Bike finance

[Johny Bravo]

Not necessarily true, if done properly. 

Absolutely agree. Waaaaay to many factors to consider. 

[mrbaker]

Truly speaking, and looking at it from an accounting perspective, this isn't actually correct. Yes, it's a physical item that appreciates in value, but it costs you cash every month, and in order to realise the "asset" you need to sell it. And then you aren't actually realising it, as you're going to need to buy another one. 

 

The only time a house should be described as an asset, is when it's either earning you cash over and above your mortgage payments and other bills (rates insurance etc) or you're using it as a base of business operations (it's being used to generate an income) or your mortgage payments and all associated bills (rates, insurance etc) are less than what you'd have to pay for it if you were renting it. 

 

It's a myth that your primary house is an asset. In 9 out of 10 instances, it's not - it's an expense.

 

I know that this is against the norm, but in order to build true financial independence you need to realise that your primary home is not an asset, unless it was purchased very carefully, and you paid far below purchase price for it.

 

Well said- to many folk think your first house is an asset...

[Captain Fastbastard Mayhem]

Well said- to many folk think your first house is an asset...

I'm slowly convincing my actuarial science degreed wife that this is the case. She's still stuck on the taught idea that any fixed property is an asset, including the one you live in. 

[Nayr]

I'm in the don't finance toys camp... All these companies do is offer a service that enables you to satisfy your 'must have' needs and instant gratification and you end up paying a lot of money for that pleasure. I for one used to finance all my toys from motorbikes to fancy cars and I used to justify the hell out of it to myself. All my experience has taught me is no good can come of it. You just end up paying far more for a depreciating asset. Basically p*ssing good money against the wall. I may sound holier than thou, but it's really just because I learned the hard way...So for me now, if i can't afford it cash, i simply can't afford it.

[GoLefty!!]

I'm slowly convincing my actuarial science degreed wife that this is the case. She's still stuck on the taught idea that any fixed property is an asset, including the one you live in. 

 

 

 

well it is in the longer term and you have to understand that that is the space actuaries think in.

Accountants deal with today, actuaries deal in tomorrow

[J∆kk∆ls]

I saved for a year before I bought my road bike and scoured the hub for a deal. In the end I got a fantastic deal on a full carbon Sram force beauty. Spent the rest on a new chain and cassette along with a tip top service from J.O.Conner, Happy days

[GoLefty!!]

I'm in the don't finance toys camp... All these companies do is offer a service that enables you to satisfy your 'must have' needs and instant gratification and you end up paying a lot of money for that pleasure. I for one used to finance all my toys from motorbikes to fancy cars and I used to justify the hell out of it to myself. All my experience has taught me is no good can come of it. You just end up paying far more for a depreciating asset. Basically p*ssing good money against the wall. I may sound holier than thou, but it's really just because I learned the hard way...So for me now, if i can't afford it cash, i simply can't afford it.

 

 

Well there are other ways to look at. You can view it as financing a toy or you can view it as financing a healthy lifestyle. Good health has long term benefits but those benefits are high risk because there is a good chance you won't realise those benefits.

There is also benefit in the bank owning a toy because its liability is their problem, not yours. Surprisingly despite the financial crisis being created by this very thinking, the practice is rife. Admittedly the banks exposure is far far less than with a morgage or a car but the principal is the same.

[Captain Fastbastard Mayhem]

well it is in the longer term and you have to understand that that is the space actuaries think in.

Accountants deal with today, actuaries deal in tomorrow

oh, absolutely. We're in the lucky position that if we were to rent our space out, it'd generate more income than we're paying on the bond. But then we'd have to rent. 

 

Another alternative is that we leverage the extra value over and above the bonded amount to invest in a long-term solution (not property - neither of us have the time to devote to managing a property portfolio, but we could invest in property stocks) but that would also expose us to expenditure which, at the moment, we just couldn't afford. 

 

So for the moment, it's sitting on the fence, but tending to the asset side. Neither an asset nor a liability, and to replicate the size of the house if we were to rent, we'd be paying far more than the mortgage we're paying. It's a pure expense which we cannot yet leverage to its full potential. When we do, it'll become an asset. At the moment, while it's just sitting and we're not doing anything with it, it's just a house. 

[Nayr]

Well there are other ways to look at. You can view it as financing a toy or you can view it as financing a healthy lifestyle. Good health has long term benefits but those benefits are high risk because there is a good chance you won't realise those benefits.

There is also benefit in the bank owning a toy because its liability is their problem, not yours. Surprisingly despite the financial crisis being created by this very thinking, the practice is rife. Admittedly the banks exposure is far far less than with a morgage or a car but the principal is the same.

I agree that there are many ways to look at it, but for me those ways are all justifications, which 9 times out of ten are BS. Because if it were just a healthy lifestyle thing then you could pick up a bike on here for 5k and achieve that. Or start jogging or running or whatever they want to call it...  Hey in the past I would have most probably done it, 2k a month is far less of a hit than 60k up front, but technically the bike wouldn't be mine, if i wanted to sell it I couldn't because it's lost too much value, so i'd have to upgrade or load the price of a new bike in order to meet the deficit of the old one or pay in the balance. Theres no benefit of tax or VAT right-offs through my business etc etc... I really don't see an upside other than I can have my dream bike now, which would most probably end up being my dream bike plus every conceivable upgrade because 'i can afford the monthly repayments'... 

[SCD]

Well there are other ways to look at. You can view it as financing a toy or you can view it as financing a healthy lifestyle. Good health has long term benefits but those benefits are high risk because there is a good chance you won't realise those benefits.

There is also benefit in the bank owning a toy because its liability is their problem, not yours. Surprisingly despite the financial crisis being created by this very thinking, the practice is rife. Admittedly the banks exposure is far far less than with a morgage or a car but the principal is the same.

 

Hmm, commuting 30km daily on a R4000 steel framed single speed. Feeling healthy without the heartache of paying interests... just saying...

[Captain Fastbastard Mayhem]

I agree that there are many ways to look at it, but for me those ways are all justifications, which 9 times out of ten are BS. Because if it were just a healthy lifestyle thing then you could pick up a bike on here for 5k and achieve that. Or start jogging or running or whatever they want to call it... Hey in the past I would have most probably done it, 2k a month is far less of a hit than 60k up front, but technically the bike wouldn't be mine, if i wanted to sell it I couldn't because it's lost too much value, so i'd have to upgrade or load the price of a new bike in order to meet the deficit of the old one or pay in the balance. Theres no benefit of tax or VAT right-offs through my business etc etc... I really don't see an upside other than I can have my dream bike now, which would most probably end up being my dream bike plus every conceivable upgrade because 'i can afford the monthly repayments'...

Again. It all comes down to the numbers. If your investments are returning in excess of the interest rate that you're being charged on the bike, it makes sense to finance it IF you can afford the monthly repayments.

 

By afford i mean it reflects a portion of your left over spending money once you've paid all your monthly bills, investments, ra's and food etc.

 

If it equates to all your monthly excess cash, then no. Not for you. Save for it Or buy lower until yof can afford it.

[lechatnoir]

I know a lot's been said on this, but you need to factor in a 20% deposit as well... so that 60k bike...? well that's 12k upfront...

[milky4130]

I know a lot's been said on this, but you need to factor in a 20% deposit as well... so that 60k bike...? well that's 12k upfront...

are you sure it's not 10% ?

[popcorn_skollie]

On a 50k bike you looking at about 25% ontop of retail price if you finance it over a 12month period with bikelife.

 

    R4,029 installment + R50 admin fee x 12 months = R48,948

+  R10,000 deposit upfront (20%)

+  R2,000 service package upfront

+  R1,000 initiation fee upfront

=  R61,948 total cost

 

Total cost of bikelifes services = R11,948

 

In short you'll pay R12,000 for financing a bike which retails for R50,000

Thats pissing away R1000 a month.

Coincidentally. The R13,000 you have to pay upfront pretty much covers the finance cost to them. You'll spend the next 12 months paying off the actual bike.

 

You better off sticking the bike on your credit card over a 12 month budget.

The interest is slightly less. It will also cost you nothing upfront.

[Captain Fastbastard Mayhem]

On a 50k bike you looking at about 25% ontop of retail price if you finance it over a 12month period with bikelife.

 

R4,029 installment + R50 admin fee x 12 months = R48,948

+ R10,000 deposit upfront (20%)

+ R2,000 service package upfront

+ R1,000 initiation fee upfront

= R61,948 total cost

 

Total cost of bikelifes services = R11,948

 

In short you'll pay R12,000 for financing a bike which retails for R50,000

Thats pissing away R1000 a month.

Coincidentally. The R13,000 you have to pay upfront pretty much covers the finance cost to them. You'll spend the next 12 months paying off the actual bike.

 

You better off sticking the bike on your credit card over a 12 month budget.

The interest is slightly less. It will also cost you nothing upfront.

Yeah. These package deals are nothing more than re purposed high interest and fee personal loans.

 

If you do it, do it properly and do it right. if you're looking at bike life finance, it'll be better to save the cash Or finance through alternative means.

 

That does not include credit card. Unless it has one of those 6 month interest free things and you pay it off in 12.

[flymango]

Only finance "need to have" and not "like to have", and even if it's "need to have", preferably an asset which can appreciate. Einstein's eighth wonder of the world is fundamental to understand ...