Bike finance

[Goodbadugly]

I am not sure whether this is a rant or a rave. But one of the advertisements that pops up on the screen when I open thehubsa is for bike finance.

I can buy x bike for a nominal fee of R1.1k/month (or thereabouts)

Rant side:Now I am just wondering if a person SHOULD buy a bike and pay off R40/day on a bicycle. Should that person not be looking at lower level bikes? We all know how fast bikes loose their value. As soon as it is second hand, you will be lucky if you can get 60% of the original price.

On the Rave side: It is really nice to be riding the bike you really want. And you will probably ride it a lot more than a guy with lots of moola who bought it just to prove 'he is the man' 

 

[Cav']

OR the Insure your bike for R1 banner to the right. (wat se *** is dit!)

[milky4130]

I am not sure whether this is a rant or a rave. But one of the advertisements that pops up on the screen when I open thehubsa is for bike finance.

I can buy x bike for a nominal fee of R1.1k/month (or thereabouts)

Rant side:Now I am just wondering if a person SHOULD buy a bike and pay off R40/day on a bicycle. Should that person not be looking at lower level bikes? We all know how fast bikes loose their value. As soon as it is second hand, you will be lucky if you can get 60% of the original price.

On the Rave side: It is really nice to be riding the bike you really want. And you will probably ride it a lot more than a guy with lots of moola who bought it just to prove 'he is the man' 

No. There are plenty out there driving fancy cars that they are still paying off but really didnt need to take that bmw, probably couldve gotten away with a just as reliable toyota or VW but they opted to get around in style. So why not with a bike? Besides who sells a bike shortly after you just purchased it?

[StevieL]

I for one, don't want to ride a R2000 bicycle from makro that I can buy cash.

Next option... Credit card...

*** idea, the balance just never seems to come down.

At least with the loan, the interest rates are better, and the balance will come down a lot faster than visa/MasterCard will.

[Captain Fastbastard Mayhem]

It really all comes down to the interest rate, and the present value of the money that you have paid for it over the 2 or 3 years, versus the PV if you buy it in 2 years time after saving that same cash over the same term.

 

If the interest rate is too high, it won't work out and it's not an advisable solution. If the interest rate is favourable, then go for it. If you can afford it. It gets you on the bike sooner, and it allows you to purchase something that you may not ordinarily have been able to buy (which in itself is a problem, but that's not the question here)

 

Having said that - a bike is a pure liability (from a financial standpoint) and you should ask yourself if you want to finance it. 

 

The better thing to do (generally speaking) is invest that cash in something (please, NOT money market) and let it earn you returns and then once it's at a certain level, buy that dream bike. 

 

If you absolutely must have that bike, don't go for the top of the line one because it's "only" R 500 p/m more than the base level one. Get the middle of the road / cheaper option and then invest the rest. 

 

In short - don't buy toys with your income whilst not being able to pay yourself first, and being able to put some away. If it's the last R 1000 in your budget, and you're thinking of doing it, DON'T. 

[DIPSLICK]

The OP

Name sums up the topic

GOOD,,,NO GOOD can come from financing TOYS (including lux cars)

BAD Bad DEBT, the worst kind of debt, the debt you chose to put yourself into because you trying to live beyond your means

UGLY justifying it to yourself and actually believing it

 

Dips runs this thread is going to get hot and nasty quick,,,two groups

 

The one saying don't finance toys

The other saying why not it's my money my choice ( normally the ones complaining they don't have money and they not getting paid enough)

[Captain Fastbastard Mayhem]

The OP

Name sums up the topic

GOOD,,,NO GOOD can come from financing TOYS (including lux cars)

BAD Bad DEBT, the worst kind of debt, the debt you chose to put yourself into because you trying to live beyond your means

UGLY justifying it to yourself and actually believing it

 

Dips runs this thread is going to get hot and nasty quick,,,two groups

 

The one saying don't finance toys

The other saying why not it's my money my choice ( normally the ones complaining they don't have money and they not getting paid enough)

LOL. Actually pretty accurate. 

 

In theory, financing toys isn't a bad thing. If you can truly afford the R 1k per month (or whatever your payments are) whilst building in a suitable amount of fat in your monthly income for your slush fund and retirement savings, then that's fine. If you need to decide between a bicycle and spending the normal amount on your monthly food bill, then you need to reassess your priorities, and slowly save until you can afford it. Simple economics and proper financial planning. 

[Vetseun]

No. There are plenty out there driving fancy cars that they are still paying off but really didnt need to take that bmw, probably couldve gotten away with a just as reliable toyota or VW but they opted to get around in style. So why not with a bike? Besides who sells a bike shortly after you just purchasred it?

Apparently a lot of people sell bikes shortly after purchase . When I look look in the classifieds on The Hub, I see plenty of bikes that were only ridden once, only done 4km , was owned by an old lady who only rode it to church on Sundays...... You know the story

[Rotiringer]

I'm all for finance on things that generate a revenue. Like a car that allows you to do your business or a house that you rent out or use for business. Even the house you buy for yourself is an appreciating asset.

 

Finance for a bike on the other hand. Not for me. I personally don't think you should ride a bike you couldn't afford to save up and buy in 4-6 months anyway.

 

That said if you could save up in say 6 months then you could use the finance anyway as long as they allow you to pay the finance off over a shorter period of time which means you using their money up front to get what you want and you only pay a small amount of interest because you shorten the period.

[DIPSLICK]

My issue, you can buy/build a pretty decent bike via beg, borrow,,borrow swop, favors TRADE , not to sound like a cliche but it's really a small % of riders who get "that extra" out of the top brands,,,it's not about the bike ,,, it's about wanting something you can't afford,

If you look around the hubs classifieds you can easily get a well priced machine at a good price,trade up swop, import, save DONT BORROW,

[Captain Fastbastard Mayhem]

I'm all for finance on things that generate a revenue. Like a car that allows you to do your business or a house that you rent out or use for business. Even the house you buy for yourself is an appreciating asset.

 

Finance for a bike on the other hand. Not for me. I personally don't think you should ride a bike you couldn't afford to save up and buy in 4-6 months anyway.

 

That said if you could save up in say 6 months then you could use the finance anyway as long as they allow you to pay the finance off over a shorter period of time which means you using their money up front to get what you want and you only pay a small amount of interest because you shorten the period.

Truly speaking, and looking at it from an accounting perspective, this isn't actually correct. Yes, it's a physical item that appreciates in value, but it costs you cash every month, and in order to realise the "asset" you need to sell it. And then you aren't actually realising it, as you're going to need to buy another one. 

 

The only time a house should be described as an asset, is when it's either earning you cash over and above your mortgage payments and other bills (rates insurance etc) or you're using it as a base of business operations (it's being used to generate an income) or your mortgage payments and all associated bills (rates, insurance etc) are less than what you'd have to pay for it if you were renting it. 

 

It's a myth that your primary house is an asset. In 9 out of 10 instances, it's not - it's an expense.

 

I know that this is against the norm, but in order to build true financial independence you need to realise that your primary home is not an asset, unless it was purchased very carefully, and you paid far below purchase price for it. 

[eddy]

My issue, you can buy/build a pretty decent bike via beg, borrow,,borrow swop, favors TRADE , not to sound like a cliche but it's really a small % of riders who get "that extra" out of the top brands,,,it's not about the bike ,,, it's about wanting something you can't afford,

If you look around the hubs classifieds you can easily get a well priced machine at a good price,trade up swop, import, save DONT BORROW,

 

The problem is that the kind of person who finances a bike because he hasn't got the cash but "can make the repayment" also has a Car/Motorbike/iPhone/clothing account/lounge suite/etc on credit all of which are above his means...

[Sandro]

It's like buying a car with residual. May seem like a good idea at the time but you're bound to regret it later...

[Captain Fastbastard Mayhem]

It's like buying a car with residual. May seem like a good idea at the time but you're bound to regret it later...

Not necessarily true, if done properly. 

[Rotiringer]

Truly speaking, and looking at it from an accounting perspective, this isn't actually correct. Yes, it's a physical item that appreciates in value, but it costs you cash every month, and in order to realise the "asset" you need to sell it. And then you aren't actually realising it, as you're going to need to buy another one. 

 

The only time a house should be described as an asset, is when it's either earning you cash over and above your mortgage payments and other bills (rates insurance etc) or you're using it as a base of business operations (it's being used to generate an income) or your mortgage payments and all associated bills (rates, insurance etc) are less than what you'd have to pay for it if you were renting it. 

 

It's a myth that your primary house is an asset. In 9 out of 10 instances, it's not - it's an expense.

 

I know that this is against the norm, but in order to build true financial independence you need to realise that your primary home is not an asset, unless it was purchased very carefully, and you paid far below purchase price for it.

 

El Cap I think you are only right in part and around a braai I would generally argue the same point you have made as one seldom realizes the value in their primary residence. I may have been lucky but the first house I purchased, my personal house, I overextended myself initially but the value has increased significantly over a 10 year period. I have had it revalued 3 times over that period and I have managed to use the increased value to access cash flow to put down deposits on 3 other smaller houses that are now rented out and all washing their faces.

 

I'm didn't study accountancy but in view I would classify my primary residence as an asset and a facilitator.

[Captain Fastbastard Mayhem]

El Cap I think you are only right in part and around a braai I would generally argue the same point you have made as one seldom realizes the value in their primary residence. I may have been lucky but the first house I purchased, my personal house, I overextended myself initially but the value has increased significantly over a 10 year period. I have had it revalued 3 times over that period and I have managed to use the increased value to access cash flow to put down deposits on 3 other smaller houses that are now rented out and all washing their faces.

 

I'm didn't study accountancy but in view I would classify my primary residence as an asset and a facilitator.

See, in your case it is an asset. It's been used to develop further income. The value of the home has been leveraged in order to generate further income, which is one of the paths to financial independence. So you've done it right. You are the 1/10 or 1/100. 

 

For the majority of home owners, that's not the case.