Selling On Outstanding Finance
Many of us have purchased a motorcycle before, and it is one of the best feelings to have to own your dream machine. Whether the bike is for pleasure, work or both, we have to find the money to pay for it.
Sometimes the cost has to be spread over different ways of purchasing the new addition. Firstly, if you are in a good position and able to buy the machine outright - depending on your situation, this would be the easiest and possibly the best case for selling or exchanging your bike as you are the legal owner and registered keeper.
It is all very straight forward, but like most of us some options are placed in front of us that can make the purchase more affordable.
In some cases this allows us to buy a better bike than we first thought which is always a bonus.
We have all been there…starting with a figure in our head of what we would like to pay for a new bike, but as soon as you start looking at bikes, you see a better one for more money. The idea of thinking of a new bigger bike with more optional extras comes to mind and of course, a better bike is a better deal but a costlier purchase.
There are many ways to finance a new purchase and this post will hopefully give you some understanding into your options. We will give you insight into not only purchasing your motorbike but the different types of loans can also have on the sale when selling your motorbike also.
We all know selling a bike to a private buyer can return possibly some more cash than some other ways of parting with your motorcycle, but it can come with its pitfalls. It can come with risks selling to people that are out there ready to cash in on good honest, trustworthy people like you.
Gone in sixty seconds comes to mind when letting potential buyers test ride your motorbike. If they have an accident whilst test riding, who pays? All these known issues can be worth that extra bit of cash if all goes to plan, but if there is finance attached to the machine, more hurdles are put in the way before you can sell your bike.
Everyone knows that if a bike has finance outstanding, the information is held on finance databases like Experian and HPI checks for a reasonable cost will tell you everything you will need to know. You will need to do the right thing at this point. Paying off your financial responsibilities before selling your bike to anyone else other than a dealer is the best option. Then when a potential purchaser pays for the HPI checks, the check will show all clear on finance and all good to go.
Some suggestions on how you will pay off outstanding finance:
If you have some savings, you can pay off the credit using this as a short term until the bike is sold. You could get a short-term loan from a bank, or a relative etc, then pay off the bikes finance that will make the bike legally yours to sell. You could then pay back the loan when the bike is sold. You will need to pay off the finance as soon as possible as there will be a period between the transaction and when the database is updated, a few days to a week typically.
Outstanding HP Finance
HP (Hire Purchase) is a great way of buying your new motorcycle by spreading the cost over a fixed term. This is sometimes more preferable to many if you have a larger deposit or a lot of value on your part ex and would prefer to own the bike outright at the end of the term. HP has been around for years, and many machines are purchased this way. Once you’ve agreed with the deposit amount and terms, your deposit will be taken off the motorcycles price.
The Finance company pays the balance to the dealer on your behalf and will own the motorcycle. You then pay monthly payments over the term that includes interest.
After you have completed all the outstanding amounts, you will own the bike. As per all finance terms, the vehicle is at risk and can be reposed if payments are not maintained.
In order to sell your motorcycle whilst HP is outstanding, you will have to settle any outstanding finance. You will need to contact the finance provider and get a settlement figure. This figure is usually valid for several days. Once you have requested the settlement figure, you can let your dealer manage the deal ensuring everything will be settled on your behalf.
Outstanding PCP Finance
PCP (Personal Contract Purchase) can be a good option when financing your new motorcycle. Widely available from most finance dealers. The deal all depends on you and your own personal situation. The dealer will look at all variants and types of finance and will be able to demonstrate all the possibilities of finance on offer and will then let you decide what the best option is for yourself. Benefits of PCP include: a small deposit required that is flexible and sometimes can even be £0. Fixed-rate monthly repayments on a chosen period of two to five years usually are cheaper than other finance options. At the end of the term, you can choose to return the motorcycle or pay the final “balloon” payment and keep the motorbike. The downside of any finance is that the vehicle is at risk and can be repossessed if payments are not maintained. You have to be older than 18 years of age. Generally, during the PCP term, the bike will be in negative equity. This means that you owe more than the motorcycles worth. This because of a number of factors that include the condition, mileage, age of the motorcycle, small or no deposit also new motorcycles from new depreciate in value as soon as you take them from the shop, with the most significant part of its devaluation within its first year.
With PCP, the finance company is the legal owner until the full balance is paid off.
Suppose you desire to sell the motorcycle, the finance company will require full payment of the settlement figure. You may owe more than the bikes worth, and you will be responsible for any shortfall.
Selling To A Dealer
Maybe a more viable option with some of the stress removed. Whether you are selling to an online dealer or the dealer in your area, part exchange or just a straight forward sale, a dealer may be able to manage the settlement for you. You will need to contact your finance company and ask them for a settlement figure. Hand this information over to your dealer and let them do the rest. It is advised to remember that sometimes there may be additional costs to budget for.
Make sure you find out the complete finance settlement figure firstly and ensure that you are aware of any additional charges before committing to settling the balance.
A logbook loan is a form of secured lending. With a logbook loan, the customer will sign a “bill of sale”, which is the transfer of property to another party (the Lender). The customer then gets the money that was borrowed and keeps possession of the bike. Then the Motorbikes ownership transfers over to the Lender. Once all the payments are settled, the transfer is reversed, the ownership of the motorbike is back with the customer. The customer would be liable if anything was to happen to the bike and would have agreed to keep it insured, maintained and a valid MOT Etc. HPI checks will show up as outstanding finance. You cannot sell your motorcycle that has a logbook loan outstanding until the finance is repaid and the logbook has been put back to the owner.
Providing that you own the motorcycle outright, you are the legal owner, unlike HP or PCP finance. You would be able to sell your motorbike freely at your choice, even if you took out a personal loan to finance the purchase in the first place.
A personal loan is, as it says on the can, personal. The debt is with the person and would be up to you on any repayments are made. You may choose to repay the loan when you have sold your bike. You might even consider that you may want to keep the cash for your next purchase and continue paying the payments. It would be purely your decision on what you did next.
Being the registered keeper of a vehicle doesn’t make you the legal owner or the bike. If finance is outstanding regardless of amount, the finance company will be the legal owner until such time the finance has been settled, so essentially the lender owns the bike. They will not hand over ownership until any outstanding finance has been paid in full.