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12 Jun 2019

The Government recently announced the introduction of e-bikes into the Cycle to Work scheme. The addition of e-bike within the Cycle to Work scheme could help more commuters turn to greener...

12 Jun 2019

The e-bike market is forecasted to grow further across the UK competing with the car for short distances.

12 Jun 2019

The APPCG hope you can join their next meeting on the industrial case for cycling

12 Jun 2019

The growth of the online market space within retail is having a wider effect on the high street.

12 Jun 2019

For decades now the majority of the cycles industry has been made up of men. The industry has overlooked other demographics and target audiences that are interested in cycling.

12 Jun 2019

Newsletters are an incredibly popular means to engaging with consumers but on any given day our inboxes are flooded with a plethora of automated email newsletters, so how do you stand out?

12 Jun 2019

The Association of Convenience Stores (ACS) and the Home Office have been campaigning to raise awareness of violence and abuse towards retailers to encourage action and change.

12 Jun 2019

Social media has become a massive part of business marketing to improve brand loyalty, engage with consumers and build stronger consumer relationships.

5 Jun 2019

Getting more people on bikes and using their local bike shops is a shared goal of Love to Ride and the ACT so we are doing it together.

29 May 2019

The definitive guide to safer cycling is a four part series that offers crucial information on important cycling safety statistics as well as helpful tips and advice

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Choosing a finance provider, avoid the pitfalls #3

Posted on in Business News , Cycles News

Avoid the pitfalls #3

Following an increase of incoming calls querying finance providers in the cycles market, the ACT are publishing a mini-series to answer the trade's questions.

This is the last email in the series which takes a look at the perils of low rates, the importance of checking the finer details of your agreement and why you should identify who actually lends the money when selecting your provider.

Low rates = lost sales?

As with many things in business, the cheapest is very rarely the best. You may be tempted by providers that offer low rates but there is a lot more to retail finance than rates alone - a cheap bike isn't the best, so why would cheap rates be?

As a general rule of thumb, a lower subsidy rate equals a lower acceptance rate. Put simply, the less money a finance provider makes from each sale, the less risk they can take when lending. This means a customer who would be accepted by one finance provider might not be accepted by the cheaper one; putting the sale and any future business with that customer at risk.

Beware the small print

Providers offering lower rates often have Average Order Value clauses included in the small print e.g. if you don't do enough volume at a high enough value the rates will automatically increase.

This is especially true when a business has an account with a broker, not with the actual finance provider. Some brokers are known to offer very attractive initial subsidy rates but as they are paid on volume, they bury a rate review deep in the small print of your agreement.

Many brokers also include a minimum contract length that leaves you trapped in an expensive and restrictive solution.

The devil is indeed in the detail!

Finding the right partner

The cycle industry has already witnessed multiple providers withdraw from the market or get absorbed into other businesses, leaving their retailers without access to a finance facility. Having to change providers is time-consuming, costly and can result in lost customers and lost sales.

Many of these providers have to borrow money to lend money. When borrowing costs rise, your rates rise. When they start to run out of money to lend, your acceptance rate will drop.

With margins already squeezed many of these providers cut costs wherever possible and often it's the customer service department that suffers as a consequence - for both you and your customers. Poor customer service is not only a terrible experience it's also a bad reflection on your business.

Lower rates are not sustainable and they can end up costing you more. Make sure you identify exactly who you are dealing with (broker or bank), where they get their funding from and what their levels of customer service are like. If you're happy with all of this then you've found your perfect partner!

ACT's partner, V12 Retail Finance, are fully funded by a UK bank resulting in a stable lending environment.

Find out more

If you have any queries about retail finance or the Ride it away scheme you can find out more here or call the ACT on 01273 427 700.

If you missed it, you can read part 1 here and part 2 here.

V12 are the leading provider of finance in the cycles sector, are the number one provider of online POS retail finance in the UK* and are widely accepted as having the ‘best' online integration solution; even by their competitors!

*based on finance and on 4 continuous quarters from FLA

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