle
Why should a biker consider getting their next bike on finance?
Finance allows the buyer to purchase a motorcycle with a small investment or, in some cases, no deposit at all. There are adjustable terms and a fixed charge, and once the arrangement is concluded, the bike is totally owned by the customer.
What are the different forms of motorcycle finance?
- Hire Purchase (HP) is the most common. You secure a loan against the motorbike, which you can then ride, and pay the loan off over time. Once the last payment has been made, the bike is yours.
- Personal Contract Purchase (PCP) is less common and only available to people with good credit ratings. You’ll only borrow the amount that the bike will depreciate by, meaning lower payments, but at the end of the term there is a balloon payment. You can either pay this and keep the motorbike or the vehicle needs to be returned.
- Personal Loan is also only available to those with good credit files. This type of finance gives the customer more flexibility and better interest rates.
How flexible are finance deals?
Lower monthly payments are always an option if you put down a larger deposit and borrow less money. Alternatively, the majority of lenders permit borrowers to make extra payments, which will result in an earlier termination of the contract.
Can you part exchange your current bike as part of a finance deal?
Part ex is common in the motorbike market and is often welcomed by dealers as it helps maintain stock levels. Part ex also allows the customer to borrow less, therefore paying less interest and resulting in smaller monthly payments.
Can you return a motorcycle after purchase from dealership UK?
You must keep in mind that when you made the purchase, you signed a document acknowledging that you now own the motorcycle and are responsible for it. There is really only one exception to this situation and that’s if the motorcycle falls under the “Lemon Law.”
If you purchase a brand-new motorcycle from a dealership with a guarantee and there is a significant mechanical problem with the motorcycle that endangers your safety, the dealership is required to try to fix it without charging you any money. The dealership is required by law to either replace your motorcycle or provide you a full price refund if, despite numerous attempts, the significant problem is not fixed.
My advice to anyone who’s looking to get finance on a new motorcycle
Do your research, read some reviews (maybe on Trust Pilot), and never make a hasty decision. Most motorcyclists know other motorcyclists, so it’s a good idea to inquire around to find out how other riders have fared when applying for financing. You may also see what kinds of bargains you might qualify for by checking your credit score online.
