Bike leasing instead of cash purchase: Making expensive high-end bikes affordable

You will find these topics in the article:

• High four-digit prices - who can still afford that?
• Leasing: savings of 30 to 40 per cent are possible
• Cash purchase and financing: big bites, small bites
• Private leasing: Loss account
• Leasing for the self-employed: the tax consultant does the maths
• Employee leasing: luxury bikes at a low rate
• How and how much do you save when leasing a company bike?
• Company bike leasing: how do you go about it?
• A comparison of six major leasing providers
• Is company bike leasing also possible with direct-to-consumer brands?
• Or would you rather buy second-hand?
• Interview with Wasilis von Rauch, Managing Director of the Bundesverband Zukunft Fahrrad e. V. on the future of mobility

There are many good reasons why more and more people are ditching their cars and preferring to cycle to work: the traffic chaos in city centres, increasing environmental awareness and the need to do something for their own health. But there are also economic reasons: Cycling saves money. If you can do without a (second) car in your household, you can save a lot. But that is also a truth: Bicycles are becoming more and more expensive. If you want to buy a sporty e-mountainbike, you will find practically nothing under 4000 euros. On the contrary: five-figure sums are no longer the exception. This is no coincidence: even mountain bikes without a motor have increased significantly in price in recent years. This is mainly due to transport and energy costs, but also to the fact that suppliers are charging ever higher prices for individual components. And compared to classic mountain bikes, there are additional cost factors for e-mountain bikes that drive the price up further: Motor, battery, electronics and complex frame designs.

High four-digit prices - who can still afford that?

10,000 euros or more? Exactly, that's how much the most expensive e-mountainbikes cost. "I can buy a motorbike for that!", some may exclaim indignantly. Sure, but do you really want that? E-mountainbikes are high-tech products that have to fulfil extremely high demands: Functionality, weight, efficiency! In return, you get a piece of sports equipment that offers almost limitless possibilities in terms of leisure activities: Riding fun, sport, nature experience, action radius - what other sports equipment can offer this to such an extent? So it's no wonder that the demand for e-mountainbikes in particular is increasing rapidly - and that manufacturers are taking a correspondingly large gulp from the bottle. Of course, this is also contributing to rising prices. As a result, e-bikes are threatening to become a hobby for high earners in view of the current sales prices. Or for those who put other needs on the back burner: Holidays, family, car, home ownership. The high purchase costs of the bikes are compounded by the not inconsiderable follow-up costs: repairs can be expensive due to the high-tech components, and the Risk of theft also increases with the value of a bike. So you add the annual cost of insurance to the purchase price. Boy, boy, that's going to be expensive. Or maybe not?

Bike leasing: savings of 30 to 40 per cent are possible

Exactly: maybe not! Because there are ways to divide large sums into small instalments: Many retailers, for example, offer hire purchase. But by far the most popular model at the moment is employee leasing. Especially for those who would like to buy an expensive high-quality E-MTB If you want to afford a company bike because you use it not only as a means of transport but also as a piece of sports equipment, company bike leasing offers fantastic opportunities: Thanks to favourable salary conversion, expensive bikes become affordable even for those who are not high earners. The leasing instalment is then deducted from the employee's gross salary - reducing taxable income. Total savings of 30 to 40 per cent are possible. The 0.25 per cent of the RRP that you have to pay tax on each year for the non-cash benefit of private use is hardly significant. Weekdays in the office, weekends in the mountains - this is also the practice of a growing proportion of EMTB readers: in the large EMTB reader survey, in which around 6500 readers took part, one in three said that they use their e-mountainbike both in everyday life and as a piece of sports equipment in their leisure time. And the trend is rising. This is also one reason why the category of SUV bikes is rising in the cyclists' favour.

Also practical when leasing a bike through the job: services such as Regular maintenance and theft insurance can be favourably included in the leasing contract and are definitely worth a small surcharge. These costs are often even covered by the employer, who in turn saves part of the social security contributions through the reduced gross salary. So it's a win-win for everyone: employees, employers, the environment and the cycling industry. We have taken a closer look at the different payment models.

Cash purchase and financing: big bites, small bites

Money on the dealer's table or card through the reader - done! The direct purchase is quick, maximally transparent and if it actually takes place at the retailer around the corner, you can often take the good item with you straight away. So the temptation is great. Less tempting is the financial outlay: As a whole, a high four-figure purchase amount simply looks much more daunting than if you portion it into small bites. This is also the reason why this type of payment for expensive bikes is increasingly becoming a discontinued model. Only a manageable proportion of customers have the financial strength to pay for a modern, well-equipped E-MTB out of their petty cash. Whether there will be more generous discounts again in 2023 remains to be seen. In 2021 and 2022, customers still had bad cards to play: high demand and very limited availability characterised a seller's market. The tide could turn again in 2023 - but falling sales prices are not to be expected for the time being.

Payment by instalments: so why not pay it off?

Unfortunately, the days of low interest rates are over. Some bricks-and-mortar or online retailers still offer zero per cent financing, but usually only if the instalments are paid back within a year or even earlier. This makes the instalments unappetisingly large again. The longer the period over which you want to pay off the purchase sum, the higher the interest rate. For instalments over three years, you can currently expect to pay five percent or more. In the end, this adds up to considerable interest costs on the purchase price. What's more, you will of course have to pay for damage, repairs and theft yourself.

The advantages

Transparency and simplicity are the major advantages of direct purchasing - whether in cash or by instalment. In addition, the unrestricted choice remains on the market. The customer pays and the bike is theirs. Economically, this model is only favourable if you can afford to pay the entire purchase amount at once.

The disadvantages

Buying in instalments is no longer a bargain thanks to the high interest rates. In addition, the customer must subsequently pay for all repairs to their bike themselves, with the exception of warranty cases. Other financing concepts are already further ahead here.

Private leasing: loss calculation when buying an e-bike

Even if your employer doesn't play ball, you can still lease a bike as a private individual. Theoretically at least. This is because the choice of providers is extremely limited, and the choice of bike models is correspondingly limited. There is a reason why there are only a few, mostly small providers for private bike leasing: demand is low, as private leasing only offers disadvantages from a purely economic point of view. The only advantage is that you don't have to pay the high purchase price all at once. However, there are no tax benefits as with employee leasing that reduce the overall cost burden. On the one hand, you have to pay the monthly leasing instalments from your net salary; on the other hand, you don't own the bike when the leasing contract expires. What's more: Insurance against damage and theft are often more expensive for private leasing, as only large leasing providers have framework agreements with insurance companies and can pass on the costs to their customers at a correspondingly lower price. In other words, once you have found a (small) leasing provider that offers private leasing, you usually have to take out additional insurance at your own expense.

The advantages

Security and predictability: Small instalments are subjectively less painful, even if the total price ends up being significantly higher than a cash purchase. And the follow-up costs due to inspections, wear and tear, damage or even theft are taken care of by insurance.

The disadvantages

From an economic point of view, private leasing only has disadvantages, as it does not offer the tax advantage of employee leasing: high leasing instalments, additional insurance costs, and in the end you don't own the bike after all.

Bike leasing for the self-employed: the tax consultant does the maths

Anyone who has employed themselves as a managing director of a GmbH can take advantage of the Utilise employee leasing (see below). However, all other self-employed persons can also lease a bicycle and claim it for tax purposes. To what extent depends on one crucial question: Business or private - how is the company bike used? The legislator says: A certain amount of private use is quite normal. If it is less than 50 per cent private use, the leased bike automatically counts as business assets. The leasing instalments and other running costs such as repairs or spare parts can therefore be recognised in full as business expenses. If the proportion of private use is between 50 and 90 per cent, it is up to the self-employed person to decide whether to classify the bike as private assets or business assets. From a tax perspective, it is generally more advantageous for him if it is included in business assets. This is because if it is classified as a private asset, at most five cents per kilometre can currently be deducted.

Bike leasing or buying - what is worthwhile for the self-employed?

The economic calculation is complex and dependent on many variables. Therefore: It should be calculated and decided by a tax consultant.

The advantages

Although leasing instalments are high for the self-employed, they are fully and directly tax-deductible. If the self-employed person takes possession of the bike at the end of the leasing period, they only have to pay the usually low, calculated residual value, just like an employee. A service package and theft protection are included. And: leasing contracts usually run for three years. So you always have a state-of-the-art bike.

The disadvantages

Although the company bicycle is in the possession of the self-employed person, it is not his property. It can therefore not be resold at the end of the term.

Employee leasing: luxury bikes at a low rate

Classic bike leasing is the most attractive financing option for all those who can take advantage of it. The financial advantage is so great that last year a third of all e-bikes sold went to consumers via leasing contracts. But why is bike leasing so attractive? The key is a trick in tax law. For employees, the monthly leasing instalment is deducted directly from their taxable gross income, meaning that less tax is due. The total amount depends on the salary and tax class. In the best case scenario, this can result in total savings of up to 40 per cent. You do have to pay tax on 0.25 per cent of the purchase price per month as a non-cash benefit. On the other hand, the tax liability is reduced, as employees can claim 30 cents per commuting kilometre per month as a commuting allowance in their tax return. In addition, the employee benefits from the in many cases obligatory Insurance against damage, theft and wear and tear. The employer also benefits: Firstly, they pay less social security contributions and secondly, they motivate their employees. The state, in turn, collects less tax, but benefits from the increase in turnover in the bicycle industry. In addition, bike leasing is politically desirable, so a certain tax loss is accepted.

The advantages

Employee leasing really does help you get your dream bike at a bargain rate. In addition, the lessee is comprehensively covered by favourable insurance policies, and the low residual value means that there are no nasty surprises at the end, but often an attractive takeover offer.

The disadvantages

Unfortunately, only employees whose employer has entered into a contract with a leasing provider can lease. Depending on the leasing provider, the choice of manufacturers and bike models may be somewhat limited. But in the meantime, even smaller leasing providers have knitted a fairly broad network. Leasing means more organisational work for the employer and employee, and it often takes a few weeks before the bike is actually at the employee's premises. If the employment contract ends before the leasing contract, individual agreements must be reached.

How much do you save when leasing a company bike?

Roughly speaking, around 30 to 40 per cent, the exact value also depends on your gross salary and tax class. The lease runs for 36 months. The leasing instalment is based on the RRP and the additional costs for the service package. The buy-back value (approx. 15-20%) at the end of the lease is also included in the total bill. This results in an instalment amount that is deducted from your gross salary each month. For private use, 0.25 per cent of the RRP must be taxed as a non-cash benefit. The commuter allowance of 30 cents per kilometre can be deducted from your income tax. We have calculated the examples on jobrad.org.

Example invoice for direct purchase

Our example buyer earns 3000 euros gross, approx. 1940 euros net. He buys an e-MTB for 6000 euros and pays off the amount over 36 months. His bank charges 6.5 per cent interest. The monthly charge is 183.33 euros, and in the end he has paid 6599.75 euros for his bike.

Sample calculation employee leasing

Our example buyer leases his 6000 euro e-MTB through his employer. The monthly leasing instalment, including insurance, is 195 euros and is deducted from the taxable gross income, which is then 2805 euros. This results in a net salary of around 1840 euros. The difference to the previous net salary (approx. 1940 euros) and therefore the actual net burden of the leasing instalment is around 100 euros. In three years, our example buyer pays around 3600 euros for the lease, then he takes over the bike for the contractually agreed residual value of 17 per cent of the new price, i.e. for around 1000 euros. In total, he has therefore only paid around 4600 euros for his bike. The difference to the UK is therefore 1400 euros, which corresponds to a saving of 23.3 per cent. If you add the value of the insurance and service package to the sales price, the total price of the bike is 6900 euros. Measured against this, the saving is 2300 euros, or 38.3 per cent.

Company bike leasing: how do you go about it?

1 Does the employer play along?

Ask your boss or the HR department whether your employer offers company bike leasing. Find out which leasing provider your company works with. Also ask whether your employer will cover the costs of the service package. Some employers do this as they save part of the social security contributions due to the reduced gross salary.

2 Select your favourite bike

Free choice? In principle, yes. The larger leasing providers have so many specialist dealers under contract that there is usually no shortage of models. The question is rather whether the individual models are available. But these concerns are shared by all end consumers - regardless of whether they opt for leasing or direct purchase.

3 Book service package

Theft, accident, repair - the leasing providers offer different service packages. The costs vary depending on the scope and provider.

4 Calculate leasing instalment

You can easily calculate the monthly leasing instalment on the providers' websites. Your total savings will ultimately depend on your gross salary and your tax class.

5 Transfer agreement

Every employer has its own process, usually via the intranet. Before the employee can collect their company bike from the dealer or receive it from the sender, they must sign a leasing agreement as an addendum to their employment contract. The leasing contract runs for 36 months. After that, the employee can buy the bike for its residual value.

A comparison of six major leasing providers

Bike leasing providers differ in terms of the manufacturers offered, the residual value calculation and the leasing instalments. However, the cost differences are often marginal. An overview of six providers.

Job bike

Probably the best-known name in the leasing business. The Freiburg-based company has been in business since 2008 and is committed to "getting more people on bikes". Jobrad boasts an informative website and a large FAQ section. In addition to the friendly presentation, the transparency is a positive aspect. For example, Jobrad readily explains that all leasing bikes are calculated with a residual value of 17 per cent. By the way: Only Jobrad offers bikes from mail order companies such as YT Industries, Canyon and Rose. With around 6000 dealers, Jobrad is the jumbo of the industry.

Company Bike

The Munich-based company specialises in large companies with 500 employees or more. The agenda: to establish bikes and sustainable mobility on a large scale. Leasing customers can choose from over 2,000 models, and partner companies are given their own website in the company design, through which leasing is organised. Pioneering: Company Bike offers its own repair service to maintain the partner companies' fleet of company bikes.

Eurorad

Eurorad is a subsidiary of the large Zweirad-Einkaufsgenossenschaft (ZEG). 1000 of the more than 4000 specialist dealers are ZEG partners. The website is clearly structured and informative, and the co-operation with the specialist dealers is close. The included premium protection also covers wear and tear, with no excess. Another positive aspect: 24-hour pick-up service throughout Germany in the event of damage that makes it impossible to continue the journey.

Lease a Bike

Lease a Bike is a subsidiary of the Derby Cycle bicycle consortium. This includes the Focus, Univega and Kalkhoff brands. However, bikes from other companies can also be leased via dealers of your choice. The process is primarily handled via a clearly organised online portal. Lease a Bike was one of the first providers to offer comprehensive insurance packages, including theft insurance when locking the bike with a standard brand lock.

My company bike

Mein Dienstrad offers a choice of over 5000 models from various specialist brands. Here, too, almost everything runs via the online portal. The quick calculator helps with the calculation, the map with the selection of around 4500 co-operating dealers. In addition, all the necessary documents are available to download as a PDF before the contract is signed, and the FAQs answer extensive questions about leasing, the process and bike transfer.

BikeLeasing

Regional dealers are very important to BikeLeasing. However, the company from Uslar in Lower Saxony does not have any online or direct mail order companies in its programme, but does cooperate with over 5,000 specialist dealers. It was one of the first leasing companies to provide quick assistance to lessees in the event of damage with its own app. A binding takeover offer is made three months before the end of the lease.

Interview with Wasilis von Rauch

Wasilis von Rauch is Managing Director of the Bundesverband Zukunft Fahrrad e. V. (Federal Association for the Future of Cycling). He is committed to the transport revolution and a more sustainable form of mobility.

EMTB: Leasing has a dubious reputation, especially in the car sector. Where should the customer expect pitfalls when leasing a bike?

Wasilis von Rauch: In fact, car and bike leasing work very differently. In the case of car leasing, very low leasing instalments are sometimes offered as a lure. At the end of the lease, the actual used value of the car is often not as high as the contractually agreed residual value due to minor defects. The customer then has to pay the difference when the car is returned. The lessors earn money from this down payment, among other things. Bike leasing is quite different: here the instalments are rather high, but the contractually agreed residual value after 36 months is relatively low at 10-20% of the new price. Returning the bike is therefore usually quite straightforward, especially as the lessee is often covered by insurance. As the lessee can usually take the bike for the residual value, there is often no return at all.

EMTB: Keyword insurance: Can the lessee rely on it in case of doubt?

Wasilis von Rauch: So far, I'm not aware of anything to the contrary. The insurances are usually relatively cheap - five euros more leasing instalment per month for protection against theft, five euros more for inspections and wearing parts, that's about the order of magnitude. But it still seems to pay off for the insurance companies, because the majority of lessees take good care of their bikes and total losses or thefts are correspondingly rare.

Is company bike leasing also possible with direct-to-consumer brands?

Rose, Canyon, Radon, YT, but also small brands like Propain - Rose gave the starting signal, However, almost all mail order companies now co-operate with leasing providers. In principle, the leasing offers from mail-order companies are no different from those that you take out in your local shop. The transaction is handled by the leasing provider and the goods are delivered by parcel service. As a rule, not too much manual skill is required to get the pre-assembled bike ready to ride. However, regular inspections or unscheduled repairs may be a little more time-consuming and logistically complex. The specialist dealer bike is usually picked up at a nearby dealer and brought back there for repairs and servicing. The mail-order bike must be sent back to the manufacturer. Unless you happen to have a service partner nearby. Large mail order companies such as Canyon have been working for a long time to expand their partner shop networks. However, the network is still quite coarse-meshed. In Munich, for example, there are only two Canyon service partners, and only a few dozen in the whole of Germany. So if in doubt, the only option is to send the bike to the manufacturer by parcel service.

Or would you rather buy second-hand?

The employer does not offer company bike leasing. Direct purchase from the dealer is too expensive. So why not buy an expensive used e-mountainbike? "Only slight signs of use", "visual defects, but technically flawless" or "as good as new" - these are the typical phrases used by private sellers to advertise their used bikes. A high-end bike for half the price of a new one? Who can resist that? There is certainly a chance of picking up a real bargain from the second-hand market. But there is also the risk of getting a nasty surprise. Often only experts recognise the true condition of a supposed bargain when viewing it. Internet platforms such as Ebay Kleinanzeigen, Quoka or MTB-News Bikemarkt are full of cheap bikes from all MTB categories. But if you get carried away too quickly, you can easily end up in trouble and incur consequential costs. To prevent bad purchases, the bike should always be test ridden before buying.

You should pay attention to this when buying:

Blemishes

Paint chips and scratches may not be pretty, but in most cases they are normal signs of use and harmless. Nevertheless, take a close look, because such supposed blemishes can be indications of more serious damage. With carbon frames in particular, it is essential to check the frame for cracks. If there are cracks: Hands off!

Warehouse

If the frame cracks during the test ride, the bearings could be defective and need to be replaced. The costs are less significant than the fact that the cause cannot always be clearly determined. To check the wear of the bearings on the rear triangle, lift the rear of the bike once and drop it. Listen for rattling noises. Then twist the rear triangle against the main frame and check for bearing play. If you want to know exactly, loosen the shock and check the moving rear triangle for creaking, stiff or worn bearings.

Suspension fork

To check the suspension fork, simply place a finger between the fork crown and the lower tube. Then move the bike forwards and backwards with the front brake applied. If you can feel any play, the bushings in the stanchion tube are almost certainly worn. In this case, there is a risk of high follow-up costs - better not to buy.

Damper

The rear shock and the fork should not make any unusual or loud noises when compressing and rebounding. Adjustment options such as lockout, rebound or various platform levels must be clearly noticeable. Also look out for scoring on the surface of the dip tubes and damper piston. Heavy residues of dark oil or a smell of mould or moss around the seals are an indication of poor maintenance. Always ask the seller to show you any receipts for service work or spare parts.

Drive

The drivetrain of e-bikes, i.e. the chain, chainring and rear sprocket set, is subject to significantly higher wear than on conventional mountain bikes due to the high motor torque. The condition of the chain can be checked with a wear gauge. Wear on the sprocket and chainring can be recognised by broken or flattened teeth. Sram cassettes can only be replaced completely - this is expensive. Individual sprockets on Shimano cassettes can be replaced. Also check the function of the gears. The individual gears must engage properly.

Engine

The engine can only be checked by means of a test drive. Shift through all gears and the available driving modes. Grinding, cracking or other unusually loud mechanical noises should make you suspicious. The engine must respond smoothly when accelerating evenly.

Battery

The condition of the battery, including the charging cycles and the exact mileage of the motor, can be read out by a specialist workshop. Some apps (e.g. Specialized Mission Control, Shimano E-Tube) also give private buyers an insight into mileage and charging cycles. As a general rule, batteries age due to their service life and the frequency with which they are charged. Batteries are exhausted after more than 1000 cycles and, according to the manufacturer, only 60 per cent of the original capacity is often available after 500 cycles.

Conclusion from Josh Welz, EMTB editor-in-chief

Bicycles, especially e-mountainbikes, are becoming more and more expensive. High four-figure sums - who can afford to simply put the full amount on the table? You should also plan for theft insurance and regular inspections for expensive bikes. This pushes up the total costs even further. So it makes sense to simply pay off the amount in small instalments. However, with the current high interest rates, buying in instalments is not an economically viable option. Tax-favoured company bike leasing is a completely different matter. For employees and the self-employed, cost savings of 30 to 40 per cent are possible. This means that even normal earners can afford expensive, high-quality bikes. Those whose employers have not yet jumped on the bandwagon are left out in the cold. A little persuasion from the employee might help. After all, the advantages of company bike leasing are obvious - for employees, employers, the state and the environment. Win-win for everyone.