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Financing a ride


Jaco-fiets
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Hi

 

I'm interested to go through the costing exercise of financing a bike. Any hubbers here that went through this exercise recently? Please tell me who you recommend and what to look out for.

 

I see you can even "lease" a bike for 2 years. I assume you then just give it back and get another.....crazy

 

Thanks in advance

Back to OP.

 

What are the current finance options on the table for you?

 

Also, are there special terms? Eg: A finance company might insist that you use their insurance arm, which might give you unfavorable terms....

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that's why you invest the money that you save...  that way the R350k that you save now keeps growing at likely a higher rate than inflation, so by the time that car is worth R700k, you'll have R800k in the bank.

 

Huh? You only have the R350K after saving, you don't start with it.

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Jeez dont talk about Super Record, rear derailleur broke 5k later new one fitted. Replacing a worn out cluster, chain and chain rings so expensive easier to sell the groupo as is and take up running..lol

 

For this very same reason my latest bike runs on 105

 

okay sorry, let go back to the OP question :ph34r:

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that's why you invest the money that you save...  that way the R350k that you save now keeps growing at likely a higher rate than inflation, so by the time that car is worth R700k, you'll have R800k in the bank.

 

It works both ways.

If you have the cash and buy a special deal on HP with a good rate then you invest the cash. You can make the repayments with the interest made on the investment and save your capital.

It's not common but I know someone who has. (play them at their own game).

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For the guys vehemently against financing bikes in SA...

 

Let's say you lived in the UK and could finance at 0%, would you do it then?

something doesn't add up here..but if the NPV of the deal was less than paying cash straight up, then ja of course.

 

no such thing as a free lunch, however.

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that's why you invest the money that you save...  that way the R350k that you save now keeps growing at likely a higher rate than inflation, so by the time that car is worth R700k, you'll have R800k in the bank.

Well not really. Because if you had the R350k in the first place (in order to get to a future value of R800k) you would just buy the car cash.

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Well not really. Because if you had the R350k in the first place (in order to get to a future value of R800k) you would just buy the car cash.

NEVER buy a car cash, unless your credit record is trashed or the car is significantly cheaper than the retail price, or it's too old to qualify for cheap credit..

 

Rather invest the cash and use the growth in asset value, interest earned & dividends yielded to pay for the finance. Then you still have R 350k + growth at the end of the day and you have a car paid off. 

Edited by Myles Mayhew
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NEVER buy a car cash, unless your credit record is trashed or the car is significantly cheaper than the retail price, or it's too old to qualify for cheap credit..

 

Rather invest the cash and use the growth in asset value, interest earned & dividends yielded to pay for the finance. Then you still have R 350k + growth at the end of the day and you have a car paid off. 

 

 

And where will you invest the money for more growth over the 4 year term vs the interest on a car over 4 years.

 

Please send me the link as I would like to see it.

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This! The more expensive the bike the more expensive the upkeep. Keeping XTR and Campy Super going smoothly costs an arm and a leg.

Campy Super doesnt really cost much to upkeep. 

just know it must be your race bike only and a chain every 1000km wouldnt break the bank

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And where will you invest the money for more growth over the 4 year term vs the interest on a car over 4 years.

 

Please send me the link as I would like to see it.

Not at a guaranteed rate, and it depends on the fund in which you're investing. If you're solely looking at guaranteed income / rates of return and conservative funds then the comparison falls down.

 

At the moment the line is very blurred as investment performance is choppy at best (ALSI is flat over a 2 year period) but taking a fund such as AG Balanced you're looking at a historic 12.8% return over the last 5 years. Last 3 years have been an avg 9.2% p/a so there you can see the effects of the market volatility. 

 

An addendum to the point above is that you always have the opportunity of utilising the cash (investment) to pay off the car should the poo hit the fan and you're needing to pay it off ASAP, or for whatever other life need comes along. 

 

The point is that a car is a depreciating "asset". It's a cost. An illiquid one, at that. IMO you shouldn't be buying it cash unless you're in one of those 3 situations: 

 

1 - your credit record is shot

2 - car is too old for finance

3 - significantly cheaper than the retail cost

 

 

And the last is debatable. 

 

Okay - there's a 4th one. You're significantly cash flush and the cost of the car is a blip on your radar. But then your car was probably bought with 6 months worth of interest income. 

Edited by Myles Mayhew
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But Carpet - in terms of choosing whether to invest R 350k or buy a car for that cash, and that's all the cash you have - it's an easy choice TBH. Again - unless you're down a deep dark hole and can't get finance. In which case a R 350k car shouldn't be that high on your list of priorities... 

 

"Never" may have been too strong an opening word... 

Edited by Myles Mayhew
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But Carpet - in terms of choosing whether to invest R 350k or buy a car for that cash, and that's all the cash you have - it's an easy choice TBH. Again - unless you're down a deep dark hole and can't get finance. In which case a R 350k car shouldn't be that high on your list of priorities... 

 

"Never" may have been too strong an opening word... 

 

I agree that you should not spend your last cent on buying a car cash.

However if you can buy the car cash and after that monthly invest the amount equivalent to the PMT of the car you bought into an investment account you score both ways. This way when it is time to replace your car you have the original money plus the interest plus your trade-in value available.

 

I'm always on the lookout for a good investment. But as you said the performance of the funds are not guaranteed and the rest of the investment accounts cannot provide you the interest that you pay on your car.

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