Shelly Salamon had a simple plan. Inspired by a concept that had been tried and tested in places like Portland, Ore., she wanted to give cyclists the same flexibility in the bike shop that car owners have at the dealership. That is, she wanted to give them the option of buying bikes on credit.
Salamon, who owns both Fairmount Bicycles and Brewerytown Bicycles, tried to offer a promotional credit card through GE Capital (now Synchrony Financial) as an alternative to her layaway program. Cyclists could have applied for the card in either of her two stores. Here’s how it worked: The shop would inform the bank of how much the customer was willing to spend, and the bank would immediately let the shop know whether the customer was eligible for the credit to make up the difference.
The only problem? No one was interested.
“Most people didn’t want to get involved with it,” Salamon says. “We literally had one person take advantage of it.”
Given how expensive a new bike can run, the lack of interest came as something of a surprise. For cycling enthusiasts, a top-of-the-line model can cost upward of $1,000. But buying any bike new will be pricey. Even Detroit Bikes, which touts the affordability of its American-made products, charges $699 apiece for its two models.
As Americans struggle with low wages and high debt burdens, younger cyclists — especially those with limited incomes — may tend toward beaters they can pick up for $100 or so. But there isn’t much profit in sales like that, so shop owners are struggling to figure out how to steer customers toward newer, more expensive bikes. In Philadelphia, options remain limited to credit card promotions. In some states, however, local credit unions have partnered with bike shops to put small loans on the table.
It all started in Portland, where Unitus Community Credit Union began offering over-the-counter loans, ranging from $250 to $2,500, back in 2008. Unitus partnered with neighborhood bike shops, or “preferred dealers,” throughout the Portland metro area.
Oregon’s Trailhead Credit Union, then known as the Northwest Resource Federal Credit Union, started its own bike loan program in 2009. Credit unions in other states have followed suit, including the San Francisco Federal Credit Union and the Virginia Credit Union. The CDC Federal Credit Union, meanwhile, offers loans in three Georgia counties and to employees of the Atlanta-based Centers for Disease Control and Prevention.
The Philadelphia Federal Credit Union does not yet have such a service, but some local sellers can give customers an approximation. Trek Bicycle Corporation offers the Trek Card, with no interest payments for 6-12 months and an annual percentage rate of 9.99. More than 1,000 bike dealers across the country accept the Trek Card, including three in Philadelphia: Breakaway Bikes in Center City, Bustleton Bikes in the Northeast, and Human Zoom Bikes & Boards in Manayunk.
“We’ve offered it for about six years, and this summer I had maybe 10-15 new applications,” says Mike Honeycutt, owner of Bustleton Bikes. “I ran maybe 30 sales this summer that were on Trek credit cards — maybe 2-3 percent of sales. It’s not much.”
For her part, Salamon thought a credit card could especially work for customers with cheap, used bikes whose repairs would cost more than the original product. Fairmount Bikes doesn’t sell any bikes for, say, $100 or $200, but the credit card would have allowed customers to buy a bike in the $400-$600 range and pay for it over the course of six months.
Brian Hackford, owner of Keswick Cycles, offers the same promotional credit card through Synchrony and for the same reasons. (In fact, Synchrony has partnered with more than 300 bike shops around the country to start programs like this.)
“If I was going to work with a local bank and try to finance a bike for somebody or finance my own program, it would put a whole lot of liability on me,” Hackford says. “I sell bikes, not loans, so going through a much larger lending institution makes sense. It takes the liability and the loss out of my hands and ultimately I get the same sale.”
Customers at either Keswick location, in West Philly or Glenside, Pa., can take advantage of the card. Yet it’s much more popular at the suburban store, according to Lucas Pellegrino, a Keswick sales associate. The reason? Glenside tends to sell pricier products. “It’s worth it to use financing on a more expensive bike,” Pellegrino says.
This jives with what at least one bike shop in Portland, where loans for cyclists are now widespread, has found. According to Jesse Fairbank, floor manager at River City Bicycles, one of the largest bike retailers in Portland, customers generally take advantage of the loans for one of two reasons: They want to buy a high-end product, or they’re transitioning into a car-free lifestyle. As for customers on a budget using loans to afford ordinary bikes, Fairbank says, “that’s something I haven’t encountered all that much.”
While Salamon abandoned the credit card offer, she still thinks it’s a good idea, although she understands why more stores don’t want to get involved. Even if they were offered through a smaller, local institution like the Philadelphia Federal Credit Union, in-store loans can still put a bike shop in an awkward position. If a customer is declined, the seller not only has to explain that to the client but then lose the sale as well.
Then there’s the bigger question of demand. For a generation increasingly saddled with debt, are loans like these even desirable? Just because a credit card is available for bike purchases doesn’t mean anyone will use it. And as the situation at Keswick suggests, higher-income suburban shoppers may be more inclined to finance a bike purchase, simply because they’re more likely to buy an expensive bike.
“I mean, it seemed like a good idea,” Salamon says. “[The credit cards] offer up to six months with no interest. But as I said, people didn’t seem to want another credit card or a credit card at all.”
SPOKE editor Alex Vuocolo contributed to this report
Illustration by Tim Pacific