PeteHski

Just to clarify, when I meant cash I didn’t mean a pile of bank notes and coins. I meant just paying for the item up-front in full rather than taking out finance to pay it off monthly.

If I bought a new bike in “cash” that would actually mean putting it on my credit card, which is then automatically paid off in full at the end of the month. While technically that is very short term credit, I wouldn’t consider it as buying on finance.

AlanO

I must be old. Didn’t know you could finance a bicycle.

stephr1

As someone stated above....if the bike was not used as collateral then there are no legal means to "repossess" it (I suppose the company could come and "steal" it back Something other than the bike could be used as collateral: part of a home equity loan, auto...prob'ly some other kinds of assets. If it was just a personal loan (no collateral) then wage garnishment and/or credit annihilation would be the case.

JimPeltier

My first good bike was financed at my local bike shop in 1966 for $100.00. I didn't know that the owner extended me credit because my father had gone in and bought the bike and arranged that I would pay the owner 10.00 per week for 11 weeks. He then paid my father $100.00 and kept the other $10.00. I was 16 at the time. I was 36 before I found out the truth.

Chuck M 

My first "good" bike was bought with a bank loan. Of course it was 4 decades ago, it was a small town locally owned bank and the vice president of the bank was helping to teach me about credit and the responsibilities that go with it. Now as I type that, I'm reminded how thankful I am for that experience to learn to be a responsible citizen and the importance of having a good reputation with a local lender. That seems like an easier row to hoe than the credit score culture big banking has created.

topflightpro

Anytime someone offers me a zero percent finance offer, I'm pretty much taking it.

Beyond big things - homes, cars - I don't buy things I can't really afford. But if I can spread payments out over 6-12 months and invest my money elsewhere over that time, well, that just makes good financial sense.

For example, earlier this year, I bought a bunch of weights and lifting gear. They offered 12 months same as cash. The monthly payment was about three times my monthly gym membership. Once I had the gear, I cancelled my gym membership. So really, it cost me very little each month for the year to have my own weight gear, and after three years, it will start paying for itself since I will not be paying the gym membership.

Mojo31

Smart man.

I did the same thing in December, plus, we financed a bunch of furniture at 0% over the last year. Both were a fraction of my income, but the money was free. I wasn't getting a lower price paying cash.

As for bikes and repos, as mentioned there is really no enforceable lien on a bike when financed. Bike financing is typically done on a credit line/credit card basis. Those companies make their money off the interest rate, and play the odds on default. Plus, if you can get a $10k bike financed, you likely have a really good income and really good credit, both of which make you a good risk. The riskier business is the $1k bike and loan that just about anyone can get.

SkinGriz

That’s an interesting story. I’ve done the opposite with my kids. I asked if they want to make a dollar. When they say yes I ask them if I can borrow 5 and pay them back 6.

Koyote

20% interest? As long as you were going to pay them back in a year or two, I hope they took the deal.

GhostRider62

I pay cash on everything.

I just avoid being the sucker.

A £10k bike new will sell 50 cents on the dollar in a year.

An alternative way of looking at it.

I have used the same approach to cars for over 30 years. I just bought a big German car that sold for $112K new. Three years old with 18K on the clock. I paid $50k. Cash. Please don't bother telling me I made a bad decision.

Young people who finance £10k bikes are making a mistake. Buy something pretty good but used. Go on vacation with the money saved. Take pictures.

PeteHski

So.only “suckers” buy new. Well I guess that makes me a sucker then. But really it just comes down to what you can afford. Would it make any sense for Jeff Bezos to buy a used car? I’ve done the used car thing many times in my younger days, but now I can afford to be a “sucker”. I avoid finance though unless it’s close to zero percent.

wolfchild

Avoiding monthly payments allows you so save more money each month which can be put into savings and have more disposable income for other things. I would never purchase a $10 000 bike on credit because a $ 2000 -$3000 dollar bike is all I really need and I can buy that for cash and eliminate unnecessary monthly payments.

PeteHski

It doesn’t matter whether it’s £10k or £2k when it comes to the concept of interest free credit being better than paying 100% cash up-front. Avoiding monthly payments by effectively paying all of the monthly payments in one hit at the start is not really avoiding anything. The bike still costs you exactly the same either way. Whether you can afford £10k or £2k is an entirely different matter.

If you are smart about using interest free credit then you actually have more savings during the period of the credit. Where people tend to go wrong is buy things on credit that they cannot actually afford. But again that’s another matter entirely.