[Closed] how many people buy there bikes through finance?

Do you mean bike shops who offer 3 years 0% or personal loans that cost an APR?

I often wonder this one as I cant beleive the amount of people who are prepared to spend £2k + on a bike. I certainly dont have that kind of cash lying about.

I did once (£1200 over 18 months @ 0%), but then decided it wasn't worth buying brand new any more.

All three of my [second hand kit] bikes probably equate to what I paid for one new bike - and yet I can now choose between road, XC or DH...

I was going to say never, but then I did have two cycle-to-work bikes and that's a form of finance I suppose.

I cant beleive the amount of people who are prepared to spend £2k + on a bike

And the rest! You not seen what's happened to bike prices over the last few years?

OK how did you pay for your bikes?

I've paid cash for my MTB & road bike BUT I'm considering finance on a new frame (to soften the blow)

Bought my bullit frame on 0% in 2007, bought my P7 Pro and added van 36 for the bullit in the 0% deal in 2009.

The bullit was sheer desire, could have bought second hand but just wanted shiny new.

The P7 pro was more of a practical decision, as it was more than the sum of its parts. the price for the complete bike with the pro upgrade was something like 1600, if I'd bought all bits separately to build the P7 it would have been about 2200 and I actually really wanted a 456 or a BFe. So I rode the P7 for a year, flogged the frame for 350 ish bought a 456 rode that for a year, gave the frame away and then finally settled on the BFe for 370 delivered which now has all the P7pro parts on it and it hasn't cost me any extra (ish).. (Bit long winded but you get my point)

I have done 2, one the Black Horse 0% finance and one on a Barclays 0%. Did it through the shops, one was a 1k bike, put a couple hundred down and paid about £35 per month (same as the gym I just quit).

I then did one on a 2k bike but after selling my old bike I put about 1k down so it worked out the same each month.

Very good if you can get 0%, if it doesn't cost and you can afford it there's no reason not to.

Bought my 5spot frame from CRC's sale last year. Took out a Tesco credit card at 0% for 12months, set up DD to cover the cost.

Its the only large value purchase I have ever really made. Fancied shiny new with a warranty. Was well worth it as the frame craked 6mths later!

Paid off within the interest free period. Bit of a hassle but worth it for a one of purchase.

"how many people buy there bikes through finance?"

that's "their bikes..."!!!

am I alone in getting annoyed by the 'they're, there, their' thing?

(sorry)

There, they're pjbarton. Go have a lie down for a bit 😉

your alone...this is a bike forum 😉

No you're not and yes it is annoying.

i did - no brainer really just make sure you have the cash to pay off the loan if need be

pjbarton - Member
"how many people buy there bikes through finance?"

that's "their bikes..."!!!

am I alone in getting annoyed by the 'they're, there, their' thing?

(sorry)

People not starting their sentences with a capital letter annoys me more.

The only thing that has put me off it is that by the time you pay of the loan you will prob have replaced parts and/or the bike. Well in my case I will have I am sure

PJBarton - Why Don't You? - go outside and do something less boring instead!

Never bought anything (except morgage) on finance or credit cards.
If ive not got the money then I cant afford it.
Bikes are mostly 2nd hand purchases.

I've never used finance on a bike, but depending on the deals they were doing for cash and/or 0% say, I'd consider going down the 0% route just so that I'm quids in at the end of it - i.e. I might as well have the cash in investments earning % rather than someone else having it. Even if I was financing, I wouldn't go for it unless I could actually afford the thing in cash in the first place.

NEVER !

Cash is king. If you can't afford it , dinnae buy it.

Mortgage was the only thing I ever financed.

My initial reaction to this is that I would never buy a bike through finance. They are not that expensive that you couldn't save up for one (like a house or possibly a car) and they are far from essential. I'd take the view that I couldn't afford it if I needed finance but then I hate taking on debt when I don't have to.

Having said that, with the likes of Cycle to work and genuine interest free credit I could be pursuaded as there is a financial benefit in keeping the money yourself longer. If someone can afford to give you interest free credit, maybe they could afford a discount if you paid in cash?

"If someone can afford to give you interest free credit, maybe they could afford a discount if you paid in cash?"

Basically if the bike shop get you on 0% they make more money as they dont have to discount the bike. I've never known a LBS offer 0% and give you a discount at the same time.

By signing up to 0% I wouldnt be surprised if the bike shop get a small commission off the finance company. The finance company hope that you fail to make all your payments on time so that they can sting you a masssive penalty charge or interest rate at the end of the agreement.

NEVER !
Cash is king. If you can't afford it , dinnae buy it.
Mortgage was the only thing I ever financed.

Oh if only everyone had enough cash lying around to buy the things they wanted. People like yourself wouldn't be able to come across as all sanctimonious, and what would be the fun in that....

Cash is king. If you can't afford it , dinnae buy it.

Mortgage was the only thing I ever financed.

Wondered when the first one would pop up. 😉

I've never bought a new bike. Always s/h, bought a new frame a couple of times. Picked up my Ventana s/h, for £450. New was about £1500 IIRC.
I'm just tight.
If I ever hanker after a new bike I'd use 0% if the sums worked, but I'm guessing your going to be paying full RRP.

I probably would do unless I could get a better deal with cash, though paying cash doesn't seem to result in much of a discount.

I tend to prefer buying bikes cash, but my current bike is on a 0% credit card, and will be paid off prior to the 0% period ending. I got a good deal on it at the time, and as it was the last bike in stock in my size, I would have otherwise had to stump up the extra cash for the 2011 model at full price (and at an increased price too).

Nothing wrong with credit when (a) you know you can pay it off within a sensible time frame and (b) it doesn't end up costing you more than you would have paid cash. It is when (a) or (b) isn't true that it is time to walk away.

Call me old fashioned but if I want to buy something I save up for it first. Apart from the mortgage, i do everything I can to avoid debt.

I can understand the appeal of a 0% deal but I would still have to save the money first and know I had it set aside ready to cover the monthly payments.

If you can't afford it , dinnae buy it
Mortgage was the only thing I ever financed

Pot kettle black that!!

I could afford the £35 a month plus a small deposit down but didn't have 2k to buy it out right.
Same as I can afford my morgage repayments but didn't have 150k to layout in one lump sum. Only difference is one was 0% and the other (currently) is about 4%!!

I have and why not? Too many people live for tomorrow when today is every bit as important!

If taking out some managable credit is the difference between riding a new bike or not riding it then do it.

You might get hit by a falling piano next week so do stuff now.

I should work for a bank really...

never a borrower or lender be..

I saved up for my bike over a couple of years..

I have, bought my last turner from rutland as i was off to live in the states and if you move there as a alien you have zero credit rating and the car insurance co treat you as a new driver even if you have been driving in the uk for 20 years, it is hard saving up for a new bike as with 3 children house wife something will always come along and ned the money

LOL at the "i do everything to avoid debt" brigade (especially the ones with mortgages).

I love threads like this, always brings out the touchy subject of "borrowing money".

Personally, I am able to manage my money with sufficient maturity and intelligence that it doesn't leave me quivering in my boots at the mere thought of "borrowing" money to pay for things, so I don't feel the need to do everything to avoid it.

That said, the only things I tend to finance (normally on a CC or overdraft and then transferred to an interest free offer and paid off) are deals that would be economically foolish to miss and can't wait for me to free up £3k(+) of cash. I've got a savings fund which is there for emergencies, but snapping up a great deal on a bike isn't an emergency (no matter how much I try to convince my girlfriend), so it doesn't get touched.

I don't tend to buy (too many) things for the sake of it. So if I know that a bike/TV/laptop is going to be replaced in the near future then I snap up a deal when it comes along. Makes sense to me. Must have saved loads over the years buying things that way.

bought my first bike on 0% finance over 6 months, why wouldn't I?
it's good for your credit rating!
I've paid for bikes and parts with cash and on credit cards (even ones with 20% APR). I buy a mix of new and second hand bits - never really saved for anything!
debt is not a dirty word, as long as it's manageable.

how about getting a credit card with 0% for 12months for the sole purpose of buying a new bike/frame?

It does make me smile when people say that their mortgage is their only debit/finance and that they save for everything else. A friend who works in the city (earns 7 figures but still finances his cars etc) says that people who think like that haven't thought it through.

Think about it - if you saved up £2k to buy a bike, that is £2k you could have paid off your mortgage and saved interest on so that money is in effect financed anyway, and also, it could take you 12 months to save up £2k at £180/month so how is that ANY different to getting the bike a year earlier and paying £180 a month to the finance company?

In reality, until you have no debts at all, mortgage (or rent) included then anything you buy could have reduced that debt so therefore is effectively being financed anyway.

Cashflow is all that matters - if you prefer to save each month or pay a finance company the same amount each month, as long as you can afford the payments it is no different at all and entirely down to the individual.

A lot of my clients have no need for mortgages but still have them as anyone who has that sort of cash can make it earn far more for them with investments, than they're paying in interest on their mortgage.

For what it's worth, I have a mortgage and a leased car but wouldn't have any qualms about getting a bike on finance should the need arise.

It would suck if you saved for a year to find the new "Giant bike" has gone up in price!

so what's the conclusion?

take advantage of 0% finance if available?

My conclusion would be to do whatever suits you best! If you want a £2k bike and have £5k sat in the bank and no time to look how best to invest it then it probably makes more sense to buy it outright and haggle for a discount, but if not and it would take a year to save up and you need/want a bike sooner then I'd probably opt for the finance route!

I used a 0% Tesco credit card to buy my PX Pro Carbon SRAM Red at the end of last year, I aim to pay the balance next month, worked for me but the temptation is now to buy something else as I have still got 6 months 0% left.

Cashflow is all that matters

Yep. Too true.

My inlaws are mortgage free, cash-rich and still will consider financing items (int free, always, natch) to smooth the cashflow impact on their position and particularly on their investment/capital base.

By signing up to 0% I wouldnt be surprised if the bike shop get a small commission off the finance company. The finance company hope that you fail to make all your payments on time so that they can sting you a masssive penalty charge or interest rate at the end of the agreement

Nope. Bike shop will have a subsidy to pay to the finance co. which is how the likes of Black Horse make their money. This is why last years discounted bikes often are not offered with 0%. The bike shops offer it as it increases sales volume. Interestingly, this type of consumer finance has some of the highest delinquency rates.

 

A lot of my clients have no need for mortgages but still have them as anyone who has that sort of cash can make it earn far more for them with investments, than they're paying in interest on their mortgage.

What sort of cash?, I own a house but don't have a mortgage
Should I have piles of cash available to invest?
I take it you think anyone who doesn't have a mortgage must be rich?

yep i bought it on 0% finance, it meant i could have it straight away and was easy than saving up. i would never pay an APR on one though.

1, on C2W. Only new bike I've bought.

If you have cash in your hand then a deal is to be had on the price.

If you take the LBS 0% you will be very lucky to get a discount

Never, cash only.

Edit; or I'll leave a cheque if I'm in no hurry to pick up.

Hijack; I wonder how many do the same with cars, what with them being such a wonderful investment.

Hijack; I wonder how many do the same with cars, what with them being such a wonderful investment.

Current car bought with a c20% discount and paid for 50% cash/px and 50% finance interest free.

I think that's a pretty good deal on the ownership route, though I could have just leased a car and had someone else deal with maintenance etc.

I think C2W is a pretty poor form of finance, as it results in all the risk of maintaining the asset to the employee without title to the asset transferring until much later (at high/taxable cost).

If I can't afford it I can't have it.

Let's face it, the singletrack classifieds are full of items that really haven't been used anyway - basically brand new because the seller is losing sleep because they don't own the latest frame/component/fork etc.. So they replace it with something with the latest sticker on. Bos Devilles seem to be the latest - expect them to be for sale soon hardly broken in. 😀

So I really don't see the need to buy new anymore 8)

Unless the dealer is promoting a manufacturers offer you don't get a discount for buying a car with cash - gross margin (for the dealer) is around £200 on a £20k car. They make their money on finance and target rebates from the manufacturers. NB No one would choose to be a car dealer - there isn't any money it it any more - at best you might make 1% on your investment, most just loose money.

What sort of cash?, I own a house but don't have a mortgage
Should I have piles of cash available to invest?
I take it you think anyone who doesn't have a mortgage must be rich?

Not at all - my mum doesn't have a mortgage but is far from what I'd describe as rich. My company installs very high end integrated AV/automation systems and most of my clients are rich list type people - all I was saying is that even people worth several million like many of my clients, still use finance to buy homes or depreciating assets (such as cars which are no different to bikes in certain respects) as they can put the cash to better use elsewhere.

A friend who works in the city (earns 7 figures but still finances his cars etc) says that people who think like that haven't thought it through.

Your friend has a point, but cash buyers usually get better deals when buying discounted bikes - and you can't get 0% deals on bikes bought via trade contacts or secondhand.

I think many people on here would be reluctant to pay full RRP for a new bike, but I expect many shops would expect you to do that if getting interest free credit.

You should never buy a depreciating asset with cash unless 1: you get a massive discount or 2: the cost of the finance available is more than the interest you can earn on the cash in an investment vehicle.

1: Put the cash you've saved in a high interest account / pension / and earn money on it, or pay it off your mortgage if you have one
2: Pay for the bike on finance at 0%
3: Profit!

I'm a never borrow type, mortgage excepted

surely there is no such thing as interest free credit. With the possible exception of some car care deals where the finace is done by the manafacturer not the retailer

on the other saving for a bike at the moment would be very upsetting as bike inflation seems to out strip interest rates

Basically if the bike shop get you on 0% they make more money as they dont have to discount the bike. I've never known a LBS offer 0% and give you a discount at the same time.
By signing up to 0% I wouldnt be surprised if the bike shop get a small commission off the finance company. The finance company hope that you fail to make all your payments on time so that they can sting you a masssive penalty charge or interest rate at the end of the agreement.

As LimboJimbo has already mentioned the LBS pay the finance company a subsidy.

Although a 0% package is just that to the buyer, the LBS is the one paying the interest. So rather than a straight discount, the LBS offer 0%. It seems to have more value than a discount, which is why LBS's offer it.

For example: You buy a £2000 bike on 0% over 12 months. The finance company are a lending business and want a return on their loan. In this example they want 10% interest back. So over 12 months the interest charge should be £200. When the finance company pay the LBS, they pay them the amount less the expected interest charge (The subsidy). The LBS receives £1800 from the finance company. Over the next year the finance company get £2000 back from the buyer. So they make £200.

Edited bit: The same applies if you buy a used car or a DFS sofa on 0%. The retailer still pays the finance company a subsidy.

In most new car cases this is similar but the vehicle manufacturer (ie Ford) rather than the retailer, will pay the manufacturer finance company (ie Ford Credit) the finance subsidy.

Remember there is no such thing as a free lunch!

I was offered 0% interest finance but would have lost out on 15% discount so I paid up front.

Paid cash for much the same reasons as others, discount for cash, not for finance. I did have to save up though!

It does make me smile when people say that their mortgage is their only debit/finance and that they save for everything else. A friend who works in the city (earns 7 figures but still finances his cars etc) says that people who think like that haven't thought it through.

High earning city type. I can think of anyone less qualified to hand out financial advice. Its not like thay completely stuffed the world economey in recent years is it!!!!!

And on a personal note if you earn over a million a year and need finance to buy a car, well the mind boggles. (Quick note thats a take home of £40,000 a month). If people like this are payed as financial experts no wonder the world is in a mess

High earning city type. I can think of anyone less qualified to hand out financial advice. Its not like thay completely stuffed the world economey in recent years is it!!!!!

And on a personal note if you earn over a million a year and need finance to buy a car, well the mind boggles. (Quick note thats a take home of £40,000 a month). If people like this are payed as financial experts no wonder the world is in a mess

You're missing the point. Even wealthy people finance supercars as they are depreciating assets and their future value can be massively affected by global economic trends, fuel and tax costs etc.

Why spend 150k of your own money and then three years down the line have to sell the car at a 50% loss, and have to deal with the tyre kickers, test pilots and ripoff merchants when you can finance the depreciation of the car over three years with someone elses money instead with very little risk?

Car not worth anything in three years time due to the oil wars? Not your problem, you walk away and the finance company picks up the pieces. Suddenly lose your job and can't afford the car? Instead of having a rapidly-depreciating expensive lump to sell you hand the keys back and take the credit rating hit.

All the while your own money is working for you in investments.

Forty grand a week BTW.

I have the Cash, negotiate a cash deal, then throw the "0% Option at them", these guys are making 40/50%profit on these bikes, + the mark up on the "parts" u need to keep them running !!

Yep, bought 3 bikes on 0% over the years - the cash i would have spent goes into a high interest account (or at least, used to be high interest). Dont see what the big deal is, i can afford it, never missed a payment on anything in my life, and have sufficient cash in the bank to pay it off if needed.
I used to buy lots of frames etc second hand, but threw so many away through breaking that it is simply better for me to pay for new to have warranty back up.

I did it once and by the time I'd paid for it only bit left was frame and forks now I just buy from the classifieds as they are mostly near new stuff you get the build not want at a fraction of the price albeit without warranty but I can live with that for the saving.

Depends on your circumstances I guess.

I bought my last Stumpjumper fsr on 0% finance with a 10% deposit. I wasn't planning on it, I had the money in the bank but the shop offered me it. I hadn't even considered it.
But, I'd rather have the money in my savings account earning interest and just set up a standing order for the term of the finance.

When I bought the new bike last year, I had the savings in the bank so just paid for it in full. If I'd have been offered 0% finance though & interest rates for savings accounts were still high, I probably would have used finance again.

I've not but would have no objection if I had the cash - either if I was buying online and there was no discount opportunity or if I could get the same discount plus 0% finance. Also I'd do the apply for a credit card with 0% on purchases for a year thing. Then put the cash in a savings vehicle. I trust myself not to then spend the cash on something else.

Also if the frame on my only bike snapped and I was broke but reasonably confident about employment prospects I'd probably do it even if I didn't have the cash.

You're missing the point. Even wealthy people finance supercars as they are depreciating assets and their future value can be massively affected by global economic trends, fuel and tax costs etc.

Why spend 150k of your own money and then three years down the line have to sell the car at a 50% loss, and have to deal with the tyre kickers, test pilots and ripoff merchants when you can finance the depreciation of the car over three years with someone elses money instead with very little risk?

Car not worth anything in three years time due to the oil wars? Not your problem, you walk away and the finance company picks up the pieces. Suddenly lose your job and can't afford the car? Instead of having a rapidly-depreciating expensive lump to sell you hand the keys back and take the credit rating hit.

All the while your own money is working for you in investments.

thanks for explaining but now I know thats how the people who are responsible for our money think I'll probably never sleep again

I deal with Hitachi Capital Finance through my own business (they are the largest retail lender now the Lloyds TSB have stepped out) Most larger companies including DFS and Several bike chains also use them.

If someone is offering 0% finance through them they are paying a MINIMUM of 7.2% subsidy for a 12 month contract. As was previously posted the LBS gets the sale price, less the subsidy retained.

Further since March of 2011 there is a mandatory 14 day cooling off period on ALL finance agreements, you can walk away from it without any reason within that period. This means the LBS wont get paid for at least 3-4 weeks after you've signed up for the purchase assuming you get the bike on the spot.

Cash is king, any Store will give you discount if you offer cash / debit card at the time of purchase. Even a Credit card is only going to cost them 2-3% by comparison.

Go in with the knowledge of what they will lose by offering the 0% finance, ask them outright, if the salesperson doesn't know make him find out or deal with someone who makes the decisions and get them to take it off the top line. Cash flow is probably the most difficult area for any business in this climate, and them knowing the cash is in the bank (or in the petty cash tin out the back) is worth a lot !

Caveat ... vendors have to be very careful of being seen to offer discount for cash. By doing so as an example they are saying "we will give you 0% finance or 15% discount for cash" which equates to "we will charge 15% extra for 0% finance" which then makes the 0% finance ... not 0%. Highly illegal under the Consumer Credit Act.

As for the premise of putting money in the bank and using the 0% option, given the current interest rates, offset by the loss to PAYE (of course you declare your interest earnings don't you) its going to be considerably less than 7% that the store will lose by signing you up ... you both benefit.

Some stores (Mainly Franchised) are bound to a price point by their suppliers, if this is the case then look for upgrades or additional items. Wether its a long term servicing agreement, spares or upgrades at the point of purchase. They will chase your bundle of cash with these !!!