Bike Leasing
Fursty Ferret
Posts: 189
Anyone else ever thought of doing this?
Mate put me on to a bike leasing firm after I expressed interest in the concept. Decent range of road bikes, mainly Felt, BH, De Rosa and Merckx, all the way from entry level up to a 9K De Rosa. Usual format appears to be a small deposit and then 24 monthly payments after which you either pay the balance or give it back. So a 4K De Rosa Merak Evolution sees a £99 deposit and 24 payments of 119 squids a month for a lease totalling £2971.
What do you reckon? Anyone lease their cars? Obviously there are question marks about wear and tear and so forth and what condition they want the bike back in but in principle would any of you do it?
Mate put me on to a bike leasing firm after I expressed interest in the concept. Decent range of road bikes, mainly Felt, BH, De Rosa and Merckx, all the way from entry level up to a 9K De Rosa. Usual format appears to be a small deposit and then 24 monthly payments after which you either pay the balance or give it back. So a 4K De Rosa Merak Evolution sees a £99 deposit and 24 payments of 119 squids a month for a lease totalling £2971.
What do you reckon? Anyone lease their cars? Obviously there are question marks about wear and tear and so forth and what condition they want the bike back in but in principle would any of you do it?
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Fursty Ferret wrote:So a 4K De Rosa Merak Evolution sees a £99 deposit and 24 payments of 119 squids a month for a lease totalling £2971.
Afterwhich you still don't own it or any residual value in it. Would rather buy a bike at £2.5k ride it for 2 years and sell it on.
Presumably you carry the risk of theft or damage meaning you would have insurance on top.
Plus on the assumption that the lease company has to obtain finance from somewhere it strikes me that you will be paying through the nose - profit to the lease company and the finance company.
I wouldn't.0 -
I try to follow the philosophy that if I can't afford it I don't have it. I'd rather just own a bike outright, prefer the feeling of knowing that it's my machine. Up to you though.0
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Seen some shops in Germany do it. Not sure of its success rate but if its there, there must be a call for it .0
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Navrig wrote:Fursty Ferret wrote:So a 4K De Rosa Merak Evolution sees a £99 deposit and 24 payments of 119 squids a month for a lease totalling £2971.
Afterwhich you still don't own it or any residual value in it. Would rather buy a bike at £2.5k ride it for 2 years and sell it on.
Presumably you carry the risk of theft or damage meaning you would have insurance on top.
Plus on the assumption that the lease company has to obtain finance from somewhere it strikes me that you will be paying through the nose - profit to the lease company and the finance company.
I wouldn't.
The finance is pretty much the same, or less, than you would be paying on 0% finance from your LBS (on a 36 month finance deal). If I am correct, after the two years leasing you can, if you choose, pay the balance and keep the bike. You don't have to return it.
Not saying I'm convinced myself (I wouldn't be happy to not completely own a bike and I'd rather have myself to answer to if I did damage it) but just wondered if anyone else had considered leasing, or even done it.0 -
I'm not sure work financially does it? I can see that with a car when you are looking to lease it over say three years it could work out there is still, maybe, 50% of the value of the asset left at the end of that period, so the monthly fee can therefore be a level where customers can "buy" something without having to find anywhere near close to the complete value of the item. With a bike I just can't see that you're going to be left with that much equity left in the asset and as the person leasing it, so you have to increase the monthly payments to cover the depreciate (plus some profit presumably). That means that the person leasing it is paying very close to the full value of the item over that period. I'm not sure why anyone would want to do that when they could just buy it with a loan to start with (especially at 0% APR deals floating about).0
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Unusual. It works with cars, plant and other capital goods for businesses because by leasing - rather than buying outright - it becomes a business expense and therefore tax deductible. Has advantages over
Capitalising assets which has an upper limit.
But I don't see the point with a push bike. It cant be aimed at businesses as the take up would be minimal - plus the employee would be penalised with benefit in kind tax presumably.
So for individuals i can't see how it works. It's not like motoring where you can accept a
Fixed monthly cost for having the use of a car without feeling the need to own something. The residual value in bikes is also good compared to many other assets - as long as its looked after. So the "If it appreciates buy it, if it depreciates lease it" argument isn't strong.
Very odd - particularly as stated above - with all the 0% finance deals around.
Good luck to 'em though.0 -
Sounds like a very expensive way to not buy a bike.0
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cougie wrote:Sounds like a very expensive way to not buy a bike.
+1.0 -
In essence, I suppose it's no different from paying (for example) £2000 for a bike then flogging it 2 years later for £1000 - you've spent £1000 to ride round on the thing for 24 months.
The difference, as I potentially see it, is that the leaser needs to make a profit on both the lease agreement, and the asset at the end of the lease. So you'll pay interest on the lease, and the final option to buy might not be the deal you might expect. Therefore it would not be more beneficial than buying one new on 0%, or indeed 7%, from a shop.
There's also the likelihood that, like car leasing, you'll get charged for every little scrape, ding, and scratch on the bike when you hand it back.
The concept probably works if you want some £500 thing to commute on for two years. £2,500 of carbon roadie you're sort of asking to have your pants pulled down I think0 -
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Erm... what? Why? Have you read others comments above? Why do you think it is a brilliant idea? :?Werbo wrote:i Think this is a brilliant idea.0 -
If you have a car on lease you get the option to upgrade every year, not 100% but pretty sure that's the case so if a bike offer worked the same way I'd be interested.0
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I looked at the scheme when they first brought it out, I didn't go that route in the end but it can make sense. IMO it's more attractive if you want to change bike every couple of years and don't like the hit/hassle of selling second-hand, you just transfer the lease on the scheme to the new bike. If you look at it purely for a way of getting a bike as cheaply as possible up-front then 0% deals (or sale bike + transfer onto 0% credit card) probably work out cheaper.0
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The OP gave the example of the 4k De Rosa - that costs you 3k to ride it for 2 years. It doesnt make sense financially unless you trash the bike during that time and if you do that - why buy a 4k bike ?0
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Fursty Ferret wrote:The finance is pretty much the same, or less, than you would be paying on 0% finance from your LBS (on a 36 month finance deal).
No such thing - anyone who thinks that a 0% finance deal actually exists is kidding themselves. You're paying for it in the price, before they add the finance on.0 -
I would never consider leasing a bike, that is just daft. I would rather save for 3 years to buy the bike outright, and if I decide to sell it on, I get the money back (more or less). Leasing a bike just seems very expensive way not to actually own a bike, and with so many probable stipulations in the contract, could end up costing a lot if something happened to it.0
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I wouldn't do it myself but I suppose it allows people to own, and pay through the nose in manageable instalments, something that they would never normally be able to afford to get that dream bike (that they probably don't really need).
Lots of people get very bad finance deals to buy things they can't afford, and so why wouldn't they do the same on such a bike lease deal?0 -
But they don't own it ? Ever ?0
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Hello Everyone,
My name is Paul and I am the MD of the company you are discussing.
I'd like to start by thanking you for taking the time to look at our website and making the effort to post your comments here.
Your comments are very much appreciated as they give us the opportunity to clarify any misunderstandings, identify any areas of our proposition that we are not communicating well via our website, or indeed, areas of our proposition that we need to improve.
I think that this forum has highlighted some splendid observations that reflect the natural concerns and curiosities that leasing generates.
It is apparent to everyone here at http://bikeleasingcompany.com that detailed information about leasing needs to be made more easily accessible on the website. Several conclusions have been drawn on the forum that are incorrect. Clearly, we need to make sure that we present the information in a way that gives you the answers to your questions much more quickly and easily.
We're going to get on with addressing that very shortly. I'd welcome your feedback and critiques on the videos and the information pages so that we can make the improvements that you would want to see.
There has been quite a lot of discussion about the total costs involved with leasing. It's an important distinction that our offering is not like a car lease in terms of expense. If you lease a car and choose to buy it at the end, you pay an awful lot more than the RRP of the car. I would not do that myself so I can hardly advocate a similar scheme to my customers.
We do something very different. In a nutshell, we are focused upon making the total costs of ownership of premium bikes less. Indeed, we GUARANTEE that we shall be cheaper than an equivalent 2 year 0% finance offer:
http://www.bikeleasingcompany.com/bike-leasing-company-price-match-guarantee
I am going to spend the next day or so answering each of the points raised within the forum above. Hopefully, I shall be able to address any concerns that you may have.
I understand that leasing will not be for everyone. Indeed many people state their desire to own their bike for several years. I know it is a little cheeky, but to those people I ask: have you ever considered that you may be reluctant to change your bike more regularly because it is so prohibatively expensive to do so? We aim to address that.
I acknowledge that many of our customers will fall in love with their bike and want to keep it. Again, we address that as you can buy the bike at the end of the lease for 35% of the RRP. However, how do you know that the latest version of your model, or indeed another brand, may be even better suited to your riding? Wouldn't it be nice to be able to make a decision on that once these models are available to test ride? Once again, we address that.
We are offering the most flexible option to cyclists, who want current model year premium bikes, with the least expense and the least hassle.
I'll get on with answering those questions now.
Thank you again for your time.
Best regards,
Paul0 -
Thanks for taking the time to reply Paul. I hope my figures below are correct, but just wanted to put some in, so that I can see how your scheme works.
Using the De Rosa 848 105 as an example.
De Rosa 848 105 £1,699.99 RRP from local bike shop who give discount of 10-20% off the RRP. So for ease, being member of the local cycle club, automatically gets 10% discount in local bike shops, without the need to negotiate. So the 848 would cost £1,530. Local bike shops also tend to give 15-20% of accessories for free when buying a bike. Another incentive to buy local.
Under your scheme you would pay deposit of £99.99 and 24 payments of £49.98 which would be £1,298.52. You would then have the option to buy the bike for 35% of the RRP, which would be £594.99
Meaning a grand payment of £1,893.51. So you pay £193.52 to buy a bike more than getting one on interest free credit. Also paying £363.51 more than buying from a local bike shop.
So I'm guessing that the benefits of your scheme must lie in the insurance and servicing? Your site doesn't give any clear information about what this is, or how it works. Also the claim of buying spares at trade prices. A link to a catalogue of spares would be helpful.
So I can see why someone short of cash would take it up but I don't see the benefit over interest free!0 -
Careca wrote:Thanks for taking the time to reply Paul. I hope my figures below are correct, but just wanted to put some in, so that I can see how your scheme works.
Using the De Rosa 848 105 as an example.
De Rosa 848 105 £1,699.99 RRP from local bike shop who give discount of 10-20% off the RRP. So for ease, being member of the local cycle club, automatically gets 10% discount in local bike shops, without the need to negotiate. So the 848 would cost £1,530. Local bike shops also tend to give 15-20% of accessories for free when buying a bike. Another incentive to buy local.
Under your scheme you would pay deposit of £99.99 and 24 payments of £49.98 which would be £1,298.52. You would then have the option to buy the bike for 35% of the RRP, which would be £594.99
Meaning a grand payment of £1,893.51. So you pay £193.52 to buy a bike more than getting one on interest free credit. Also paying £363.51 more than buying from a local bike shop.
So I'm guessing that the benefits of your scheme must lie in the insurance and servicing? Your site doesn't give any clear information about what this is, or how it works. Also the claim of buying spares at trade prices. A link to a catalogue of spares would be helpful.
So I can see why someone short of cash would take it up but I don't see the benefit over interest free!
Hello Careca,
Thank you for the question and for taking time to work out some calculations.
The example you have given might not be the best one to use. De Rosas do not come with sufficient trade margins for a LBS to offer the discounts that you suggest, especially current model year bikes. You'll see that De Rosa lease prices are higher in percentage terms than other models as a consequence. We pass on as much of the trade discount as we can to our customers.
The automatic 10% cycling club discount you mention will always be at the discretion of the retailer in question. If you're able to get a 20% off a 2013 R848 105 then I strongly recommend that you get a bike from them. It's a great deal. I could envisage a LBS offering that sort of deal to the main organiser of a cycling club to attract other members, but it's not likely for many others. It would also likely only be available to staff that worked in the LBS.
Retailers typically pay 10-15% to a finance company if they offer a 0% finance deal. Therefore, any discount on a bike like this would usually negate 0% finance as an option they can offer you.
With regards to accessories etc, we are able to offer the same type of incentives. After all, the people we buy the bikes from also sell the very accessories you mention.
When doing your comparisons, please remember that we offer the leases at 2 prices. You can get a 10% discount off the lease if you pay for it upfront, like a cash purchase. That automatically knocks another £129.85 off the equation (as you would not likely get a 0% offer if you also got a good discount from the LBS).
With regards to insurance, unless your household policy would cover bikes that retail for £1,699.99 (many will not insure bikes worth more than £1,000-£1,500), you would likely need to pay £170.00 annually for insurance if you bought the bike but only £85-£90 with our partner (with like for like cover). So that is another £170.00 extra over the two years if you bought rather than leased.
All this being said, if you could provide a written quote for a R848 together with an insurance quote for this bike, then you would be able to make use of our price match guarantee that would mean that you would still get it for less than if you bought it. I hope that you agree that we can't really offer more than that.
So in summary, I would suggest that a very special set of circumstances would need to present themselves for a LBS to offer:
* a 20% discount on a 2013 R848 105, and a further
* 15% off any accessories, and to offer all of that
* on 0% finance for 2 years
It is simply not a sustainable equation for the LBS. Of course, online retailers may offer short term special offers, but these tend to be stock clearance offers or offers that drive traffic to their site.
When you actually come to order the bike, I am fairly confident that you will find the bike in question to be out of stock. We are genuinely committed to presenting the best deal to cyclists, so even if you do not wish to lease, we know that you will do a Google Shopping search or something similar to find the best offers possible.
I have found this for you: http://www.bikelab.co.uk/8207/products/ ... PriceComp1
You'll see that they have 1 size 48 in stock and the remainder are out of stock and at full RRP. This is before the 2013 season proper has even begun. Let me know if you have any success at getting the R848 105 for £1,495.00.
If you're unsuccessful and you'd prefer to pay less than £50 per month for one, and keep the flexibility to choose what you want to do at the end, whilst protected by a price match guarantee, we're here to help: http://www.bikeleasingcompany.com/r848-3423.html
I hope that I have answered your question.
Best regards
Paul0 -
Navrig wrote:Fursty Ferret wrote:So a 4K De Rosa Merak Evolution sees a £99 deposit and 24 payments of 119 squids a month for a lease totalling £2971.
Afterwhich you still don't own it or any residual value in it. Would rather buy a bike at £2.5k ride it for 2 years and sell it on.
Hello Navrig,
Thank you for your observations. As I mentioned in an earlier post, we obviously need to make it much easier for you to find answers to your concerns on our website. Whilst we get on with resolving that, I thought that I would endeavour to answer your questions on this forum:
If you buy a bike, pay for it, and then sell it on after 2 years, you still have no bike at the end of the day.
Yes, if you buy it and sell it, you will recover some money. However, you will have tied up your money in the bike whilst you owned it, and you will be taking a risk on the residual value being what you expect it to be. You'll likely have to put up with time-wasters and strangers coming to your home whilst you are trying to sell your bike.
Also, it is worth considering that people are often very nervous about paying over £1,000 on a second hand bike from someone they do not know and without any comeback; and will you be able to sell it at the specific moment when you want to free up that cash?
With our proposition you have none of that hassle as you effectively know the residual value you will recieve at the outset, as you don't pay it out in the first place. If you do choose to own it, you can select the "buy" option at the end.
Also, your cashflow is more healthy as your monthly payments are lower.
We endeavour wherever possible to ensure that our leases are at least 30% less than the RRP. Sometimes that is not possible due to the prices we are offered by the suppliers. However, normally retailers are not able to discount these bikes for the same reason.
If you are prepared to pay a lease as a lump sum we offer a further 10% discount so the lease costs are nearly 40% less than the RRP.
We are mainly focused upon making premium current model year bikes affordable and on making the total cost of ownership as low as possible.
That includes insurance:Presumably you carry the risk of theft or damage meaning you would have insurance on top.
Many cyclists would like to insure their bikes but are put off becuase of the costs involved. It is often seen as a rip-off and only becomes relevant when their bike is actually stolen or damaged by accident.
I am a cyclist myself and I knew there had to be a better solution. Fortunately, I've found one.
Leasing means that you can get the bike insured typically for 50% less than if you tried to insure the bike yourself.
Many people think that they will be able to automatically insure their bike on their household policy. However, this is often not the case as these policies have a low limit (usually£1000-£1500).
We work with Velosure currently and they provide a policy that protects against theft and accidental damage both in the UK and overseas for both regular and competitive cyclists.
We've arranged this excellent means of insuring the bike for you so that you can relax and enjoy it, knowing that if it did get stolen or broken, you'd be able to get it replaced and carry on your riding undisturbed.
We take the view that if you spent a lot of money on a bike then you would probably want to protect it. We can make that easier and cheaper; and in so doing, we bring down the costs of riding a premium bike significantly.
With regards to your final point:
[/quote][/quote]Plus on the assumption that the lease company has to obtain finance from somewhere it strikes me that you will be paying through the nose - profit to the lease company and the finance company.
I can only presume that you may not have had an opportunity to do a full comparison.
We are offering a Price Match Guarantee http://www.bikeleasingcompany.com/bike-leasing-company-price-match-guarantee so I presume you would be happy to know that you would be getting whichever bike you chose in the most cost effective and lowest priced manner.
Hopefully, you would be keen for such a service to remain in place for your next bike, whenever that may be. Naturally, we need to make use of business model that generates profit to make that happen. I trust that you will countenance that.
If you have any further questions I would be happy to answer them.
Best Regards
Paul0 -
Dumb idea, fuelling debt in a screwed up nation. Buy what you can afford, buy second hand, there is no shame, let some other fool pay full price.0
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Cheers for the reply Paul.0
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Simmo72 wrote:Dumb idea, fuelling debt in a screwed up nation. Buy what you can afford, buy second hand, there is no shame, let some other fool pay full price.
Hello Simmo72.
Thank you for your comments. I'm not sure that you've thought through your suggestion to its natural conclusion. If no-one bought new bikes, there would not be any second hand ones for you to buy.
Nevertheless, I think you raise a good poinit about debt and I want to put your mind at ease.
Like you, we also advocate people only spend what they can afford. Our application processes ensure this is the case.
Indeed, the combination of our Price Match Guarantee and the structure of leasing as a way to pay for a bicycle, means that our customers are saving their money and putting it into savings accounts or making overpayments on their mortgages. So, it could be argued that we are helping to reduce the debt burden of a cyclist and therefore the debt of UK plc.
The fact that this can all be achieved whilst also riding an upgraded bike is simply an added bonus.
Leasing is not some dreadful mechanism for creating unaffordable debt. It is just another means to have possession of a product such as a bicycle.
We are focused on current model year premium bikes. If a customer wanted a second-hand bike, then naturally, they would not come to us and we do not expect them to.
Second-hand bikes will of course always be the cheapest option. However, someone looking for a used Felt F1, for example, may have to look around for a while to find the right size and price. They may also be reluctant to risk spending hundreds or thousands of pounds on a used bike without a warranty or a guarantee; and, of course, they would likely, ultimately, still pay for it on a credit card via PayPal. Again, this is not exactly helping the debt situation.
Therefore, second-hand does not necessarily mean that someone is avoiding debt.
The other aspect about your comments related to
.let some other fool pay full price
Have you considered the fact that the people who buy new goods are critical to UK plc coming out of its present situation? If no-one bought new products, there would be no R&D, no manufacturing etc etc. That could very well ultimately lead us all to unemployment (other than selling second-hand goods of course) and being unable to afford bread, yet alone a second-hand bicycle.
I only point it out as I'm not sure you're giving due credit to the people who effectively enable you to enjoy your chosen sport. Possibly, "Thank You" rather than "fool" would be more choice phrase to use.
Hopefully, I have addressed your concerns about our contributing the predicament of UK plc, and you can see that we're about helping people to enjoy their sport more cost effectively.
If you have any other questions or observations I would be more than happy to answer them.
I look forward to hearing from you.
Regards
Paul0 -
Paul
Excellent stuff and good effort on the responses. Without wishing to patronise you, it's seriously good form to correspond with your potential customers in such an open, honest and comprehensible way.
I iterated scepticism earlier in the thread (whilst wishing you luck I hasten to add...!). But confess I was looking at it from a purely business perspective regarding the pros and cons of leasing - namely tax deductibility. I couldnt see the advantage over 0% finance or indeed buying, selling, rebuying etc. I have never thought of bike ownership purely as a set outgoing for use of a 'tool' like I do a car or other business plant. I've probably been guilty of being too romantic in my bike ownership as it were.
But, whilst not having done my own calcs, I can get when you're coming from.
I continue to wish you well and when you're stocking bikes that tempt me I might do some business. So, until you have Legend on offer, I seriously wish you all the best.
Cheers0 -
I second that, Paul. You make a pretty persuasive case and thanks for taking time time to address the queries in a polite and comprehensive fashion.
I have to say that my own concerns relate to basic things like wear and tear. If I ride a bike, premium or otherwise, for two years then there will, without a doubt, be some cosmetic damage at the end of that time period (scratches, the odd dent etc). I would also suspect that, depending upon circumstances, the cassette and chain might also be a little worse for wear. Presumably there would be some sort of contractual obligations to address these matters prior to giving the bike back?
Personally, I'm more inclined to want to own something outright because of the naked fear of being stung badly if I were to damage something that, at the end of the day, belongs to someone else. But I havent completely dismissed the idea of leasing (the only problem is that you don't have quitewhat I'm looking for in my price range...)0 -
There's a way to address criticism, preconception, and potential customers on the internet, and this is certainly the right way of doing it. Chapeau Paul!0
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djhermer wrote:Paul
I continue to wish you well and when you're stocking bikes that tempt me I might do some business. So, until you have Legend on offer, I seriously wish you all the best.
Cheers
Hello djhermer,
Thank you for your compliments. They are much appreciated. We are offering something new in a fairly conservative environment so we accept that we'll meet with some resistance initially. Fortunately, once everything is considered fully, cyclists realise that it makes sense if they're looking for a current model year bike.
We are always seeking new brands to add to the range. I have sent a message to Legend Bikes to see if they would like to utilise our new channel to market.
........something rather hilarious just happened! It seems that Legend are telepathic!
Ali from Legend has just responded to my email and called.
We've discussed it and he is going to have a chat with Marco and we'll see if we shall be working together in the future.
We had planned to introduce a "professional bike fit" service this year, so we may well start this with Legend.
Follow us on Twitter to keep posted - (@BIKELeasing)
Best regards
Paul0
