[Closed] How do people finance a new bike?

[i]ok - but why not just spend the rent money on Mortgage now and have your pension for other things in the future? [/i]

Are you FSA regulated ?.

It was a question, not advice.

Hence the '?' at the end.

[i]Hence the '?' at the end. [/i]

Aye.
My Bads
😉

how exactly is buying a depreciating asset taking advantage of credit, you still end up paying more than cash and the bike doesnt make you any money, the only way to gain a financial advantage from credit on a bike would be a guide who needed a new bike to work.

Your asset is depreciating anyway? How does it make a difference whether it's my cash or someone else's that is paying for it?

I've got about £1200 on credit. If i pay that back over the 15mo that the 0% deal remains in force I'll pay back - £1200. At the same time I've got £1200 of my cash in an interest bearing plan which i didn't spend that i reckon will nett me between £50-100 in the meantime. So, by end of the 15mo I'll have say £1250. Pay back the £1200 i owe, I'm £50 better off.

OK, it relies on you being able to save the repayment in the timeframe (or in my case, already have the cash available if i want it) in order to do it, but I still can't see why being paid £50 to have the stuff you want now instead of waiting 15mo to achieve the same is any bad deal?

[b]wwaswas[/b] - [u]Member[/u]

ok - but why not just spend the rent money on Mortgage now and have your pension for other things in the future?

Fair question. Because of the transient nature of my job (posted to a completely different town, country or even continent every 2-3 years, the location of which you can express a preference for but are by no means guaranteed to get) it would be very difficult and expensive to sell one property and buy another each time. There is also no guarantee of being able to sell a given property in the notice period the Army gives you, which can be as much as 6 months or as little as a fortnight.

[i]If he or she is anything like me, by serving 22 years in Her Majesty's Armed Forces. In 7 years from now, I plan to use my lump sum in exactly this manner, my pension to cover my mortgage repayments and - all being well - wages from a new job for income.[/i]

But that means you're not buying your first house untill you're forty something.

[b][u]Gary_M[/u][/b] - [u]Member[/u]

But that means you're not buying your first house untill you're forty something.

Correct.

0% is different, it doesn't cost you anything, you get the bike now, everyone's happy. But it does rely on you not playing the game, the card issuer is still going to make money, they're just rellying on a few people going over the 0% terms and having to pay it at 29% or whatever.

Also (and this is the part of credit I don't like*) there's a lack of flexibility, if you forwhatever reason lose your disposable income after 6 months (say your boiler belw up, the dog got sick, a friend is getting married in whistler bike park, the government discovers your porn stash and you need to emigrate in a hurry) you still have the debt to pay off, if you were saving for 15 months for the bike you could divert that money elswhere and continue saving once things are back to normal.

*note what I've said is a view and oppinion on credit with facts to back it up, you can make credit work for you, but I disagree with it on principal.

[i]0% is different, it doesn't cost you anything, you get the bike now, everyone's happy[/i]

It does cost you.

I get discount for cash / on a sale that doesn't require credit.
😉

2nd hand for me. I haven't bought a new bike in 5 years, and even that was on the cycle to work scheme. If the OP puts his spare cash into savings, a year would yield about £800 - which gets some pretty damn fine machinery if you look in the classifieds.

Also (and this is the part of credit I don't like*) there's a lack of flexibility, if you forwhatever reason lose your disposable income after 6 months (say your boiler belw up, the dog got sick, a friend is getting married in whistler bike park, the government discovers your porn stash and you need to emigrate in a hurry) you still have the debt to pay off, if you were saving for 15 months for the bike you could divert that money elswhere and continue saving once things are back to normal.

true - but that is a 'risk' (with risk definitely meaning calculated risk) you take - plus you do also have the chance to liquidise your assets and you stand a reasonable chance then to get your repayments down to a manageable amount, or at least mean what flips to 29% small enough that you aren't totally screwed.

Hence why i don't mind having £1200 on this basis, but I didn't blow the full £8000 limit I was given on other stuff. Because that is a risk that is not worth taking. And that's the issue - too many people (on here as well as in real life) just as default take the position that buying on credit is a mugs game. The issue is people who don't understand when / how to use credit, banks making it too freely available to them, and then everyone bleating when the inevitable happens.

I absolutely hate [u]any kind of[/u] credit,

I get discount for cash / on a sale that doesn't require credit.

Depends how the credit was arranged, the shop might have a 0% deal which costs them 10%, so that's there to be negotiated with. An interest free credit card on the other hand doesn't cost them much more to process than a wedge of £50's.

I get discount for cash / on a sale that doesn't require credit.

Not on the items I bought you wouldn't. Plus i get free cover for them, as a result of buying distance on a credit card.

While some of the arguments in favour of credit above seem (and may indeed be) sensible they do tend to assume that you are paying the same price on credit as you would have done with cash. In my experience that's very rarely the case. As somebody said "you need to understand how credit works" and that means understanding that, one way or another, somebody has to pay for it and that somebody is usually you. Even if it's as simple as the shop having to pay a percentage to the credit card company, that's still a percentage that they can't pass on to you, which is effectively an interest charge that you are paying for using your card.

Cheers,

Andy

Do Apple do discounts for cash then?

[i]An interest free credit card on the other hand doesn't cost them much more to process than a wedge of £50's[/i]

Yes.
When I bought my FSR, tag price 1900, I paid 1500.
He told me he didn't need cash as it would cost him to push the notes across the counter at the bank.

Same for a watch I bought.
I negotiated a discount, offerred cash.
But they took the card instead of the cash.

Anyway.
Paying tag price, thinking that you've done well getting 0 percent credit.
Isn't a deal, in my book.

[i]Do Apple do discounts for cash then? [/i]

Do Apple produce and sell bikes then ?.

Tax refund. Result.

cold hard cash.

in the words of my dead grandmother "there is nothing better than a new bike"

the money for my next frame is sat there waiting, as stated above, its earning zero interest so i cant wait to hand it over.

Does appear some people are confused as to what credit is. Anyone who buys a bike on 20% apr is crackers, but so you would be if you bought a house or car.

However most bike shops offer 0% finance over 1, 2 or 3 years which is still credit,but free credit. I wouldn't buy a bike ever at full RRP, but see 0% finance on a bike with nearly 30% off it as a very good deal. It means I get a new bike now rather than saving for months on end whilst the old bike falls apart and needs bits replacing.

[i]He told me he didn't need cash as it would cost him to push the notes across the counter at the bank.[/i]

Is there not a fee applied by the issuer for credit card use? So it costs the shop money?

People who use credit are not idiots. People who don't understand how credit works or how to take advantage of it ....... need I write more?

When I worked in a bike shop the people who asked for the interest free credit were either:
a) very poor with 8 maxed out credit cards already
b) silly rich and were simply taking advantage of the system.

This was in the days of cheap easily available credit but on the occasions when someone was refused a deal, they either
a) walked out the shop
b) brought out a big wad of cash and bought the bike anyway.

There were some very smart people out there moving money around constantly on interest free cards and taking all the advantages of airmiles, cashback, discounts etc that were offered at the time.

[i]Not on the items I bought you wouldn't. Plus i get free cover for them, as a result of buying distance on a credit card.[/i]

Then, one, you're buying from the wrong people.
Two, I pay off my credit cards, completely, each month.
They aint getting my dosh that way either.

[i]He told me he didn't need cash as it would cost him to push the notes across the counter at the bank.

Is there not a fee applied by the issuer for credit card use?
[/i]

That was his point.
To process a card was something 3 percent, IIRC.
And the bank would charge him for accepting a cash deposit.
It was going to cost him to make a sale (thanks to those banks, eh ?)
SO why take the additional risk of holding cash.
He took a card and I still got 400 quid off.

"There were some very smart people out there moving money around constantly on interest free cards and taking all the advantages of airmiles, cashback, discounts etc that were offered at the time."

Thank you 😆

We do this, probably put £1k per month through credit cards to get points etc.

I agree that if buying your £2k bike will take up all your disposable income per month then thats just stupid. However if its only a % of your disposable income, and you have weighed up the risks/benefits then its a good thing to do, as it frees up cash for other shiny things.

To the OP, [url= http://www.paulscycles.co.uk/offers.php?cat=7 ]Pauls Cycles[/url] offer discounts and interest free.

"An interest free credit card on the other hand doesn't cost them much more to process than a wedge of £50's. "

so you pick your bike shop carefully - sole trader independant. give the owner a wedge of 20's you get a bike , hes got a slush fund for his safe , everyones happy.

that said i have not found one local they are all chains.

and TINAS - what happens when your in negative equity with your 1st house due to the markets or simply end up with a house that wont shift as seems to be happening quite alot just now - even up here where its still fairly fluid....

I only plan to move if i move continent or get a significant cash injection for any reason that would make a significant dent in clearing my mortgage

Then, one, you're buying from the wrong people.
Two, I pay off my credit cards, completely, each month.
They aint getting my dosh that way either.

1. Apple, On-One (neither of whom offer cash discounts as far as i'm aware) and a local jeweller who'd already substantially discounted the item and made no further concession for cash. How can you say I'm buying from the wrong people for a semi-bespoke item sized to fit at a price I was happy with in that case?
2. So do I*. I never pay interest on anything, apart from my mortgage. *Any CC that is not paid in full is deliberate because it's 0%, and thus by not paying is earning me interest.

No need to buy new with the STW classifieds - so much unused kit going cheap.

Cash, loan, credit card - what's the point in saving up for a year if you can have it now? :p If you're disciplined to save for a year you're disciplined enough to pay off an interest-free loan or CC. Sure if you lose your job you're in trouble but then you'll probably also have a mortgage to worry about so paying for a bike will be the least of your worries.

[i]Cash, loan, credit card - what's the point in saving up for a year if you can have it now? :p If you're disciplined to save for a year you're disciplined enough to pay off an interest-free loan or CC. Sure if you lose your job you're in trouble but then you'll probably also have a mortgage to worry about so paying for a bike will be the least of your worries.[/i]

theres loads wrong with that logic.

But simply. I'll save for a year and either get the out-going MY bike, or the incoming MY.
No Credit.
😉

and TINAS - what happens when your in negative equity with your 1st house due to the markets or simply end up with a house that wont shift as seems to be happening quite alot just now - even up here where its still fairly fluid....

No need to buy new with the STW classifieds - so much unused kit going cheap.

Really?
7 years ago I'd agree, 2nd hand stuff was half price.
3 years ago I'd agree as parts prices were going up quickly.
Today? Flicking through it a lot of stuff is only slightly less than the same stuff new from Germany.

e.g. Hora's SLX cranks, in good conditon, £50's not a bad price. But the same cranks are <£100 new from the continent, and come with chainrings and a BB.

Reverb's go for £150-£180, I only paid £175 for my new one!

I'm building a new hardtail up, going to cost me a smidge under £1k for a chumba HX1 with XT double, X9 gearing, sektors, hope hoops, XT brakes with ice tech rotors, nukeproof stem and post, da-bomb bare bones pedals, carbon bars, hope seatclamp and headset, anodised bling bits, etc etc, only existing bits were the forks (~£200 new) and gears (£150). I reckon you'd struggle to get something that good off the shelf or much more than a couple of hundred off in the classifides.

My bikes have always been bought when possible, at a discount, then upgraded over years.
I'll admit that my current 575 frame was bought on my credit card but that was discounted and only after I sold two other bikes and various bits to pay for it. Upgrades to its current spec have taken place over years- christmas and birthday money is saved and goes towards new forks, wheels etc when needed. And even then it's bargains that I've been buying. Made do with older bits until upgrades possible.
Taken 2 years to get my yeti to where I want it but it's only cost me about £2k max whereas, if I'd just bought it all at once id have been looking at maybe £3k plus easy.

Ah so better off on paper but still stuck with a crap house you can't shift for near what you paid.person a doesn't actually need to sell to climb the ladder.

Suit your self

Clearly your better educated than me - paying 200 quid more than I would have to rent something 3 times bigger than my ( cheap For the same area) rental.

Maybe if you rent in a crap area and aspire to own in a reasonable area your logic works

You took that rather personally!

*looks out of window at 'crap area' and considers the surf (not today, too flat), looks out of other window at the moors (yea, singletrack looks nice and dry, I fancy a ride 🙂 *

To the Op's question.

Most of my bikes are the triggers brush technique.

Or build up with a mix of 2nd hand or new over time.

No Debt for me on anything except mortgage. But have bought on CC before just don't need to now.

theres loads wrong with that logic.

But simply. I'll save for a year and either get the out-going MY bike, or the incoming MY.
No Credit.

Err but you won't have the bike for a year (so you're assuming you already have a bike for starters). you can still get the out-going or incoming MY bike, just for the year you actually want the bike not in a year's time.

I like to buy mine with cash, making sure I've got a spare twenty to light my cigar with while the transaction takes place.

i priced up the bike i wanted at £2500 & i could afford the ~£200/ month payments on a 0% CC.

built the bike & it cost £2700 buy the time i finished building. I didn't quite keep up the payments & ended up paying back £3K+.

didn't even like the bike and sold the £900 frame on for £300.

Expensive lesson.

My posh road bike i got for my 40th, i bunged on the credit card.
Other bikes and kit are all pretty much classifieds/ebay/discount online stuff that i put together/upgrade as and when i can afford it.

Save up for a deposit and then buy one on finance if you can't afford one outright. Most places offer interest free credit over 12, 18, 24, 36 months. But you'll not really be in a position to haggle over the discount. But can afford the better bike.

Hello Everyone,

I thought that I would post as we were mentioned early on in the discussions.

It's good to know that Bike Leasing Company is becoming more well known out there. I guess having built up a plethora of happy customers now helps:)

A couple of very interesting points have been raised about the relative merits of credit etc.

I think that the point to focus upon here is that the originator of the thread is looking to buy a NEW road bike.

Clearly, second hand doesn't really fulfill their criteria, and new will never compete with used at a price level. However, new does compete with used in terms of warranty and aftercare and often in terms of reliability.

Not to mention the sheer joy of riding a brand new shiny bling bike!

As has already been mentioned,new bikes are available as current model year and previous model year bikes.

However, affordability is always the crunch point.

0% finance certainly helps with this, but it does involve being tied in for the term of the credit. It is also very rarely available on previous model year bikes or sale items; and where it is, it is usually for a very short term. On current model year bikes it usually means that there is no opportunity for discount.

Either way, it is only an option for people with impeccable credit histories.

So many people have experienced redundancy between 2008 and now that the majority of people have at least 1 missed payment on their credit file. This often means that 0% finance is not an option for them.

Interest bearing credit can also make it "affordable" in cashflow terms, but naturally, you end up paying more. Bank loans for typical "bike values" e.g. below £7,500, often run at 18% or more! So this is hardly an enticing option.

Credit cards are often a risky option. You have to be disciplined to make sure that you don't find yourself "caught out" at the end of the 0% offer period.

If you use the card for other purchases (outside the usual 3 month offer period) then any payments you make will be used to pay off the 0% finance first and you will pay the usual credit card's interest on the purchases until you have cleared the 0% element.

Also, no 0% credit card offer is ever truly free. There is always a "charge". It's typically 3% or more nowadays. You'll pay this each time you move the balance.

Then there is the cash option. This is only really open to people who have enough disposable income to just go out and get what they want, are good savers, or are willing to compromise significantly on the quality of the bike they ride.

Whichever option chosen, all of the above involve tying your cash up in the bike. If you want to get a replacement bike you often have to sell your old bike to fund your new one.

We've considered all these issues faced by riders with the "traditional" funding options and realised that there was a better way (in our opinion of course)

Leasing presents an entirely different option:

If you or your partner lose your income or become injured and can no longer afford the lease, then you can simply hand the bike back with no penalties.

The costs are spread out over 2 years. We have made the first 6 months of the payments higher so that the last 18 are amazingly low, reducing the financial burden on you and your family. It also helps to make sure that we are all being financially responsible. It makes no sense at all to damage your financial health with a bicycle.

We only want our customers to lease bikes that are affordable for them. The good news is that leasing lets you get a much better bike at a cost that is affordable to you, or you can get the bike you originally wanted and spend less of your money over the 2 years. Either way, you get what you want.

We take on the burden of depreciation so that you don't have to sell your old bike to fund a new one.

The bikes are all covered by manufacturer's warranties, but if something does break or wear out then you can replace it at trade prices: that saves you a lot of running costs.

We know that the natural response is that leasing means that you don't own the bike. That is true. But you do get to enjoy all the benefits of owning it without many of the downsides.

The total lease costs over the 2 years are typically 30% less than the retail price. Much more of your cash is freed up for the majority of the lease to spend on those other things that can crop up over 2 years, like broken cars and vets bills etc, and the costs of replacement parts and accessories is much lower.

There are no hidden catches in terms of the condition that the bike needs to come back in either. We expect it to be ridden and used as you would your own i.e. regularly and hard:).

All we ask is that you return it in one piece and functioning. Scratches and the odd ding are not an issue. Even if it does get broken, there is no problem, as again, you can make use of crash replacement policies or trade prices to repair it.

Also, very importantly, if one of customers did want to own their bike at the end of the lease, the equivalent APR they would have paid would be just less than 6%. That's a lot less than a bank loan and probably less than the ultimate costs involved with credit cards.

Obviously it's not less than 0% finance, but remember, you're not tied in and your cash is not tied up in the bike until you come to sell it (and your running costs are likely higher with 0% finance).

You'd also have to be 100% confident that you would get more than 30% back on the bike when you came to sell it. Remember to take into account ebay or pinkbike fees and charges, timewasters and the final haggling that invariably occurs:)!

I hope that this goes some way to explain leasing as an option in a little more detail. We think it represents a cost effective and safe alternative.

We now have customers with Road, Triathlon, Downhill, All Mountain and XC bikes out there who are enjoying the thrill of a high-end bike in a very cost-effective manner.

I'd be happy to talk to anyone who would like to find out more detail.

I know that some of our customers would be happy to discuss it with you as well to give their point of view on how leasing works for them compared to all the other funding options that can be considered.

Our contact number is available on our website.

I wish the best of luck to the originator of the post in their pursuit of the right bike at the right price for them. There is simply so much choice out there, that finding the right model can be problematic enough, without even considering all the funding options available.

Enjoy this brief respite with the weather everyone. Hopefully it will give the trails a chance to dry off a bit and I can avoid trying to defy the laws of physics by trying to get mud laden tyres to have friction on wet roots!

I thought I'd my experience. Paul ([b]paulmtbleasing[/b]) helped me to source my bike and I'm leasing it through his company. I've been amazingly happy with my choice ([i]and no he's not paying me to day this![/i]).

Leasing allows you to choose a silly expensive bike to play out on, paying in a way that suits you. Yes, it's a credit agreement so if you're one of the people in this thread who's against credit in principle, then it won't suit you as yes, you're borrowing money. But I found it the best credit agreement for me and I've got a lovely shiny bike - although the shiny bit is a lie after a trip up Windy Hill yesterday.

If you're in the market for a new bike ([i]or indeed some new kit, Paul leases new bits too[/i]), all I can say is give him a call. Nice bloke, pleasure to talk to and he'll find something to suit you.

I did [url= http://bit.ly/JqBYX2 ]a little post about my experience here if you fancy a read[/url].

Thanks for the kind comments Phill.