+1 on the cash in hand.
having just recently been the victim of someone accidentally crashing my bike, my "rules" on letting others ride my bikes have changed.
no one rides my bike, with VERY few exceptions. I have one riding buddy I'd trust with anything I own, because he is as careful and meticulous with his belongings as I am with mine. secondly, if he wrecked it, he's the type who would offer to buy the bike from me for what it would cost me to replace it.
I've been looking around craigslist lately for a few different used bikes, and many of the ads state in no uncertain terms, "No test rides without cash in hand, and valid M class license. You drop it, you bought it."
yes, I would imagine that it's difficult to sell a bike without offering a test ride, but the dealerships around here don't offer them either. I'm inclined to agree with a couple of the other replies; I'd have to make a judgment call, but then again, last time I did that, it bit me in the behind, and I still don't have my bike back from the shop -- the rider who crashed my bike has ridden for 22 years and is a fairly conservative dude.