Buying A Bike Using Hire Purchase

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It can be a manageable way to pay for a new motorbike, even though the monthly repayments can be comparatively high. At the end of the hire purchase agreement, the bike is yours.
What is Hire Purchase?
Most of the time, the hire purchase agreement for the bike you want is arranged with the dealer from whom you buy your new bike. You need to have a deposit for your bike, and you can do this with savings or with a part-exchange on the current bike you own. You could also choose to pay out for a larger deposit up front, which allows you to spread the cost over a much longer term.

As the new registered keeper of the motorbike, you are responsible or the insurance and maintenance of the vehicle, and you are also in charge of servicing the bike, too. It's important to know that while you are the registered keeper, the legal owner of the bike is the finance company from whom you borrowed, which means that you cannot sell the bike on without permission.

Plenty of dealers will run promotions on hire purchase agreements, so if you are looking to save some cash, this could be an option. Some of these options include getting help with the deposit or receiving 0% APR deals for a set period. Do your research, though, and shop around between the dealers so that you know who is offering the best. Compare APRs and the total costs of the loans, and you can get a good deal on a new bike. Some dealers offer a slightly different arrangement, called Conditional Sale.
What is Conditional Sale?
If you choose to go for a Conditional Sale agreement, you have to buy the bike at the end. At the end of hire purchase, you can give the bike back. There is no ‘Option to Purchase’ fee payable like there is with HP, and you will automatically become the vehicle owner once you’ve made all your repayments to the lender.
Can you end an HP or Conditional Sale agreement early?
Yes. By paying off what you owe, you can end an agreement early. Some dealerships will offer to pay your outstanding finance if you choose to trade it in for a new model and buy.
Pros of buying a bike using HP:
There are plenty of pros and cons to a Hire Purchase agreement, and it's important to know what will be right for you. So, what are the advantages?
  • You get the option to buy out the remainder of the contract any time you wish.
  • The deposit size can be flexible.
  • You get some protection if the bike runs into issues.
Cons of buying a bike using HP:
  • The payments per month are usually higher due to the higher APRs.
  • You will run into penalties if you leave the contract early.
  • Missed payments can mean repossession of the motorbike.
  • You cannot sell your bike before the final payment.