How does motorbike finance work?

For many motorcycle enthusiasts, the temptation of the open road and the thrill of riding a new bike is hard to resist. With some models of motorbikes costing up to £15,000, financing can become a crucial aspect of making that dream a reality. In this comprehensive guide, we'll delve into the world of motorbike finance in the UK, exploring the various options available, eligibility criteria, and the factors to consider when choosing the best financing plan for your needs.

Whether you're a seasoned rider looking to upgrade your current set of wheels or a newcomer to the world of motorcycling, understanding the pros and cons of motorbike finance is essential. From Hire Purchase agreements and Personal Contract Purchases, there is a range of solutions tailored to suit different budgets and preferences.

We'll also discuss the importance of credit scores so that by the end of this article, you'll be well-equipped with the knowledge needed to navigate the world of motorbike finance confidently, ensuring you can secure the best possible deal for your dream drive. Read on to find out more… 

How does finance work on a motorbike?

Financing a motorbike is similar to financing a car and is well worth exploring whether you’re interested in a brand-new bike, a second-hand model, or a vintage classic. The most popular forms of motorcycle finance are Personal Contract Purchase (PCP) and Hire Purchase (HP). Here we explain more about these options:

Personal Contract Purchase (PCP) motorbike finance

A very popular financing option among motorists, Personal Contract Purchase (PCP) can offer lower monthly payment plans compared to other solutions. This is because you're only paying off the depreciation cost of the motorbike during the agreement. At the end of the contract, you can either return the bike, make a final 'balloon' payment to own it, or trade it in for a new model.  

Hire Purchase (HP) motorbike finance

Another preferred financing solution is Hire Purchase (HP) which also allows you as the borrower to pay for your motorbike over a set amount of months. Usually, you’ll pay an initial deposit (recommended to be around 10%) and then make fixed monthly payments over an agreed period. You'll only own the motorbike once you've made the final payment.

When financing a motorbike, it’s important to consider factors such as:

• Interest rates and total cost of borrowing
• Deposit requirements
• Length of the finance agreement
• Any annual mileage restrictions
• Early repayment or termination fees

Always compare offers from multiple lenders to find the best deal for your circumstances, and ensure you can afford the monthly payments before signing any agreement. Failure to meet the monthly repayments could result in your motorbike being repossessed by the lender. 

What type of motorbike can you get on finance?

You can typically finance any type of motorbike, although more niche models may require the experience of a specialist lender. As a leading vehicle finance broker in the UK, here at Octane Finance, we can discuss your needs and advise you accordingly. Some of the most common types of motorbikes we can arrange finance for include: 

Adventure Bikes

These are versatile bikes that can handle both on-road and off-road riding, such as the BMW R 1250 GS or KTM 1290 Super Adventure.

Cruisers

These are relaxed, low-seated bikes with a focus on style and comfort, like the Harley-Davidson Softail or Indian Scout models.

Electric Motorbikes

These are environmentally friendly bikes powered by electric motors, such as the Kawasaki Z EV or Super Soco range.

Naked Bikes

These are essentially street-style bikes without the usual fairings, offering a more upright riding position, such as the Yamaha MT-07 or KTM 790 Duke.

Scooters and Mopeds

These are practical, easy-to-ride bikes with step-through designs and smaller engines, like the Vespa Primavera or Honda PCX.

Sports Bikes and Superbikes

These are high-performance motorbikes designed for speed and agility, such as the Yamaha YZF-R6 or Suzuki GSX-R750.

Touring Bikes

These are large, comfortable bikes designed for long-distance riding, like the BMW R 1250 RT or Honda Gold Wing. 

Who is eligible for motorcycle finance?

To be eligible for motorcycle finance you must be a resident in the UK with a current address in the country. Typically, you need to be at least 18 years old - although some lenders may have higher age requirements, such as 21 or 25 - and you must have a valid UK motorcycle licence for the type of bike you want to finance.

Most lenders require you to have a stable income, usually from employment or self-employment, and in some cases, there may be a minimum income requirement too in order to demonstrate you can afford the monthly payments. Bear in mind that lenders will check your credit score to assess your creditworthiness. A good credit score increases your chances of being approved and may result in better interest rates.

It’s worth noting that some lenders may have additional requirements, such as:

• A minimum deposit amount
• A maximum age limit for the motorbike being financed
• A minimum value for the motorbike being financed
• No history of bankruptcy or County Court Judgments (CCJs)

If you have a poor credit history, you may still be able to secure motorcycle finance, but you may face higher interest rates or need to provide a larger deposit. Some lenders specialise in providing finance for individuals with less-than-perfect credit, so make sure you speak with us first. 

What credit score do you need to finance a motorbike?

Having a higher credit score generally improves your chances of being approved for motorbike finance and may result in more favourable terms, such as lower interest rates. In the UK, there are three main credit reference agencies (CRAs) that lenders work with to access your current credit rating. 

Experian, Equifax, and TransUnion each have their own scoring system numbered 0 to 999 and ranging from poor to excellent. To find out more about these, read our credit score sales explained article which goes into more detail about the individual credit score scales. Lenders will also consider other factors when assessing your finance application, such as your income, employment status, and debt-to-income ratio. 

If you have a low credit score, you can take steps to improve it before applying for motorcycle finance, such as:

• Registering on the electoral roll
• Making payments on time
• Reducing your credit utilisation
• Checking your credit report for errors and disputing them

Motorbike finance FAQs

We hope our guide to understanding how motorbike finance works in the UK has given you a better idea of the process and what to expect. Why not check out our FAQ section below to find out more? If you have any other questions at all, please do get in touch with our team and we’ll be more than happy to help.  

Is it easy to get motorbike finance?

Getting motorbike finance in the UK can be relatively easy, provided you meet the lender's eligibility criteria and have a good credit history. The process has become more streamlined in recent years, with many lenders offering online applications and quick decisions. Overall, while getting motorbike finance in the UK can be easy for many people, it ultimately depends on your individual circumstances and the lender's criteria.

What is the minimum credit score for motorbike finance?

It is generally accepted that a higher credit score will improve your chances of being approved for motorbike finance, so lenders tend to favour those with a ‘good’ credit score. That being said, some lenders specialise in providing finance to individuals with lower credit scores - referred to as poor or bad credit. It's important to note that a credit score is just one factor that lenders consider when assessing motorbike finance applications. Other factors, such as your income, employment status, and debt-to-income ratio, will also play a role in the lender's decision too.

Can I get a motorbike on finance with bad credit?

Yes, it is possible to get a motorbike on finance with bad credit, although it may be more challenging and the terms may be less favourable compared to those offered to individuals with good credit.

Does financing a motorbike build credit?

Yes, financing a motorbike can help build your credit, provided you make your payments on time and in full throughout the duration of the finance agreement. When you take out motorbike finance in the UK, the lender will report your payment history to the main credit reference agencies (Experian, Equifax, and TransUnion). If you consistently make your payments on time, this positive payment history will be reflected in your credit report, which can help improve your credit score over time.

Can I return a financed motorbike?

The ability to return a financed motorbike depends on the type of finance agreement you have and the specific terms and conditions of your contract. Always carefully read and understand the T&Cs of your finance agreement before signing. If you are unsure about your options for returning a financed motorbike, contact your lender directly for clarification and guidance.

Can I sell a motorbike that’s on finance?

Yes, you can sell a motorbike that's on finance, but the process depends on the type of finance agreement you have and the amount outstanding on the loan. If you're selling a motorbike on finance, it's essential to communicate with your lender throughout the process to ensure you're following the correct procedures and meeting your obligations under the finance agreement. Failure to do so could result in penalties or legal consequences.

Motorbike finance at your fingertips

For motorcycle enthusiasts, accessing competitive motorbike finance deals has never been easier, thanks to our network of leading lenders. With a commitment to providing a seamless, user-friendly experience, here at Octane Finance, we offer a wide range of financing options for both new and used motorbikes. 

Whether you're looking for a Personal Contract Purchase deal or Hire Purchase agreement, our team of experienced professionals is ready to guide you through the process. By partnering with reputable lenders and offering a simple, transparent application process, we put the power of motorbike finance at your fingertips, helping you turn your two-wheeled dreams into a reality. Get in touch with us to find out more.