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 !!!