- This topic has 27 replies, 15 voices, and was last updated 4 years ago by robj20.
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0% finance
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phatphilFull MemberPosted 4 years ago
Anyone know what 0% finance costs a bike shop?
It can make a new bike possible and have done this in the past and big shops go as much as 4yrs on larger amounts.
Obviously there is a cost to the finance, theoretically a bike store isn’t supposed to offer a discount as an alternative to 0% finance as this discriminates against those using 0% finance however logically this means there must be some margin a shop could reasonably ‘do a deal on’ a new bike if someone is lucky enough to have the money(or a o% credit card I suppose).
Any ideas?zilog6128Full MemberPosted 4 years agotheoretically a bike store isn’t supposed to offer a discount as an alternative to 0% finance as this discriminates against those using 0% finance
is that a thing? not heard of it before!
Best thing to do maybe is negotiate a discount then pay on a 0% card? (I have taken out a new card before just to buy a bike! 😃)
northernmattFull MemberPosted 4 years agoIf it’s anything like the 0% finance we used there was a flat £60 charge for application and then a percentage on top of that which was usually around the same amount as for a card transaction through a card payment provider (around 1.8%).
So for a £4k bike that’s £60 + £72 = £132
phatphilFull MemberPosted 4 years agoTHAT SEEMS CHEAP?
I was under the impression that V12 charged the
bike shops as much as 13% for a 4y 0%tomhowardFull MemberPosted 4 years agoWas around 10%, varying dependant on the length of the agreement, when I last worked in an LBS.
is that a thing? not heard of it before!
I thought it was that you weren’t supposed to offer a discount for cash (over credit card) as that would mean there was an additional cost of using a card, which is now banned. Didn’t think that applied to finance though.
simondbarnesFull MemberPosted 4 years agois that a thing? not heard of it before!
Yes. It’s against FCA regulations and can lead to big problems for the shop.
Cost of finance depends on length of terms – the longer it is the higher the percentage the shop is charged.
phatphilFull MemberPosted 4 years agoso a 10% discount for a non finance purchase isn’t pushing it too far then!
zilog6128Full MemberPosted 4 years agoso a 10% discount for a non finance purchase isn’t pushing it too far then!
pretty much standard (against RRP, not on a sale bike!) if you’re at least on nodding terms with the owner!!
reluctantjumperFull MemberPosted 4 years agoJust helped a colleague buy a new road bike and the shop mentioned no discount for him if he took it on their 0% via V12 Finance. The sales guy said they basically either charge the customer 20-odd % interest on the loan if they take that option or of the customer takes 0% then the shop basically pays the interest in fees. Either way V12 get their money. My colleague got a £2k loan at 6.4% and got £150 off the bike for paying ‘cash’ instead.
northernmattFull MemberPosted 4 years ago@phatphil my bad, just checked and that was for 9.9% APR. Can’t remember specific figures for 0% but sure it was closer to what you have mentioned.
zilog6128Full MemberPosted 4 years agoMy colleague got a £2k loan at 6.4% and got £150 off the bike for paying ‘cash’ instead.
still mad vs. getting a 0% for 2 years CC
jam-boFull MemberPosted 4 years agoMy colleague got a £2k loan at 6.4% and got £150 off the bike for paying ‘cash’ instead.
£2000 loan at 6.4 APR over 2 years. for example:
The total amount repayable will be £2,132.14, therefore the loan will cost you £132.14
that seems totally worth it to save £27.86…
edited to get the right APR, slightly better if they paid it off over 1 year.
kelvinFull MemberPosted 4 years agoRemember, if you pay by credit card, or Paypal finance, or whatever, the bike shop is still getting charged and cutting into their margins.
benpinnickFull MemberPosted 4 years ago10% is roughly cost neutral when you account for credit card fees. The shop will subsidise the purchase at a rate slightly above the difference bewteen the interest rate you pay and 10%.
CraigWFree MemberPosted 4 years agoRemember, if you pay by credit card, or Paypal finance, or whatever, the bike shop is still getting charged and cutting into their margins.
And if you pay by cash, the bike shop will get charged to pay it into their account. Plus the time required to visit the nearest bank etc.
theotherjonvFull MemberPosted 4 years agoThe total amount repayable will be £2,132.14, therefore the loan will cost you £132.14
that seems totally worth it to save £27.86…
edited to get the right APR, slightly better if they paid it off over 1 year.
I’m not trusting your APR calc if you can’t take 132 away from 150
0% card but set up a DD to clear it in time on and time (monthly).
tomhowardFull MemberPosted 4 years agoIIRC the cheapest way to pay a shop is by bank transfer, but that may depend on their account.
Would the best of both worlds not be to do a promotional rate (ie 0% over as long as possible, for a small one off percentage, 2-3%) credit card money transfer (I’m always being sent offers) to your current account, then paying by cash/bank transfer?
reluctantjumperFull MemberPosted 4 years agoHe couldn’t be trusted with a credit card! He’ll always pay a lump sum off his but easily falls into the trap of then spending the same amount or more on it a few days later. With his loan he can make extra payments to clear it faster but he then doesn’t have the option of spending the equivalent of that payment again. He should have it paid off in 6 months but the best rate was for the amount over 18 months. I’m sort of mentoring him into getting his finances in shape, he earns loads but it all just disappears! The new bike was his motivation for ditching the expensive lease car and getting a cheap second hand car instead, his old road bike is going to be used for commuting.
Anyway, he wasn’t looking to get the extra £150 off, the shop offered it to him to seal the sale. It was between two bikes at two different shops so they did what they needed to do to get his money in their till.
phatphilFull MemberPosted 4 years agoso slightly off tangent but related – if you wanted to upspec a new bike what does that cost the shop
for instance a 34 rythmn fork on a levo sl changed to a lyrik select rc (or yari) that could be upgraded later but much better from the offtomhowardFull MemberPosted 4 years agoSame as buying it separately. They may offer to ‘buy’ the old fork off you to then sell on, thus giving you a bit of a discount on a new fork, but not everywhere will do that so you are as well buying a new fork and selling the old one yourself.
pbooker1995Free MemberPosted 4 years agoWithout reading the whole thread shops get charged a fortune for 36 and 48 months 0% finance.
Rarely will you get a deal and get 0% as 3 years costs the shop 17.5% when using V12.
Shops will normally do a deal if you have the money or use a credit card. With current credit card offers this is a no brainer.
paulmgreenFree MemberPosted 4 years agoI have just bought a new Trek gravel bike …I was about to click Buy when I noticed I could get 3 years interest free ….. so I opted to pay a bigger deposit (25%) and kept my money in the bank taking the remainder over 3 years 0% …….
shootermanFull MemberPosted 4 years agoOdd. My experience buying my last 2 bikes left me with the impression the shop was actually making something on the finance.
Same SC dealer. Went in and asked for a discount for paying cash as I had the proceeds of selling my old bike and some money saved. Immediately refused a discount and fairly hard sell on the 0% finance. Just bought a different brand outright elsewhere.
The shop was steering me so hard towards the finance and were losing a sale I assumed they were profiting sufficiently from the finance to lose a sale rather than deal on a straight purchase. Bizarre to read the posts above in that context.
ayjaydoubleyouFull MemberPosted 4 years agoOdd. My experience buying my last 2 bikes left me with the impression the shop was actually making something on the finance.
Same SC dealer. Went in and asked for a discount for paying cash as I had the proceeds of selling my old bike and some money saved. Immediately refused a discount and fairly hard sell on the 0% finance. Just bought a different brand outright elsewhere.
The shop was steering me so hard towards the finance and were losing a sale I assumed they were profiting sufficiently from the finance to lose a sale rather than deal on a straight purchase. Bizarre to read the posts above in that context.
Employee or owner?
employee might get a bonus from the finance company like car dealerships do.
simondbarnesFull MemberPosted 4 years agoOr maybe they don’t want to devalue the brand by discounting it?
kelvinFull MemberPosted 4 years agoOr, they hope that if you do go for credit, they can up sell you to something a bit more spangly and pricy… “oooo… carbon wheels for sir?”
robj20Free MemberPosted 4 years agoI’m tempted to stick a new frame on 0% for 12 months, would let me get some nice new carbon wheels and a fork much sooner.
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