Advice Needed - Personal Loans to fund Next Bike purchase.

[rouxtjie]

I haven't committed myself to anything and am not looking for any endorsement. Not saying I'm going to take the loan. Just looking for advice thats all. Finances are under control. Have a house over our head and at 28 still paying off my first home and our 2 cars. Thats comfortably accounted for as well as food on the table and everything else that goes along with raising my 14 month old daughter. But my wifes clothing accounts and the credit card are next on the hit list which is why I sold my bike and a carbon frame. Just a thought though.

 

Thanks for everyones input. I will not be taking out the personal loan to buy the Sworks.

 

Any one got a better idea on a cheaper but decent hardtail 29er?

As mayhem said...niner EMD for the win. You can build that pretty light. What's your budget. The nice thing about building up a bike from scratch is you can get the best price for each individual part and also get exactly what you want. It's also not a big ticket purchase like a complete bike. Buy things as and when they become available....this is also good fun

[Danus24]

Let's look at some real world numbers here:

 

You should finance something over the period of time you expect to keep it for. So let's say 24 months is realistic for a 2011 bike.

 

R30 000 financed over 24 months at an assumed interest rate of 17.1% (market rate from Capitec Bank) will cost you R1 463.85 p.m.

 

You get to ride the bike you want now and it costs you R35 132 in total over 24 months.

 

If you instead saved the R1 463.85 p.m. and invested that into a savings account at 4.5% it would take you 20 months to save the R30 000. So you would save paying the last 4 months off at R1 463 pm. giving a total saving of R5 855. Put differently to get to ride the bike you want NOW instead of saving for the next 20 months will cost you R292.77 p.m. (R5 855/20) Whether that's worth it only you can answer but for me R292 is dinner for two once a month.

 

So let's see dinner for two once a month or get to ride the bike I want now? For me the bike wins every time.

 

All this assumes you manage your cashflow and debt responsibly.

 

This is not including insurance. But an answer I was considering. Why would I only keep a bike for 2 years. Does it only have a lifespan of 2 years. I Was kinda hoping I could keep it for at least 5 and buy a new Dual Sus too and alternate usage keeping the kms down. Bare in mind I ride 3 times weekly. 20 - 30 kms a ride on average. How long would it last on that sort of mileage.

 

The bad, sinful, illogical original idea was to finance over 5 years to bring the monthly installments down to R500 - R650 monthly and pay it off within the first 6 - 12 months with lump sums every 2 or 3 months. I'm not to versed in bank loans to be perfectly honest and was wondering about the financaii implications and judging by what I been told, overall stupidity of it?

Edited November 8, 2012 by Danus24

[Danus24]

That niner that was posted here earlier...

 

its a small. unfortunately. Looking for a medium beinmg 1.78m tall.

[alsoran]

 

Thanks for everyones input. I will not be taking out the personal loan to buy the Sworks.

 

 

Might be a bitter pill to swallow but I do think that is the correct decision.

[Mr Winter]

Ja I know, man, I have lots of sleepless nights about this, but the wife wants to contribute, even though I give her a wad of cash every month, she puts some into a policy, and pays extra on the bond , what should I do???

 

This is a tough one , we'll have to ask someone who is not a chauvinist

[mike xtreme]

go for a cheaper bike do you need a 30k bike ? look at a silverback or even gt

[Captain Fastbastard Mayhem]

This is not including insurance. But an answer I was considering. Why would I only keep a bike for 2 years. Does it only have a lifespan of 2 years.

 

The loan would be over 2, not the life of the bike.

[P.A.K.]

Woah, with R2500 extra cash flow a month I would have already bought a rental property. Rather buy assets

[Brian Fantana]

Dude, you ride less than 100km a week, an aluminium hardtail with SLX level components will be more than enough for your needs. It will not break the bank either.

[GrumpyOldGuy]

This is not including insurance. But an answer I was considering. Why would I only keep a bike for 2 years. Does it only have a lifespan of 2 years. I Was kinda hoping I could keep it for at least 5 and buy a new Dual Sus too and alternate usage keeping the kms down. Bare in mind I ride 3 times weekly. 20 - 30 kms a ride on average. How long would it last on that sort of mileage.

 

The bad, sinful, illogical original idea was to finance over 5 years to bring the monthly installments down to R500 - R650 monthly and pay it off within the first 6 - 12 months with lump sums every 2 or 3 months. I'm not to versed in bank loans to be perfectly honest and was wondering about the financaii implications and judging by what I been told, overall stupidity of it?

 

You know what man, I will go against the flow here, as I made clear in my first statement debt as long as its manageable is NOT a bad thing, it do's not make you a misguided aweful person, debt is simply a means to an end, thats it.

 

Its my opinion no-one has the right to tell you how to spend your disposable income, thats your prerogative, you earn it you can spend it as you see fit, some folk buy boats and motorbikes some folk buy quads and 3d tv's you just prefer to buy a bike, they all devalue and frankly your house value is probably stagnant now as well, so a devaluing commodity is not part of the equation, however, the overriding common denominator in all of this is that most people who buy these cost intensive items WILL enter into some sort of credit agreement to do so, dont believe otherwise.

 

Its not right to hold people back, your experience and circumstances are unique to you, evaluate what you can afford to spend and cut your cloth to suit, understand your responsibility to the lender and the monthly obligation, dont overextend yourself and ensure you can still cover all your daily / monthly obligations without any stress, then go buy your bike and enjoy it.

[mtbsmurf]

Think carefully and honestly about why you want that bike.

[Forthefun]

STAY AWAY FROM LOANS, BANKS AND FINCE HOUSES THEY MAKE YOU POOR AND THEY WILL RUIN YOU WITH INTREST. They lure you in first a bike then a washing machines and then a swanky car.

 

I think you a lot younger than me and I can tell you all my friends who opted for loans are no where today. I opted for mostly payment upfront - made a world of difference ride a cheep bike and train hard. Unless you in the TOP TEN - repeat top 10 rather train harder and save you money and have a debit free life!!!

Edited November 8, 2012 by Forthefun

[gadget]

Simple loan calculator attached (Excel not allowed so image attached)

 

I agree with most of the above sentiments, but make an informed decision. See if the installment fits in your budget.

 

Note the Effective Interest rate (Including all fees etc), and the Total Repayment.

 

The lookup table can be used as a quick reference to what you wil be repaying in total given a term and interest rate.

[Minion]

You know what man, I will go against the flow here, as I made clear in my first statement debt as long as its manageable is NOT a bad thing, it do's not make you a misguided aweful person, debt is simply a means to an end, thats it.

I'm in the camp that says you only take on debt for items that won't depreciate (e.g. houses) or are basically essential for modern life, but are usually unaffordable with cash (e.g. cars for transport to work etc.). That said, this is pretty sage advice.

The spending and debt habits of large numbers of South Africans make the knee-jerk 'no loans for luxuries' response a reasonable and prudent generic recommendation. I can, however, see the point the debt could be taken on if it is based on a reasoned decision and that the repayments can be comfortably serviced (including if rates were to spike in the future).

[Chopper Jr]

American Express interest rate on my credit card is only 12.5%

If you intend paying the 30k bike off in 6 months - it's only gonna cost you around R 1,800...

 

Make sure the bike is insured!

 

Enjoy that S-Works! Doesn't get better than that!

[Danus24]

Think carefully and honestly about why you want that bike.

 

Its the best riding bike I've ever ridden and I wont buy another hardtail again unless I break it. Weighing 72kgs I doubt that will be anytime soon. Aiming to use the hardtail for day races and buy a dual sus for stage races.