When you purchase a new bike, you’ll be feeling chuffed to bits that you managed to afford your dream wheels with the help of a little motorcycle finance. But, if you want to sell your beloved bike before you have finished making all of the repayments on it, your mood may change when you discover how much of a hassle it can be.
You will need to inform the lender that you are considering settling the finance early, and ask them to provide you with a settlement figure. You will also need to find out about any early settlement fees or other fees that they may charge.
Although you are the registered keeper of the bike, you are not the legal owner until the finance has been settled. Therefore if you have an outstanding amount owing under your finance agreement, the bike is technically the property of the lender and they will not relinquish their interest in it until all repayments have been made.
Most honest sellers will clear the finance before selling a bike. But there are some rotters out there who will sell a bike, without having cleared the finance first and bluff the new owner into thinking the seller is entitled to sell the bike.
This is highly detrimental to the new owner as the lender could still repossess the bike, especially if the seller doesn’t use your funds to settle the finance. This could leave you as the new buyer out of pocket and with no new bike.
If you want to achieve the best price for your bike, you may want to sell it privately. In order to do so, you will need to pay off the settlement balance, including any fees.
You could do this using your own savings, or look into the possibility of a short-term personal loan to cover the remaining payments.
Let’s say you owe £4,000 on your bike to your (fictional) finance company Mr Motorbike Finance Ltd.
The bike is worth £7,000. You could take out a new loan for £4,000 from a reputable lender like AA Loans and pay off the £4,000 of finance you owe to Mr Motorbike Finance Ltd. The bike is now yours to sell and once you sell it, you have £7,000 cash in hand.
You could either settle the new AA loan, meaning you’re left with £3,000 from the sale of your bike or you could go and buy another bike with the £7,000 you’ve got in the bank and continue to pay off your AA loan.
Because you do not legally own the bike until all repayments have been made, you cannot sell your bike with outstanding finance on it privately. Remember that your finance company will have registered your bike on the HPI and Experian databases when you took out the finance plan. This means it is easy for a potential buyer to check the databases before making an offer on your bike, so fibbing about finance is definitely out of the question.
Some dealers will be able to manage the settlement for you. If you are looking to upgrade or just fancy a new set of wheels and don’t mind suffering a few small penalties for it, your dealer should be your first port of call.
With this option, the settlement value can be transferred to a new finance agreement on your new bike. Alternatively, you could pay the cash to your dealer to settle it as part of your new deal.
Repaying your finance agreement early can have penalties attached to it depending on your contract with the lender. Be sure to find out about any additional costs before you commit to settling the balance.
Likewise, trading in or part exchanging a bike that has outstanding finance on it will usually be subject to fees from the dealer, and they will no doubt offer you a lower part exchange value than you would be able to achieve if you sold your bike privately.
That’s why, if you need to finance a bike, it’s simpler to take out a loan as unlike PCP or HP, that loan is not attached to the bike, meaning you can sell the bike at any time.
But, if you genuinely need to sell your bike with outstanding finance, the above options are available to you.