Personal Contract Purchase
How it works
PCP typically offers a lower monthly payment than Hire Purchase. This is because we defer part of your loan repayment until the end of the agreement, when you will then have three options.
So, how does this work?
- Firstly, choose the motorcycle you want, and agree how much deposit you would like to put down.
- Then, estimate how many miles you will ride each year, and then agree how long you would like your agreement to run, between two and four years.
- Then, estimate how many miles you will ride each year
- We will then use this information to calculate a Guaranteed Future Value [GFV] – this is what we predict the value of your motorcycle to be worth at the end of the agreement.
- The Guaranteed Future Value is deferred until the end of your agreement.
- Because this value is based on your estimated annual mileage, it is important to give an accurate estimate, as you may have to pay excess mileage charges if you exceed your total agreed mileage for the agreement.
- Your monthly payments are worked out on the difference between the GFV and the price of the motorcycle once your deposit has been taken off and interest added. This means you have lower, fixed monthly repayments than with Hire Purchase.
At the end of your agreement you have the flexibility of 3 options:
- Retain - You can keep your motorcycle – pay the final payment and the option to purchase fee, and you will own the motorcycle outright
- Return - You can hand your motorcycle back to us without paying the final payment – if you have exceeded your agreed mileage or the motorcycle is not in a good condition, then there may be additional charges to pay. Excess mileage charges will be explained before you sign the agreement, so you will know what these may be if you go over your estimated mileage.
And finally your third option is,
- Renew - You can part exchange your motorcycle and subject to market value conditions, this should cover off the cost of the final payment. Then together with your Honda dealer, you can start looking for your next Honda.
Choose the right product
Personal Contract Purchase may not be right for you so please review our other finance products or speak to your Honda dealer, to make sure you choose the right product to suit your needs.
It is important that the product you choose should provide a monthly payment that is sustainable, whilst also meeting your needs and circumstances best. Your Honda dealer will be happy to assist you with this.
Product Features and Considerations
There are some aspects of Personal Contract Purchase (PCP) that you need to be aware of to help you make an informed choice to decide if PCP is right for you.
- As your PCP agreement includes a Guaranteed Future Value (GFV) you have the ability to return the motorcycle to us (subject to the terms of the agreement). This provides you with some protection from market depreciation.
- You have the right to withdraw from your PCP agreement within 14 days from the start of your agreement. You can also partially or fully settle your agreement at any time (subject to the terms of the agreement).
Personal Contract Purchase (PCP) may not be the right product for you for the following reasons:
- If you are a high annual mileage user then PCP is unlikely to be suitable for you as there is a maximum total contracted mileage limit.
- If you prefer to change your motorcycle after more than 4 years then PCP may not be right for you as the maximum PCP term is 4 years.
- Interest is payable on the amount you borrow including the Guaranteed Future Value (GFV). The Total Amount Payable (the overall cost) is likely to be higher than a Hire Purchase agreement with the same loan amount and term, as your balance will reduce slower due to the deferred GFV.
- If you do more miles than you estimated and/or there is damage to the motorcycle, there may be additional charges if you decide to return your car to us.
- You are not guaranteed to have any equity at the end of the agreement, if market conditions mean your motorcycle is worth less than the GFV. This may mean you will require an additional deposit if you choose to part exchange at the end of the agreement.
- You will own the motorcycle outright once all regular payments, GFV and any option to purchase fees are paid.