[Dibbs]

Well I ordered my bike in February and paid a £500 deposit, the dealer did a credit search and gave me the figures for the monthly payment and final balloon payment, and also the registration number of my new bike that would be arriving at the beginning of April. Then yesterday I had an odd call from them telling me that Honda have revised their finance figures as the bikes are selling so well the future guaranteed value has now risen thus increasing my final balloon payment by nearly £1000!!!! however they have reduced my monthly repayment so over the 36 month period it will work out all equal. Well I did some calculations and it actually works out that I will end up paying about another £80 which although quite a small amount I'm still not happy about. When questioned the dealer said that he couldn't organise the finance until the bike arrived and because it was into the second quarter and Honda have changed the figures and there's nothing he can do!!!!

I was under the impression that I had already agreed on a price as I was given repayment figures back in February and paid a deposit to secure the deal and fix the price!!!

I also thought that you can play around with the figures as much as you like i.e put down a higher deposit less/more monthly repayment and a higher or lower balloon at the end. So is this just finance trickery to get an extra few quid out of us poor folk or have Honda under anticipated the sales figures, and can they legally do this?

So if anyone has ordered a bike a few months ago and doesn't take delivery for a couple of months time I would re check to see if your finance arrangement has changed from what you initially thought.

Has anyone else had a similar experience of this? as on top of the heated grip and spoke fiasco and now the great finance stich up I'm on the verge of telling them where to go!!!!! :crying::crying::crying:

 

[mike5100]

I think PCP is the next sub-prime scandal, but I can't find out why. I've been researching the concept and I can't see who loses - but someone has to - this is capitalism after all
FWIW Dibbsy I think you are morally in the right and should demand they discount the headline figure of the bike by £80 before they do the paperwork.
Mike

 

[Yromulus]

i guess that the dealer agrees the price of the bike with you and takes the deposit to secure the bike on that basis. The rest - the credit - is in the hands of a corporation that can change its mind at the smallest sniff of extra money.

So whilst I agree with Mike in that you are morally right to want to not give up the £80 it also seems wrong to make the dealer stomach the loss as it is Honda who are being awkward.

Look on the bright side though - £80 is a drop in the ocean compared to the costs of buying and running a brand new bike - better guesstimated residuals or not!

Good luck sorting it out - well worth sticking at it as the bike is great imho - dodgy spokes or not.

 

[Dibbs]

Thanks all! a quick update. after throwing a few F's down the phone and trying to get the first service done for free as compensation they have now reversed everything back to how it was when I originally ordered the bike! So no figures have been changed, although I had quite got used to the idea of having a lower monthly payment and a possible free first service (they charge £135 inc vat by the way!) so I'm not sure if ive won or not really!!!! hey ho, well I'm still picking the bike up on Saturday all being well, so hope it doesn't rain!

P.s I will still have to pay for the 1st service now though!!!!

 

[Captain Scarlet]

To me, PCP is just the modern phrase for leasing. You don't so much agree a future value, as agree a residual which will only just about pay off the remaining debt.


Payments are low, because in affect you're only paying the interest and capital on half the value of the vehicle (plus a 'little' on top), with the future residual value taking care of the balance.


Effectively leaving you with little to no deposit on a future bike and all that money paid out to effectively own nothing. That's called leasing in my book, or an interest only mortgage.


You're paying to enjoy the asset while it's in your possession, but you can never actually own it, unless you pay the balloon payment at the end.


Add up what you pay in PCP payments and the balloon payment at the end to actually own the bike, and you probably could have negotiated a better straight finance deal with any lender.


Buying a house with a big balloon payment was never the best idea and the same goes with bikes too IMPO. But each to their own, if the cells on the spreadsheet make sense to you and you go into it eyes wide open, if might be the right thing for you and your personal circumstances.


Personally I never pay more than the MSRP or accept any revised deal from a dealer. If the costs change from time of order, I expect them to consume them if they want my business. When I did the deal for the AT my dealer couldn't clearly explain why the shops preparation and admin fees were so high when I quizzed him for more details. So I told him I felt I was being taken advantage of, and told him what I was prepared to pay, which was significantly less than I was quoted. He pulled a face and then said okay then. The amount was well worthwhile being a bit candid with him about.


There's only so much money in a deal, but the dealer can dress that money up any which way they like - over-allow on a trade-in; give a discount on the new machine; subsidize the finance; consume admin and workshop fees; there's simply a multitude of ways. IMPO I would tell them that if prices were subject to change, then that should have been explained up front and clearly documented on any purchase order. If they didn't do that, then you expect them to consume those costs. And it looks like that's exactly what they've done, backed down. Well done to you Dibbs - they don't like it up 'em!

 

[gasman]

Evening Captain,Not sure your entirely right there!! My understanding is you are paying off approximately half the capital as you say BUT you are paying interest against the full value of the bike less your deposit. In addition the whole point of PCP is that there IS enough difference at the end of the policy to use as a deposit for another new bike. The idea being that you get into a cycle of changing your bike every 2/3 years paying a monthly amount that you can afford. Finance companies are making their money on the interest, the dealer will make his profit on the sale of a well maintained 2/3 year old bike and the customer is paying an affordable amount for a new bike that will need little maintenance, is under warranty and will never need an MOT (UK). Everyone's a winner.

 

[Captain Scarlet]

Thanks Gasman, I don't think they have them in the U.S. where I'm based nowadays and I've neve rhad one myself, but know they are a fare pandemic in the UK from what I hear.


"the whole point of PCP is that there IS enough difference at the end of the policy to use as a deposit for another new bike."
... but how much deposit? Call me old fashioned, but when I've paid out for a bike for years I want more skin in the game than to just own a nominal deposit against a new one - that's not a win for me personally.


"paying a monthly amount that you can afford"
... I get that. Leasing or hiring for an agreed term will always be cheaper than actually buying a machine outright. All the purchaser is buying on top of their lease is a deposit on a new bike. Assuming they don't have any additional outlays, like extra mileage or vehicle condition penalties to come out of that deposit before they start.


"Finance companies are making their money on the interest, the dealer will make his profit on the sale"
... oh they're quids in, no argument from me on that front! :-D


"customer is paying an affordable amount for a new bike that will need little maintenance. Everyone's a winner. "
... great for those that want a loaner, or to impress friends by pretending they own a vehicle of perhaps greate rvalue than they can afford to buy. Not such a winner for those who want to eventually own their machine and progress onto getting out of the loan / debt cycle which in some people's view won't be seen as a 'great thing' to be iteratively caught up in cycle wise.


Just me two pence / cents and don't want to go too off topic, especially as I don't speak from a place of personal experience of having signed a PCP. Just glad the dealer made it right with Dibbs, which is what any decent dealer should do.

 

[Tinpot]

£55 my first service in manchester, parts only. see if they'll do that to match other main dealer.

 

[mike5100]

the way I see this PCP thing is that in any deal we should consider two bikes because almost always someone is trading in (at the beginning or the end of a PCP deal).
So the players are 'you' the dealer, the finance company and the next owner. All of those parties have to get something out of it, and for years there was a particular ratio I guess of gains and losses. PCP can only change those ratios - it cannot make something out of nothing. So if you 'gain' from a PCP deal someone else is losing - problem is I can't work out who
Mike

 

[mike5100]

...... I guess what's bothering me is that the PCP deal COULD seemingly create something out of nothing by piling up some liabilities somewhere in the chain which may come home to roost like the sub-prime or mis-selling of financial products did.
Mike

 

[Philtrx850]

My dealer said that over half his sales are now financed on a PCP, it is becoming the norm in the UK.
What I find strange about Dibbs situation is that due to popularity of the AT they have increased its residual value (balloon payment), surely in three years time there will be a glut of AT's hitting the used markets, at the end of the three year PCP cycle, so won't the value be diminished by oversupply.
For this reason I opted for a two year PCP in the hope the actual px value will be higher than the balloon, giving me a bigger deposit for the next bike. (The difference in monthly payment for a two year over a three year was only £4 a month!!)

Phil

 

[Dibbs]

Well if there is another sub prime fiasco looming and I can make a claim in the future and get loads of money back from someone then bring it on I say!!!!!! lol

 

[Twister]

I would think the contract is already agreed with yourself and the suppler so any change with the suppliers importers are Irrelevant as the deposit is paid and the contract binding.
check the sale paperwork for small print first.

 

[gasman]

To hopefully answer a few points raised....Typically it is recommended you lay down a 10% deposit, any more and it starts to defeat the point of the PCP. ie the idea is you are only financing 50-60% of the bike. Any more of a deposit and as Captain S rightly questions you might as well think of paying the whole thing off over 3 years or whatever time scale suits. PCP is, in many ways a mind set from the old adage 'if it depreciates rent it, if it appreciates buy it'! And your bikes value is only going one way. Personally I don't want the same bike for more than a couple of years so it is perfect for me. Low deposit, reasonably low monthly repayment or at least a repayment that is comfortably affordable, bike in warranty all the time, no MOT, no unexpected repair bills other than standard wear and tear, 2 years up and a nice new bike with all the latest technology and repeat!! Happy days!!
Re the sub prime comments this is surely not relevant because the final optional payment to own the bike outright is also a guaranteed minimum value, so if the market bombs out or motorcycles are banned or whatever then you are safe in the knowledge that you can just hand the bike back and the finance company will pay out the final value set at the beginning of the policy. ie you are not solely dependant on the market value of the bike. The finance company have given you a guaranteed final value. it is a safety net if you like, regardless of the market....The problem with sub prime amongst other things is a house does not have a guaranteed minimum value, it is only worth what someone is willing to pay for it.

 

[mike5100]

To hopefully answer a few points raised....
Re the sub prime comments this is surely not relevant because the final optional payment to own the bike outright is also a guaranteed minimum value, so if the market bombs out or motorcycles are banned or whatever then you are safe in the knowledge that you can just hand the bike back and the finance company will pay out the final value set at the beginning of the policy. ie you are not solely dependant on the market value of the bike. The finance company have given you a guaranteed final value. it is a safety net if you like, regardless of the market....The problem with sub prime amongst other things is a house does not have a guaranteed minimum value, it is only worth what someone is willing to pay for it.

Isn't this where the crunch will come? I hear stories now of dealers persuading PCP 'owners' to trade in early and lots of 2 year old vehicles appearing on forecourts. But if everyone is buying new on PCP who is going to buy these nearly new cars, and if that means the prices are going to fall then you can guarantee that the finance companies or the dealers will have to do something about the guaranteed prices (are there clauses in the small print?). Or look at it another way - if previously owners were the ones taking the hit on depreciation and now they are not, then someone has to and I can't see it being the finance companies.
Mike

 

[Dibbs]

To hopefully answer a few points raised....Typically it is recommended you lay down a 10% deposit, any more and it starts to defeat the point of the PCP. ie the idea is you are only financing 50-60% of the bike. Any more of a deposit and as Captain S rightly questions you might as well think of paying the whole thing off over 3 years or whatever time scale suits. PCP is, in many ways a mind set from the old adage 'if it depreciates rent it, if it appreciates buy it'! And your bikes value is only going one way. Personally I don't want the same bike for more than a couple of years so it is perfect for me. Low deposit, reasonably low monthly repayment or at least a repayment that is comfortably affordable, bike in warranty all the time, no MOT, no unexpected repair bills other than standard wear and tear, 2 years up and a nice new bike with all the latest technology and repeat!! Happy days!!
Re the sub prime comments this is surely not relevant because the final optional payment to own the bike outright is also a guaranteed minimum value, so if the market bombs out or motorcycles are banned or whatever then you are safe in the knowledge that you can just hand the bike back and the finance company will pay out the final value set at the beginning of the policy. ie you are not solely dependant on the market value of the bike. The finance company have given you a guaranteed final value. it is a safety net if you like, regardless of the market....The problem with sub prime amongst other things is a house does not have a guaranteed minimum value, it is only worth what someone is willing to pay for it.

Good point gasman, this is why I chose pcp over outright purchase, and like you say if the future value drops like a stone you just give the bike back and walk away. I think the sub prime comments made are like the recent PPI scandal, some people who always had debt got quite large payouts when it was deemed unlawfully sold. However I never really had any debt and struggled for years going without stuff I couldn't afford and got **** all!!!! when I tried to claim!! so if in the future PCP deals are found to be miss sold then I want to be on the receiving end of a payout lol.... (hopefully it will be enough to pay the balloon!!!lol)>

 

[gasman]

Hi Mike, I understand your concerns but think you are reading too much into it. As I understand it PCP was introduced because new car sales were on their arse due to no one being able to afford traditional repayment. (Please note the vehicle does not need to be new to take out a PCP policy) and there will be plenty of people out there wanting to buy a 2/3 yr old AT. Dealers want to get you out of the deal and into another as quick as possible because they want to keep you tied in with them i.e. they don't want you wandering off to Triumph at the end of the deal, they want a new bike sale to keep their targets and they want a 2nd hand bike with as few miles and as new as possible on their forecourt. No doubt they get a bit of commission from the finance deal as well. As long as you are paying an affordable amount every month the rest is not our problem. Finance companies keep getting their interest, dealers get their profit on the new bike sale and no doubt get 20% plus on 2nd hand sale and we keep riding a new bike for an affordable amount. How good a deal you get when you change is down to you and your negotiating skills!! The final payment is the minimum guaranteed value, our job is to negotiate as much over that as possible. Unfortunately salesman are well practised and their job is to offer the lowest amount possible or rather as close to the minimum value as possible thereby increasing their margin on the 2nd hand value. Lastly I have never heard of the guaranteed value being reneged on as long as bike is in proper condition and remember the customer is protected under the Consumer Credit Act 1974 and the Financial Services Regulations 2004 so it is all above board and we are fully protected.
Hope this makes sense
Cheers

 

[Yromulus]

I read an article in the paper a year or so ago to do with the possibility of it becoming a bit of a problem with cars. The main focus of the author was that the guaranteed value can be, and often is, put too close to the residual value meaning that there is little or no deposit left at the end of the term. Honda probably wanted to tweak the numbers because if the residual values are creeping up then customers will have more deposit - i.e. they get exploited less which can't be good can it.

But for many people it's not a question of choice - certainly in the car world. If you can't afford to buy outright and don't want to run an old banger that can cost a lot to keep going then PCP is a really attractive proposition. Bikes are perhaps more of an indulgence but essentially the same thing applies - why buy old when you can have something a bit newer. No-one will know or care less if you are PCP-ing it or have bought it - in fact in the UK you just assume most people are PCP-ing it judging by the number of new vehicles sold each year. (As an aside, the PPI "scandal" has launched a lot of PCP deals apparently...)

The world runs on credit these days - why fight it? Even your government does it. And they are the brightest and most clued-up people in the world right? Heaven help us all when the merry-go-round stops and the debts get called in. Best thing to do is enjoy it while it lasts.

 

[mike5100]

I will think about your points gasman, but I still say that until PCP the first buyer of a car took the hit on huge depreciation in the first couple of years and subsequent buyers got a relative bargain. If that first buyer is not taking the hit now, then who is?
Mike

 

[gasman]

Mike your absolutely right, first buyer always got hammered if he sold which is why invariably people would keep cars/bikes for longer to get monies worth. I don't think anyone is taking the hit as such any more....people like myself are always paying a monthly payment, it never ends but it is within a budget I can afford and I have a new bike with no other bills other than natural wear and tear every 2/3 years where as the second hand market are paying less for a vehicle so maybe don't have endless monthly repayments but the vehicle is normally out of manufacturers warranty and they have to expect unexpected costly repair bills and they have a vehicle that is only getting less efficient and more dated as every year goes by. I am not saying either way is right or wrong its horses for courses for each individual but it is nice to have the choice!!