Bicycle repossession. Is it coming?
 

With the ever rising costs of new bikes and credit/financing offers that those costs have created, are we going to see banks start repossessing delinquent account holder's bikes? Bikes costing $3k+ are pretty commonplace and banks will go after cars worth half of that.

What credit/financing offers are you referring to? Are banks really doing bike loans?

I'd like to read about how that play out. If you're leaving a $10K bicycle outside leaning on the weed infested chain linked fence, idk how good of a reclaim that'll be.

Most any place that does this kind of lending does so on lines of credit with different liens than the item purchased. Usually it's a "credit card" credit line opened and those can garnish your wages, withhold your tax return moneys, etc... to recoup if you don't pay.

I think even the "rim time" sports rims for your car places "rent to own" wheels and those might repossess since they don't necessarily use credit lines.

So, I'd think the more expensive bikes would be more like a traditional credit line.

Cars are only repossessed when they are used as collateral for a loan and that loan is not kept in good standing, ie. the car loan itself is delinquent.

As a young lad, my Grandfather-in-law accepted a paper route because the newspaper company was giving a free bicycle to new delivery boys. All went well for the first week or so, then he progressively delivered fewer and fewer of the papers, the rest being tossed into a ravine. I don't know if it took the newspaper company weeks or a month to catch up with him, but they repossessed his bicycle pretty quickly.
I am not familiar with any other bike repossession stories. There is financing available for bike purchases (according to signs I have seen at bike shops) but I don't know if the bike itself if the collateral.

In 1996, my junior year in high school, I financed my ProFlex 855. Had it paid off within the first three months as it was a 90 days no interest type of thing.

Just mentioning this as an example that bicycle financing is nothing new. I believe every major manufacturer offers some credit option and most shops work with a lender.

Repossession though. I’m not sure. It’s extremely easy to hide a bike. Easy to trash it to the point of being almost worthless. And certainly anyone going to bank auction is looking for a screaming deal.

The lenders are probably happy enough to wreck your credit, charge tons of late fees, and eventually call a collection agency.

So even without the repo guy, don’t buy things you cannot afford.

It is an interesting concept, but I do agree that unless the loan is secured using the $10k bike as collateral, I don’t see a method of repossessing it.

Plus, there is no registration/licensing requirement, like cars, boats, planes. A bike, or any other personal possession, can be sold without any record.

Basically you buy a $10k bike on credit and sell it for $5k and buy a $5k bike with cash. No one could find your sold $10k bike to re-possess it.

John

I tend to believe that only expenses greater than your annual income should be considered a reason to ask for a loan. If you have to finance your bike, you are buying too much bike.

My 2¢

Buy old bikes. No one has any idea what they're worth. ;)

If you buy anything from a store with a credit card branded for that store, chances are that the store retains a purchase money security interest (PMSI) in the item you purchased, and if you don't pay the card, the item can be repoed (in theory). The reality is it's too difficult to do with things that are easily concealable.

No. Bicycles do not hold value well nor is there a standardized secondary market for them. No lender would ever take a bicycle as collateral.

They'll just keep sending monthly bills, letting the interest accrue until they give up and send it to collection, ruining your credit.

Stop with this common sense, else people will stop believing that the American way is to go into debt up to your eyeballs. Think of all the poor payday loan people who'll have to go get real jobs!

I bought a car in 2016. It cost a lot less than my annual income. I could have paid cash for it, but I financed at 0%.

You'd think, but it seems the norm today is for even those with solid income to have almost no savings on hand, nevermind for a purchase but even for an unexpected expenses.

What indy said.

We last bought a new car in 2011. Took my checkbook to the dealer, but put it away when they offered financing at .9%. I left our money in a mutual fund that gained more than 60% over the life of the loan. I’ve not run a precise calculation, but I easily made a profit of over $5k by taking that loan.

As far as a bike goes, I tend to agree with Iride01 , but can see an exception for a commuter bike.

Whether someone is able to buy a bike, or a car, with cash or whether they need credit is purely academic. And I really don't think this thread needs to head into the "I am able to write a check for..." direction. When some people can buy a house with cash, taking a checkbook to buy a bike or a car is pretty far down the food chain.

I can see instances, especially during the pandemic, where parking spaces are limited and prohibitively expensive, public transportation has shut down, and less expensive bikes are no where to be found and a bicycle is the best mode of transportation. For whatever reason, maybe buy a bike, lose a job, will the day come when the bike get repossessed was the question.

John

What's this financing thing you speak of?

The point is that the blanket recommendations against credit really don't hold up to critical scrutiny...And I was giving a counter-example. But I get where you are coming from. If you're beyond a certain age, it's no great feat to muster up enough cash to buy a new car.

PS: I also once bought a new car on a credit card that was tied to my frequent-flyer account. I got a ton of points and paid it off before interest accumulated. Sometimes, debt is the smarter way to go.

In addition to the matters raised above, I don't believe that repo men can legally enter your home/garage - they need to wait for the vehicle to be parked on the street. With a car that's always parked in a garage, this can be somewhat problematic, but they can always follow the target to work or to the store for an opportunity to snatch it. A nice bike? Yeah, those aren't going to stay outside, unattended, for very long, if at all.

The bike industry has occasionally come out with finance schemes. Maybe some locales need that. But who finances a $1000 hybrid?
Might do better with the scammy 90 days same as cash, because people forget to pay off the loan.

But repossession is not something is going to happen with low dollar loans like a bike.

OK so I did some light googling because I used to dabble in bankruptcy law so I was just curious. Taking Giant as an example, they offer financing through a third party called Affirm. Affirm offers something called point-of-sale financing at a variety of retailers, it's basically installment financing. It's similar to a 0% introductory offer credit card -- make the regular payments and pay it off by a certain point or get hit with interest.

Relevant to this thread, point-of-sale financing is considered an unsecured loan, which means there is no collateral. Therefore, no, they will not be repossessing bikes. They will either engage in collection efforts, or more likely, sell the loan to one of those predatory outfits that specializes in trying to collect bad debt.

I only looked at Giant's financing scheme but given that, in the world of finance, bikes are small-ticket items, I would assume most bicycle financing schemes are similar.

I was thinking the same thing.

BTW they can also grab your paycheck or bank account in addition to ruining your credit. Depends on how aggressive they want to be.

have you looked at the used market lately? i'd say they are holding their value too well. covid and shortage related i'm sure.

Giant, Trek, Specialized, Cannondale...All offer six or 12 month interest free financing. I have a Trek, Specialized and Cannondale Card.