With credit card companies offering favourable deals, and 0% balance transfers, is it preferable to pay for bigger purchases, like a new motorbike or scooter on your credit card?
Hire purchase agreements and lease agreements are usually tied to the bike you purchase, but your credit card allows you a greater deal of flexibility to spend on whatever you need.
If you take out a PCP or HP finance agreement, the loan is secured against the motorcycle, meaning you don’t own it outright – the finance company does.
Another option is to take out a bank loan from your local bank or a reputable provider like AA Loans for example. While they don’t come with the attractive 0% balance transfers or low-interest introductory rates that credit cards sometimes do, most people prefer them as they know what they are getting in to.
So, should you use your credit card to buy your next motorbike?
By working the system just right, you can use your credit card to buy your next set of wheels. Financing your purchase this way can save you money and offer you more flexibility than any finance agreement can.
Here are our 5 favourite reasons why we think buying your next motorcycle on a credit card could be a great idea:
If you apply for a new card or take advantage of 0% interest deals, you could potentially save a fortune in interest payments that hike up the repayment amount on finance deals.
Use a card that offers you a fairly decent length of time on 0% interest purchases and relax in the knowledge that every payment you make is 100% dedicated to paying off the balance, and therefore the cost of your bike.
Using a credit card to pay for your bike gives you the benefit of Section 75 protection.
This means that you are covered under Section 75 of the Consumer Credit Act 1974. Therefore the credit card company is jointly and severally liable for any breach of contract or misrepresentation by the retailer or trader. This is a bonus if you buy your bike from a dealer that goes bust, or you are unlucky enough to have purchased a bike with problems that are undisclosed.
If you have a good credit score and have not experienced any difficulties applying for credit cards, you may be able to keep interest payments at bay until the debt is paid off.
By being savvy and keeping on top of the best deals, you can move your balance from one card to another as soon as your 0% interest rates runs out. You can also transfer balances to cards that offer other incentives like extra loyalty points, vouchers or cash back.
Because you are not using the bike as leverage against a secured loan or finance agreement, the bike is yours the minute you pay for it using your card. This is a favourable option for many buyers.
Because your credit card balance is one outstanding amount you can pay as little or as much as your like. Providing you meet the minimum payments required every month, you can pay for your bike over a term that suits you. Of course, this is only beneficial if you can continue to find 0% interest deals.
This also means that you can make larger payments as and when you are able, meaning your bike is debt free sooner rather than later.
Of course, these are the benefits of using your credit card to buy your next motorbike, but like all debts there are downsides.
You need to be very disciplined to make regular payments equal to or more than the minimum monthly payment amount and remember to move the balance when your 0% deal ends. If you don’t, you could be stuck with the debt and accruing interest for a long period of time.
You should also be aware that not all dealers will accept credit card payments. Many of them earn a kickback from finance deals and would prefer to use these instead. You will also need a card with a good size balance available.
However you choose to finance your next motorbike purchase, try not to spend any more than you can reasonably afford. Wherever your loan comes from, you still need to pay it back. Remember, people – always spend responsibly!