Koyote

Thanks for the clarification, and I agree on your points. Paying interest to buy a bike probably indicates that you should not be buying it.

Good work on the tuition pmts. Same for me - I started saving for it when my daughter was a fetus. I now work with (among other things) a college’s financial aid data, and some of it is pretty shocking.

PeteHski

All bike shops I know of in the UK offer finance, usually at 0%. It’s the only way they are going to sell high-end bikes to younger people. With the high cost of living, they simply don’t have the savings to buy big ticket items up front.

If I was going to buy a £10k bike I would prefer to pay it off over 3 years for sure, even if I did have the cash. They don’t offer any discount if you pay up-front and there is no interest on the finance. So there is really no incentive to pay the full amount on purchase. All these loans are unsecured, so there is not going to be any re-possession if you don’t make the payments.

downhillmaster

It’s pretty clear that many people in this thread made blanket statements about all loans so Koyote was spot on.
It’s also pretty clear that this thread isn’t about your random $3,000 bike limit or your personal $50k stress reduction factor yet you felt the need to include them.
Carry on.

Koyote

"Want" vs "need" is a subjective judgment; there is no logical nor empirical way to distinguish between them -- as suggested by your statement that "value is different for different people."

There's another name for "using default as a mechanism," but it will get me run afoul of the sensor. It will also kill a person's credit rating.

​​​​​​​If there is one thing that this thread has demonstrated, it is that, for many people, debt represents much more than a mere "financial mechanism." Those folks have different values, and there's nothing wrong with that, objectively speaking.

prj71

I don't disagree. However...I'm not one of them. Mortgage payment is the only debt payment I have every month.

prj71

0% interest for 12 months with the Synchrony card.

prj71

To end this thread...Bicycle repossession is not going to be a thing.

ksryder

I said as much earlier but it's BF so people are more interested in demonstrating how much smarter and financially savvy they are than everyone else rather than the actual topic.

prj71

Right?!!!

Koyote

Umm, pretty much every thread on bf wanders around to a rather large variety of OT subjects, in case you haven't noticed. This one has been no different.

prj71

I purchased 3 bikes on 12 months / Interest free.

Wasn't a problem at all.

Cpn_Dunsel

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Troul 

IDK about others, but that was the first interpretation I made of it, & was correct on my thinking regarding your post.

Homes, major house repairs, education loans for a purposed degree, medical; [something of need & not a want [should it come down to it] , & potentially a business loan are types of loans applied for... Unless you have that much bankroll under the mattress, I dont see how the "average" American could do it without being questioned. Sure, an inheritance could provide such money to avoid needing credit, but that to me is not likely to happen on "average" . ymmv

downhillmaster

It is not only a very few that qualify. The vast majority of applicants with average to good credit immediately qualify. There is nothing exclusive about it.
Either way, the fact that a certain % of people default on all types of loans really isn’t pertinent to this rambling discussion, as telling someone with poor finance habits what to do is like pissing in the wind. It doesn’t mean that people with good credit should not take advantage of it.

Bill in VA

I try to avoid loans for anything except a new car (or a house). To me, a car loan at 2% or lower, and using payroll deduction makes it feel like it is free... However, after the loan is paid, I leave the deduction active, but direct it to my bank account. That way when I get a new car, I just redirect it to the new car loan.

For everything else, like a bike, or other consumer items I pay cash or use a credit card, which is paid in full each month.

indyfabz

I paid off my mortgage in 2019, after only 11 years. Didn't like that debt hanging over my head. I think that decision was influenced in large par by an earlier chapter in my life. In 1999, at age 34, I volunteered to be downsized in the wake of a corprorate acquisition. The severance I received combined with the lack and any debt, allowed to me to take two year off from the working world. During that time I did around 10,000 of unsupported touring in the U.S. and Andalucia, Spain, including a nearly four month trip across the U.S. and then some. I wouldn't trade my experiences for the money and career advancement I sacrificed.

And like you, I pay "cash" for day-to-day things. Use my REI credit card and pay it off in full each month. I don't think I have paid credit card finance charges since my mid-20, and even then it was only for a couple of months when I needed to buy a lot of stuff to start life after being a student. When I bought what I hope will be my last road bike in 2016 I paid with a check and got a 2% discount from the builder, which is twice what I would have earned had I put it on my REI credit card.

PeteHski

The days of cash discounts in the UK seem to have disappeared (unless paying some dodgy builder who is going to hide it from the taxman). You are actually more likely to get a discount if you agree to take the finance, especially with cars. So to get the discount you end up taking out the finance and then pay it off in full before the interest ever kicks in.

But I doubt bike finance has quite got to that level yet. They are usually simple 0% interest deals over a few years to encourage consumers to go large on their specs. It’s much easier to convince a 20 something professional to buy a £10k S-works if you turn it into a monthly £278 payment and don’t charge any interest.

wolfchild

Even with 0% interest it still makes no sense to me to be putting yourself into unnecessary debt by purchasing a bicycle on credit. Why add unnecessary monthly payments when you don't really have to ??

Troul 

If the purchase doesnt overextend the income, puts a load of risk on other debit, & it's bought with realistic expectations; The payment can be justified for some. It's not my money someone is spending when they put that McDonalds purchase on a credit card, nor is it my luvhandles that those buns are going to be absorb into...

PeteHski

Why pay the whole amount up-front when you can pay exactly the same amount in smaller regular payments? Let's say you are buying a £10k bike and you have £10k sitting in cash savings. Is it smarter to pay the £10k straight away or pay the same £10k in monthly payments at 0% interest, while you keep the balance in an interest earning savings account or some other low risk investment? Why give away all your cash up front when you don't have to? Obviously this requires some level of discipline that some people clearly cannot handle.

indyfabz

Because you can take the lump sum and get return on it that’s greater than 0%. Monthly payments are not inconvenient to some. With that said, I personally wouldn’t do it for any type of bike that I would buy. Car is a different story.

Koyote

See post #15 above.

prj71

This has been explained once already.

It frees up money over a 6 or 12 month period that can be invested in a 401k or IRA which has, on average, a 10% or greater return rate.

It would be nice if our public school system educated people more on economics and finance.

ksryder

There's a part in "A Connecticut Yankee in King Arthur's Court" where the protagonist attempts to explain inflation to a medieval peasant by showing him that although he might be getting more gold than he would in another area, things also cost more, so the net effect is that he has less money. The peasant cannot or will not comprehend.

I'm just mentioning that for no particular reason.

Cpn_Dunsel

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