Colorado Kid

I heard a fellow cyclist bragging the other day that he had to finance his new bike (For a year) through the bike shop! What?? Since when did bike shops get into that racket?

Darth Lefty 

So what would you normally do? Pay with a credit card, yes?

AlmostTrick

Yes, I pay with a credit card and then pay in full on the next statement, like always. I don't pay any interest, but the bank pays me to use the card and I don't have to carry around piles of cash. Yay!

CliffordK

The UK has an unique bicycle loan program. I think one has payroll deductions for repayment.

I'd never take out a loan on a bike, but I could imagine someone wanting a $1000 - plus bike, and wanting to pay for it over time. $5000 bike? $10,000 bike? In many cases, $1K is considered barely "entry level".

Is it also insured for theft?

It is my belief that if you can't afford it at the store, then buy used and learn to maintain it yourself. Or, heaven forbid, buy a department store bike (and learn to maintain it), perhaps incremental upgrades within reason.

Viich

I feel the same about cars...

jon c. 

And if you can't pay cash for a house, you should build one yourself. You can always start with a basic lean-to structure and build on from there.

I-Like-To-Bike

Why on earth would anyone brag about needing to finance a bicycle purchase? Maybe it is related to the bizarre agonizing that some posters seem to do over every nickel and dime purchase they are considering.

CliffordK

My parents built their house. And my grandparents too.

Dahon.Steve

We're in a society where people want to have things now instead of saving for them. If your credit is so bad that you have to apply for a loan, what does that tell you? A person with maxed out credit cards should not be taking out a loan for a 1 or 2 thousand dollar bicycle.

pamelaw33

I haven't heard of it in here in Canada. We give bicycles on EMI on credit card. That is all. Maybe this is a way to encourage people to buy bicycles.

CliffordK

What is the average credit card rate? 10+ percent?

It is quite possible that a "secured" loan would be at a lower rate than taking on credit card debt (if the card isn't paid off).

I'm not sure if these are quite the loan programs in the UK that were mentioned earlier.
https://www.cyclescheme.co.uk/

Ahhh, this is it. Cycle to Work Scheme (probably related to the above).
https://en.wikipedia.org/wiki/Cycle_to_Work_scheme

And, perhaps with a loan, one could get a slightly better bike than paying cash. Whether or not that is better, would be up for debate. Not my thing.

mcours2006

A secured line of credit currently here would be around 3.5%. So a $10K loan you're looking at $25/month interest. It's not bad compared to the 18% charged on credit card.

PatrickGSR94

My guess is because people like to brag about how much money their stuff is worth. And I guess saying that he financed it made it seem more expensive. Pretty dumb if you ask me.

Not all loans are bad, especially if they're really low interest. In some cases you HAVE to have something now even though you don't have the cash. My wife's old car was about to bite the dust, and we needed something ASAP. I got us a loan through my credit union for just 1.79%, which means we're only paying a TOTAL of about $1,000 in interest across 5 years, or about $16 a month. That's not bad at all for the piece of mind of having a much newer, reliable vehicle for my wife and son.

But no, I could not see taking out a loan to buy a bike. I guess buying it on a credit card is the same thing, though. Shoot, maybe a lower-interest personal loan would make more sense than putting it on a CC if you can't pay it off immediately.

dabac

Well, taking out a loan and buying the bike you want straight off would still be better off than buying a bike with the immediate plan to do a thorough upgrade at shop prices.

Although not as sensible as saving up to it.

AlmostTrick

I like Mr Money Mustache's thoughts regarding debt:

News Flash: Your Debt is an Emergency!!

I-Like-To-Bike

Takes all kinds, eh?

No one would brag about using a credit card to make a purchase, it is just a method of doing business. The question remains who in their right mind would brag about taking out a loan from a financial institution for a bicycle?

fast_rider

Buying new bike is getting a baby but in a shop! haha

Kindaslow

What if the kid commutes by bike and is just so excited to have a nice new bike? A lot of young folks need to build some credit to be able to buy a car, or to eventually be able to by a house. Borrowing money with a long-term plan is not a bad or evil thing. When my grandfather was young he did it to build enough credit to eventually buy apartment buildings, he was a wealthy and debt free man when he passed away. I had a fair amount of debt in my 20s and 30s, but landed to be debt free by 50. I am now debt free. For all of the highly critical folks here, how many didn't make any mistakes as kids? How many are debt free and own a home with no mortgage? How many have assets in the millions?

The kid could be making a mistake, but maybe not. Hopefully he is being careful, and just building some credit.

SteelThisBike

Paypal is always emailing me, reminding that I can spend 10 grand for six months interest free. Pay it off in time and no interest -- so in theory one can put a bike on credit and not get ripped off, and build credit.

It doesn't sound like the guy was bragging if he said he had to finance it. That's more like, "damn, I'm so broke that I had to finance..." or "can you believe the price of these new bikes?" rather than bragging.

king_boru

It isn't uncommon. The majority of people don't have $10k+ just sitting around let alone $5k. If you know you can make the payments and need to build credit then a small loan for something you want isn't a bad way to do it.

And really, why care what someone else does.

chopsteeks

Exactly.....unless the person asks for an advice.

pdlamb

I remember a bike shop owner grousing about some almost-Cat-1 college kid asking to finance a new race bike. He was planning to move up from Cat Almost-4 in a year, just needed a new bike, and if the shop could just give him a lighter bike he could do it and wear the shop jersey (that would have to be thrown in, too!). Apparently this sort of thing happened a couple times every year.

mcours2006

Going into debt to buy something that depreciates the moment you take it out of the shop is just not good money sense, and especially so if the interest on the debt is non-deductible. Perhaps young folks don't consider these things when they make such purchases. I was speaking with someone at a party on the weekend who paid $42,000 for a one-year old Nissan Z3.5. He was maybe 25 y/o and living with parents. Do you think he thinks about cared whether or not the debt was tax deductible? And I sort of get this--this was going to be his chick magnet! Could the same be said for a bike? Any bike?

Kindaslow

New bikes are a ridiculous purchase if the depreciation is something of concern. Take a quick look at CL to find out how extreme it is.

However, if a person loves biking, will ride the bike into the ground, and loves the bike, then depreciation just is not a factor. As I have gotten older, I have only bought new. And, the depreciation has only bothered me when I did not like the bike and sold it. So, picking carefully is critical.

Robert C

I am going to start with the assumption that I am not talking about an insanely expensive bike, just a decent one that is well kitted out for commuting. This also assumes a reasonable interest rate.

If the up-front cost is all that is keeping a person from cycle commuting,and replacing a car in many of their life activities, they might be well advise to actually get it and start; rather than just thinking about it at some indeterminable point in the future.

People here then to consider the choice to be between bike and no bike. The read decision most face is between riding and driving. If they are able to get rid of a car then they will probably come out dollars ahead.