So you’re going to get a new bike – I know you’re excited about your new shiny machine, but don’t just start frantically bidding thinking that you’ll rush out and sign up for the first finance plan you see! There are tons of companies out their tripping over themselves to lend you money. So take your time, shop around and read the quick guide below - I bet you could save yourself a packet…

First things first, check the sellers refund policy before you pay a deposit, just in case the bike isn’t what you had been led to expect.

There are three main ways to buy a bike on finance…

Credit Cards:
If you’re buying the bike from a dealer you cold just chuck it on your credit card. The dealer may charge you a small surcharge for processing credit card transactions, but not in all cases.

The problem with credit cards is the high interest charges. Look out for the ’APR’ Annual Percentage Rate – this is the headline cost of the finance. One option is to look around for cheap or 0% credit card offers that last anywhere between 6-12 months then, when the cheap rate stops, switch the balance to a new card with another low rate offer. This is fine if you’re buying from a dealer, however few individuals selling a motorbike or scooter will take credit cards!

Hire Purchase (Dealer Finance):
Again if you’re buying a bike from a motorcycle dealer, most offer finance plans with varying APRs depending on your individual circumstances.

Ask the dealer what his terms are and don’t let him tell you that the APR isn’t important. If he can’t tell you what the APR is, I bet it’s massive! One thing to note with this form of finance is that it’s commonly linked to the bike – so you’ll have to pay off the finance before you can sell the bike on. The dealer can normally arrange the finance there and then or give you a call back within a couple of hours to let you know if you’ve been accepted. You may have more room to negotiate over the price of the bike if buying on a dealer finance plan as dealers have more flexibility with their fee for arranging the finance.

Bank Loans:
This is probably the cheapest and most flexible way of borrowing money. High street banks along with supermarkets and loan companies are fighting hand over fist to lend you money, so there are some very competitive rates to be had on the high street and internet.

Again the cost of the loan can be summarised by the APR – so look for the cheapest rate. Most banks lend anything from £500 to £25,000. Another bonus is that the loan isn’t linked to the bike so you won’t have to worry about paying it off before selling the bike. Rates should be cheaper the more you borrow. One thing to check is if there are any early repayment charges. If you come into some cash and want to pay the loan off some lenders may charge you for the privilege – so check they won’t. The best thing about this method is that you can get the money from the bank and then go and buy a private bike with the cash or cheque.

The important thing to remember when borrowing money for whatever purpose is that someone is making money out of it – so the key is:

•    Borrow as little as possible
•    Borrow it at the cheapest rate possible
•    And pay it off as quickly as possible!

The longer you have a loan the more you’ll end up paying in inertest.