A company based in Surrey and founded by a cyclist who was frustrated by justifying his new expensive bike to the family is offering a leasing service for bikes, wheels or custom builds.
Paul Mander-O’Beirne was trying to buy a £3,600 bike when it became apparent that coming up with the cash wasn't going to happen and conversations with friends only confirmed his suspicion, "that cyclists all over want to buy nice bikes and they can afford a monthly payment but not all of the the cash up front."
His solution was leasing which has the benefit of keeping monthly repayments even lower than an interest free loan because the lease value you make the repayments on is calculated minus the secondhand value of the bike at the end of the lease period - Mander-O'Beirne calculates that at 30 per cent of the original RRP. The other potential advantage of a lease is that at the end of it you can hand your bike back and get another new bike on a new lease without the hassle of selling your old bike first.
Describing his Bike Leasing Company as an "innovative option for cyclists who love expensive bikes," Mander-O’Beirne says they will lease you a mountain, road or triathlon bike over two years while you, as he puts it, "enjoy all the benefits of ownership whilst avoiding the hassles of ownership."
Of course, car buyers will be familiar with the leasing options available although with typically larger amounts of money involved car leases tend to run over longer periods with bigger monthly payments. But the principle is the same; in simple numbers you pay a deposit and then 24 monthly instalments at the end of which you will have the option to hand the bike back, renew for a further year or buy it outright.
As an illustration; for a 2012 Merida bike with a retail price of £2,500 bike you would need to pay a 25 per cent deposit broken down into three initial payments of £208.34 - the first of which is paid upon placing an order, the second 5 days before delivery and the third up to 30 days after delivery. Once you have taken delivery, you commence with the monthly lease payments, in this case 24 monthly payments of £47.00. We make that a total £1,751.84 you're paying, which is £748.15 or 30% less than the retail price.
The Bike Leasing Company's case to you as a potential customer, apart from not having to come up with all the money in one go for a nice, new shiny bicycle, is that the 30% value that you haven't had to pay by the end might well be all the bike is worth anyway after two years. So you've kept it in your wallet without the aggravation of having to sell the bike to recoup that value plus the payments you have made are calculated on the value of the bike minus that 30 per cent residual value sor are lower than the interest free option.
And if you do decide to keep the bike, you can buy it for 35% of the original retail, which in the case of our example would be £875 meaning you've paid a total of £2,626.84 or £126.84 extra equating to 5.9%. We're not sure if that's an APR exactly but that's what the finance is costing you in actuality and the bike is yours at the end of two years.
Potential pitfalls? You're responsible for the bike which means if it's stolen you're still paying for it although Bike Leasing Company say they deduct the payments you've already made. So insure it properly, eh?
Also, like any finance based on RRP, you need to keep in mind what price you might get by shopping around and fronting up the money but that's only an option if you actually have the ready cash.
Finally, as you're renting from Bike Leasing Company as, in effect, your retailer, you will be limited to bikes and products that they have arrangements to supply. So far, they're signed up with De Rosa, Merida, Eddy Merckx, Felt, Argon 18, Kinesis, and Cielo on the road bike side, mountain bikers can choose from Yeti, Ellsworth, Kinesis, DMR, Intense, Devinci, Merida, Bionicon, Atomlab, Pivot, Commencal and Transition, and you can lease components from Enve and Fulcrum wheelsets as well as Marzocchi and Manitou forks if you're into mountain bikes, and, according to their Paul Mander-O’Beirne, the company is in discussions to add further brands all the time.
The self-employed get a tax, expenses offset and VAT benefit as the bikes are on a lease, not formally a Hire Purchase which presumably also opens up an opportunity for employers to operate their own leased bicycle fleet.
Bikes are delivered either assembled and ready-to-ride by courier, delivered and set up at home for you by a mobile mechanic or the same but with a service contract for the two years for which the costs are £45, £85 or £180 respectively.