financing a new boat

[Captain Caveman]

Re: financing a new boat

Ha, I was rolling on the floor when I read your post TMH. I agree that this buy now, worry later attitude is making a great buyers' market. It's the same with homes. I've been waiting and saving patiently for some years now, and will be buying my first house this fall and will likely still have enough left over next year to buy my first boat/motor made after the Carter administration - but probably not post-Clinton!

 

[Newtoboating2008]

Re: financing a new boat

Well I am new to these boards and quilty of financing a gently used boat. We were very close to a brand new 40k boat and found one 4 years old around 20k that had lowest rates for 10 years - BUT we are also getting money this summer and that will pay off the boat loan - so 3 months of payments is something I can live with

 

[External Combustion]

Re: financing a new boat

I believe Bomar is correct. Financing toys is the response of those who will not insure their future.

One may say "I can afford it, after all I am making many more times that in salary", but life has no guarantees. The firm you work for may let you go for any number of valid reasons or you can experience a catastrophic failure of health at any age. This is not "the sky is falling" nonsense, but observations of many peoples lives. If you have lived within your income and things are paid off, then you will have a cushion to help out for such circumstances. It sure beats going bankrupt and losing everything or not being able to afford life saving medical treatments. (Don't give me this "no one will be denied medical treatment" stuff, ask anyone that is on a organ donor waiting list)

It is much more fun also to live within a tight budget, having wonderful experiences with things and activities that are a small expenditure of your budget. The payoff of such living is a better, earlier and more well financed retirement where the big ticket toys will cause you to look back fondly on the small ticket ones you have had.

 

[EricD]

Re: financing a new boat

Here?s another perspective and I suggest it because we just went through this and it?s worth thinking about. You borrow $22,000 to buy a boat that?s worth, say $25,000. That?s pretty common around here. If you finance for 12 years at 6.25%, that?s $217 a month. In the end, you?ll pay $9,326.17 in interest. That?s nowhere near double the value of the boat as many are suggesting. What?s more, the impact of $217 a month on my lifestyle will be minimal and, in 5 or 10 years much less than it is now. I pay a reasonable amount each month with little or no impact on my savings. I have enough money in the bank to cover the entire loan tomorrow if I want to but this way I have access to the money in case I need it. Even if times get tough, I may still be able to make the payments if I have $22,000 on the bank to fall back on but if I have nothing in the bank, having a boat I own outright won?t help much anyway.
We allow ourselves a mortgage and one vehicle loan and that vehicle loan has to have an equal amount of money tucked away in our toy account so we can bail if we have to. I can enjoy my boat and the impact of the payment lessens with each year that goes by. Just a thought.

 

[dcg9381]

Re: financing a new boat

I think the big "gotcha" here is for individuals that walk into a boat dealer, come out with a new boat and financing on a 10-12 year term.
You'll be underwater on that boat for a *long* time and VERY underwater on the boat for the next 5 years.

That means no chance to sell it without paying to do so. It means that there is no equity in the boat. It means that you'll be paying for that boat, plus the cost of maintenance and repairs for quite a while.

It also means that you're not shopping for those super well kept 1-5 year old boats that someone else paid a premium for...

 

[tommays]

Re: financing a new boat

IMHP it all depends right now i am buying a 27 year old hull#2930 sailboat for cash

I bought the same 1981 boat hull #2733 new in 1981 with a loan kept it for 8 years and sold it and got 75% of what i paid new


There was no way of paying cash at that time and IT was the best time of are lifes and we do not reget it in the least

In the big picture of 2008 we put my son and daughter through collage and a MBA for the wife without any borowed money and i am not sure that was the best way as are reserves are good but would be MUCH higher if we loaned there way through collage


We were able to do it because we have not really changed are lifestyle much as we made bigger incomes

 

[mkrupp]

Re: financing a new boat

just my 2 cents here. I was taught if you can't pay for a car in 3 years or a house in 20 you can't afford it, i spose the same 3 years could be said for a toy as well. Take a 10 year loan and pay it off in three.
Personally i agree with the no toys on credit policy but that is just me and my sky is falling thinking i guess

 

[amynbill]

Re: financing a new boat

It's silly to think there is any one way to handle finances and create wealth, or that the types of financing people choose has anything to do with financial well being. This is why there are so many finance type programs (yes some better than others) and options. There are also valid reasons to take loans and pay them off on time regardless of the net payment amount on the end, and that includes building credit for investments or freeing up other money at opportune times for investments and portfolio building. There are also times where paying cash for something is the right choice.

A portfolio built on any one way of purchasing/investing/financing is doomed and short sighted. A healthy portfolio for long term wealth accumulation is a healthy mix of options.

 

[tashasdaddy]

Re: financing a new boat

boy, you sound like my investment broker. he's in jail now.

 

[amynbill]

Re: financing a new boat

boy, you sound like my investment broker. he's in jail now.

He was obviously involved in other transactions that werent exactly legal then.

Im not sure why you would think all I wrote would even be considered illegal

And I hope he was your investment broker

 

[fishmen111]

Re: financing a new boat

Using "financial people" and "financial well being" in the same sentence is contradictory unless speaking of needs. Our society has conveniently blurred the difference between wants and needs. Unless you work on the water, nobody needs a boat and paying above and beyond (interest) for new toys is the logic that has so many people heading for bankrupcy. I have a lot of toys and paid cash for them all. I am not wealthy, just wise. I was born into poverty and learned how to get the most bang for the buck while still building excellent credit. I drove $500 cars and rowed many a jonboat to stay out of debt. I am making double payments on a 15 year mortgage to pay off in 7 because I chose a house that cost 1/3 of what I qualified for. Debt, debt, debt. It literally has become a way of life for many. Sad. Of course...as always...this is just my feeble opinion.

 

[amynbill]

Re: financing a new boat

Using "financial people" and "financial well being" in the same sentence is contradictory unless speaking of needs. Our society has conveniently blurred the difference between wants and needs. Unless you work on the water, nobody needs a boat and paying above and beyond (interest) for new toys is the logic that has so many people heading for bankrupcy. I have a lot of toys and paid cash for them all. I am not wealthy, just wise. I was born into poverty and learned how to get the most bang for the buck while still building excellent credit. I drove $500 cars and rowed many a jonboat to stay out of debt. I am making double payments on a 15 year mortgage to pay off in 7 because I chose a house that cost 1/3 of what I qualified for. Debt, debt, debt. It literally has become a way of life for many. Sad. Of course...as always...this is just my feeble opinion.

Without a doubt too many people live off their credit cards and live in debt and wonder why they cant seem to retire. Or they live beyond their means and struggle from paycheck to paycheck.

You have to know what you are doing when working numbers and deciding what to save, what to invest and if financing something to free up money that can be used for something else that generates more income/debt reduction (even a mortgage)/investment capital.

You must also have a cushion for any emergency and liquid assets.

Nothing wrong with financing if it is done the right way and you understand how to use it to your advantage.

 

[tashasdaddy]

Re: financing a new boat

i was just kidding you. no offense ment.

 

[tashasdaddy]

Re: financing a new boat

this is so true. i live with a 68 y/o woman, who is a retired. $4500 month retirement income, now back in the work force earning $4000 an month, living pay check to pay check, covering old debts and newly occured credit card bills. $8500 a month, and not a pot to go in.

 

[amynbill]

Re: financing a new boat

Dood, no offense taken at all, dont think on it.

See, I feel bad, and yet I dont because personal responsibility has gone the way of the dodo in cases like this. Too many people overextend and abuse credit and financing and end up living short term gains with long term losses.

Like I said, there are many ways to finance things intelligently for a better return somewhere else, just it shouldnt be done by everyone.

this is so true. i live with a 68 y/o woman, who is a retired. $4500 month retirement income, now back in the work force earning $4000 an month, living pay check to pay check, covering old debts and newly occured credit card bills. $8500 a month, and not a pot to go in.

 

[fishmen111]

Re: financing a new boat

And I hope no offense was taken from my rant. This topic really hits home with me. I see so many good people getting in over their heads today for the wrong reasons (IMO). A friend I work with was recently evicted from a rental unit, but he had $4k worth of new 24" rims on his $3k Explorer...WTF? I am obviously not a financial advisor...just a common factory shift worker.

 

[redfury]

Re: financing a new boat

The problem is that most of us "kids" are not shown how to be financially disciplined early on and get caught in the trap of "credit" and "easy money" and "low monthly payments!". We can't see past the "$125/mo payment on a new boat!" to see that we really need to pay $300/mo to be fiscally responsible, and really should have the money to cover the full amount in the bank before we even thought of buying anything unnecessary.

At 36 I've finally figured out what I need to do financially to keep myself from losing my new home ( lost one at 26 to foreclosure ), and keep myself in the Black. I'm still not where I want to be, but I've figured out that just because I want it now, doesn't mean I need to get it now ( whatever "IT" happens to be at the time ). I need to be in a position where I'm not living paycheck to paycheck and trying to find ways to add more debt to my load-just because the numbers say I can. That in itself is usually the problem. My best friend is losing his 2 year old boat because he can't afford to keep it after getting a divorce shortly after buying the boat. You NEVER know, and now he has a "toy" that is biting him in the shorts. Not worth it.

 

[Bigprairie1]

Re: financing a new boat

Its a great topic for sure and its not meant to vilify what people might want. What interests me is that given the absolutely great market out there (and getting better) in used boats coming on the market...why someone would feel compelled to buy new given the financial benefits of even a one year old boat. If there was nothing available out there in used boats or complete junk...well new would be pretty much the choice.
There are a lot of people that got in way over there heads over the last couple of years credit-wise who have to sell near perfect boats...why not take advantage of a great opportunity?
Even a brief cruise through the local craigslists shows some amazing deals on boats with under 100 hours on them, wow!. Its unfortunate that some people got way in over their heads...but thats free choice I guess. That said...best not too repeat their mistakes but perhaps benefit from them.
My two bits.
BP

 

[Shawn_floats]

Re: financing a new boat

Most people when they take out a loan look at monthly payments. They ask themselves can I afford this on my budget. Time and interest paid out the life of the loan isn't an issue.

If you borrow $12000 with no interest it brakes down to:

1 year you pay $1000/month
5 years you pay $200/month
15 years you pay $67/month

Which sounds better?

Easy. 1 Year @ 1000/month.

Then I'm totally done in a year, the boat is mine, and the depreciation value hasn't significantly altered the resale yet.

 

[fixb52s]

Re: financing a new boat

I have read this with great interest. I have never financed a boat, but have cars. I would always take the longest term possible (ie: my last car financed for 66 months). I would have paid $21,450 if I made the min. payment of $325 all 66 months. I set up automatic payments of $500/month. This way, instead of paying for 66 months, I would only have to pay a total of $18,000 in 36 months. This not only pays it off sooner (2.5 years sooner), but saves $3,145 in interest. Most loans allow an earlier payoff, and it looks better on you with the credit companies.

This would also help if you do run into any unforseen money problems in the future. If you have some unexpected things, you could take that extra money you are putting into the payment, but I would not recommend it. When you finance something for 36 months and have problems, too bad, you still have to pay it on time or lose it. If it is a longer period, you will be in a better position to pay it off on time. As long as this is not abused (look at the news today and see people are getting over their heads), it is a great way to get the toys and build credit at the same time.

If you work out an automatic deduction, you will find you do not miss that money after awhile, and your payments are always on time.

Of course the BEST way to finance something is to have that money in the bank and take a loan out against it. I guess I learned early to "pay yourself first" by setting up retirement funds early. I have been doing this since I was in my 20s, and I have cash for the future. Of course this takes disipline, something a lot of folks do not have today.

Just something to think about.​