Bike finance - CRAZY EXPENSIVE

[Vanzyl]

 

 

This has nothing to do with whether I approve or not. It is basic economic theory applied.

 

You may not believe me, but read a bit further. The mathematics shows that if you borrow money for non-productive assets, you will find yourself in a never ending spiral of debt and poverty.

 

If you can only afford the payments, you cannot really afford the goods and should save up and wait until you can. Listen to other above like Vetseun or EdEdEd. If you want to be in a position to buy whatever you want, learn to get by without unproductive debt.

 

 

 

 

I think he is suggesting you DO NOT buy a bike on credit, but to rather save up for it... If you now agree with him, well done, you have learnt a valuable life lesson.

 

Life lesson I don't think, I bought my bike in full.....saved for a year to get my dream bike but I was simply wondering about the high interest in the finance schemes here in SA.... Cheers

[KENDA]

Flame suite on..... This thread reminds me of my signature....

 

[Skubarra]

We offer 6 months 0% finance on bikes £275 and up

 

We offer 12 months 0% finance on bikes £275 and up

 

We offer 18 months 0% finance on bikes of £500 and up

 

We offer 24 months 0% finance on bikes of £1000 and up

 

We offer 36 months 0% finance on bikes of £2000 and up

 

This is an example of a UK finance group, now I'm not moaning about financing, as mentioned by others it's your own choice to finance whatever you want regardless of what some here might believe!

 

 

Why didn't you post the full ad?

 

Please Note - 0% Finance is not available on sale, cycle scheme or discounted models unless otherwise stated.

 

Classic Credit

We are now offering Classic Credit(15.9% APR) on sale bikes. This means you can take advantage of our excellent sale prices and spread the payments over 12, 24 or 36 months with a 10% deposit.

 

I think this is very much the same scenario Johnny Bravo posted above yours...

 

And I'm not sure how APR works but I think the actual compound interest rate will be more.

 

So maybe things aren't all that better in the UK

[Captain Fastbastard Mayhem]

 

Why didn't you post the full ad?

 

Please Note - 0% Finance is not available on sale, cycle scheme or discounted models unless otherwise stated.

 

Classic Credit

We are now offering Classic Credit(15.9% APR) on sale bikes. This means you can take advantage of our excellent sale prices and spread the payments over 12, 24 or 36 months with a 10% deposit.

 

I think this is very much the same scenario Johnny Bravo posted above yours...

 

And I'm not sure how APR works but I think the actual compound interest rate will be more.

 

So maybe things aren't all that better in the UK

APR is Annual Percentage Rate. It is compounded as well. So pretty much the same.

[Skubarra]

APR is Annual Percentage Rate. It is compounded as well. So pretty much the same.

 

APR not always defined consistently ,sometimes it can refer to a nominal rate as well but I don't want to derail this thread with technicalities..

[VicanZA]

I don't know me personally, if I wanted a "new ride/upgrade" and I couldn't afford one this is how I would go about it,

*start saving

* TROL the classifieds,

* ask around lots of mates always doing "upgrades" sitting with parts that are still 100% and you could slowly start building the bike you want piece by piece,

* I know plenty of bike shops who help guys with a loose second hand part here and there

* bikes generally have no resale so there are a few rich buggers out there who buy a nice machine use it once or twice and it dies hanging in the garage, so place a ad asking for help! "good hardly used bike cheap cheap please help" , type of ad

 

Hey dibs I need a Santa Cruz tall boy 2 frame, would look great next to my Lynskey and scott premium...I know u have 1....

[Vanzyl]

Jeez..... Maybe i should have chosen a different topic hahahaha

[Skubarra]

Jeez..... Maybe i should have chosen a different topic hahahaha

 

I was intrigued by the 0% interest, what's in it for the lender? Seems in this case the opportunity to sell your stock at much higher prices.

[lechatnoir]

Buying a bicycle via financing isn't the same as a house, car, boat or motorbike. These are all registerable fixed assets (some may disagree). A bicycle is NOT a fixed asset. Essentially, what you're taking out is an unsecured personal loan (UPL) - a house, motorbike, boat or car can be repossessed. Not so a bicycle. At least not on the Bike Life plan.

 

Say what you like about Bike Life, they have a role to play, and seem to do it well. Is it for everyone? No. Many posters have stated this. But for some, they want a bike and are happy with the terms. Interest rates are punishing, but it's all spelled out for you, and you are expected to have your eyes open before signing up.

 

As for the rates and all, those are all regulated by the NCA, and there's nothing suspicious about it at all - apart from the interest rate, the costs are legislated.

 

You don't like it, don't do it.

[SiriS]

Different strokes for different folks. No pun intended.

[eddy]

I was intrigued by the 0% interest, what's in it for the lender? Seems in this case the opportunity to sell your stock at much higher prices.

 

Funding rates in the UK are close to 0%. The overnight GBP LIBOR rate is 0.47000 % and the 6 month rate is at 0.55188 % so the cost is minimal.

 

 

Lending is to move stock at full retail price rather than give a say 15% discount.

[DIPSLICK]

 

 

Hey dibs I need a Santa Cruz tall boy 2 frame, would look great next to my Lynskey and scott premium...I know u have 1....

Lies, lies, not me

[Johny Bravo]

Funding rates in the UK are close to 0%. The overnight GBP LIBOR rate is 0.47000 % and the 6 month rate is at 0.55188 % so the cost is minimal.

 

 

Lending is to move stock at full retail price rather than give a say 15% discount.

That makes sense. Here, you pay 18% interest, more than full price, plus loads of add ons you dont need. Lets not even get into inflated bike prices to start with, because of our ridiculous import taxes and useless currency.

[fanievb]

Buying a bicycle via financing isn't the same as a house, car, boat or motorbike. These are all registerable fixed assets (some may disagree). A bicycle is NOT a fixed asset. Essentially, what you're taking out is an unsecured personal loan (UPL) - a house, motorbike, boat or car can be repossessed. Not so a bicycle. At least not on the Bike Life plan.

 

Say what you like about Bike Life, they have a role to play, and seem to do it well. Is it for everyone? No. Many posters have stated this. But for some, they want a bike and are happy with the terms. Interest rates are punishing, but it's all spelled out for you, and you are expected to have your eyes open before signing up.

 

As for the rates and all, those are all regulated by the NCA, and there's nothing suspicious about it at all - apart from the interest rate, the costs are legislated.

 

You don't like it, don't do it.

Only houses/plots etc are fixed assets. Everything else you mentioned are called movable assets.

 

In most cases where goods are financed said goods are noted and regarded as security for the loan and can as a result be repossessed once the proper procedure have been followed.

 

I suspect however that bike finance works like the old RCS cards. The finance deal is between you and them and the bike deal between you and the bike shop i.e they are a 3rd party financier.

 

They get their income from interest and fees and maybe (pure speculation) a commission/fee from the bike shop that's why it must be on the full price of the item

 

[eddy]

 

The finance deal is between you and them and the bike deal between you and the bike shop i.e they are a 3rd party financier.

 

They get their income from interest and fees and maybe (pure speculation) a large commission/fee from the bike shop that's why it must be on the full price of the item

 

Correct

[GLuvsMtb]

OP: firstly its supply and demand. If someone is willing to pay prime plus... the financial institution will charge that. Secondly there are other economic factors at play such as the amount of finance in circulation.I pay prime less 2 on my house because at the time the economy was doing well and the banks were fighting for my business, not the current situation where we have to beg them to finance securable assets. Thirdly the cycling industry is considered to be a booming industry in SA where places like the UK show much slower growth. The finance scheme you refer to is a tool to boost sales and is probably driven by someone (agent/retail outlet/ distributor) who is cash flush and need to somehow boost sales. The agents etc in SA are in a growth phase and they have to bring in more stock every year. They cannot afford to take the stock on consignment as they have to pay in € /£ /$ and a perpetually weakening R means having to pay upfront or lose your margin to the exchange rate. Fourthly you have to consider consumer education. In SA you have a large emerging middle class who for the first time have access to credit. Many choose to rather buy a GTi (or in this case a fancy bike) before buying a house and the finance institutions are exploiting this as the short term segment is much more lucrative than the secured segment.