Cycle to work scheme “no guarantee of ownership”

Ballard

Deleted_User said:

I have yet to see a cycle saving scheme where, after you have paid off the bike, the scheme firm will demand the bike - it's nonsensical and completely defeats the purpose of buying a bike via the scheme as you're effectively paying the full price for the bike as a year long loan. It's 99.999% just going to be them covering their backs. Normally after the year is up, you pay the extended rental fee (or come to some agreement depending on the scheme) where the bike is yours to use.

The ownership wording is a red herring though, it's a common misconception that people use against cycle to work to say they don't "own" the bike so don't want to use the scheme but that's like saying never buy a car on PCP or a house with a mortgage

I can confirm that I spoke to Tredz on the phone and I would have had to pay them the 25% which is utter madness. I'd rather pay the extra tax than give it to a company. I have read, however, that these schemes do cost the shops money which eats into their profit margin.

Carcy

So I spoke to Vivup and what they do is you pay monthly for 12 months then at the end you pay 12% of the bike price as a deposit to extend the lease for 2 more years. Then at the end of those 2 years (3 years total) you own the bike without paying any more.

Other options at the end of the 12 months are pay them 12% to dispose of the bike for you if you don’t want to keep it, or pay them 25% to own it outright straightaway. But really no one is going to pick those options! 

I compared Vivup’s calculator with Cyclescheme’s for my bike and the Vivup monthly payments are lower than Cyclescheme. So even though with cyclescheme you only pay 7% at the end, the overall cost is similar between the two schemes. 

I’m counting on them not wanting the bike back, as my payments start in May but with the limited availability I won’t actually receive the bike till November! So I would be paying 6 month hire cost for no bike at all. 

[Deleted User]

Ballard said:

Deleted_User said:

I have yet to see a cycle saving scheme where, after you have paid off the bike, the scheme firm will demand the bike - it's nonsensical and completely defeats the purpose of buying a bike via the scheme as you're effectively paying the full price for the bike as a year long loan. It's 99.999% just going to be them covering their backs. Normally after the year is up, you pay the extended rental fee (or come to some agreement depending on the scheme) where the bike is yours to use.

The ownership wording is a red herring though, it's a common misconception that people use against cycle to work to say they don't "own" the bike so don't want to use the scheme but that's like saying never buy a car on PCP or a house with a mortgage

I can confirm that I spoke to Tredz on the phone and I would have had to pay them the 25% which is utter madness. I'd rather pay the extra tax than give it to a company. I have read, however, that these schemes do cost the shops money which eats into their profit margin.

Are you talking about paying the 25% after the first year to "take ownership" of the bike as opposed to going on the extended rental rule? Talking about option 2 on the Tredz site? If so, yes that is common on cycle to work schemes. It's also the option that literally nobody with a brain takes - anyone with a brain takes option 3, the extended rental where you pay 3% or 7% of the bike value as a deposit for 3 years, then get the bike at the end.

Your company has no involvement in the options after your bike is paid off, if they are demanding you do that then they are not understanding the point of the scheme which is a real shame as the whole point of the tax saving / going green is lost if you have to pay back the tax savings.

Bike shops that use a scheme like Cyclescheme do pay an admin fee yes so it does go into their profits - some shops only let you spend £900 on the bike due to the fee, though someone like Tredz, if they are running it themselves on their own scheme (like Evans do) probably has less of a cost than an independent

Ballard

Thanks for that info Farfetch. I agree that option 3 would be the way to go but I didn't see that when I looked at the end of last year and when I called them they only gave me the option of paying 25%. Either the extension option is new (seems highly unlikely) or the guy I spoke to didn't know all of the options. The main reason of my call to them was to clarify the end of scheme options and I was very specific about it.

A quick calculation shows that I would have saved around £330 had I gone with Tredz and extended at 7%. There's nothing I can do about that now and I'm not going to get worked up about it. I got good service from the shop I bought it from and I'm happy with the bike. 

Carcy

It might be that your company only allows the 25% option. I know my partner’s workplace use CycleScheme but have restricted it so employees can only apply for the 1 year hire vouchers. No lease extensions allowed so they always had to pay 25%. He didn’t bother going through the scheme in the end as the savings were minimal. 

[Deleted User]

Carcy said:

It might be that your company only allows the 25% option. I know my partner’s workplace use CycleScheme but have restricted it so employees can only apply for the 1 year hire vouchers. No lease extensions allowed so they always had to pay 25%. He didn’t bother going through the scheme in the end as the savings were minimal. 

That seems really odd as when I have used Cyclescheme (twice), the end of year options were sent to me, the firm was never involved. There is no point in using the scheme (which might be why they did it) if people have to use the ownership option as that kills the whole tax saving element of cycle to work. After the year the bike is not the firm's property anyway, the extended rental is with cyclescheme

Ballard

Carcy said:

It might be that your company only allows the 25% option. I know my partner’s workplace use CycleScheme but have restricted it so employees can only apply for the 1 year hire vouchers. No lease extensions allowed so they always had to pay 25%. He didn’t bother going through the scheme in the end as the savings were minimal. 

I don't think that this is the case as I don't recall going into the specifics of the scheme with Tredz. As I've said, it's in the past now and I'm not overly bothered about it anyway. 

Herzlos

The fee for ownership is meant to be based on the assumed value at the time, roughly. So If you go for the 1 year you're buying a 1 year old bike (25% value) and so on. The cycle schemes usually encourage you to go for the 4 year approach so you're making payments for 1 year, then after another 3 years you're buying a 4 year old bike (7%).

There's really no reason to take a shorter period, though it does mean that if you leave the company within that time they may either ask for the bike back or the outstanding money.

[Deleted User]

Herzlos said:

The fee for ownership is meant to be based on the assumed value at the time, roughly. So If you go for the 1 year you're buying a 1 year old bike (25% value) and so on. The cycle schemes usually encourage you to go for the 4 year approach so you're making payments for 1 year, then after another 3 years you're buying a 4 year old bike (7%).

There's really no reason to take a shorter period, though it does mean that if you leave the company within that time they may either ask for the bike back or the outstanding money.

After the first year the company that did the loan originally has no claim over the bike as you have paid them back, you only have issues with needing to return the bike or, more likely, paying off the rest of the loan without the tax saving, if you leave in the first year.
In that extended loan period you pay the scheme the deposit and that's it, I have never been asked by Cyclescheme where I was working and the extended payment thing came to my personal email

Ballard

Herzlos said:

The fee for ownership is meant to be based on the assumed value at the time, roughly. So If you go for the 1 year you're buying a 1 year old bike (25% value) and so on. The cycle schemes usually encourage you to go for the 4 year approach so you're making payments for 1 year, then after another 3 years you're buying a 4 year old bike (7%).

There's really no reason to take a shorter period, though it does mean that if you leave the company within that time they may either ask for the bike back or the outstanding money.

I completely agree with this post but in my case my company only offered the one year option and that was only open for a couple of months. This was made clear when they announced the scheme.