20 year boat loan

[metriccrescentwrench]

Re: 20 year boat loan

I'm with nearly everyone else on this, I just don't see the sense in taking out a loan to pay for a toy. Especially a toy that's going to very significantly depreciate within just a very few years.

 

[jestor68]

Re: 20 year boat loan

Any one out there ever do a 20 year boat loan? I know on the smaller boats 10-15 is the normal but when you get up to the 100K mark you start thinking of 20 year and viewing it as a house. So my question is has anyone ever done a 20 year loan and what are your thoughts on it?

I guess the answer to your question is.......no. Nobody around here has ever done a 20 year loan/mortgage on a boat.

I signed a ten year loan to get the boat I wanted; then paid it off in five years. This crowd would say I'm stupid; but I got the boat I wanted and it's been paid for now since 2001.

For some of us, the only way to maintain a decent standard of living is through the wise use of credit.

 

[JoLin]

Re: 20 year boat loan

I agree that a 20-year loan on a boat is way too long under any circumstances, but the OP didn't provide much usable info. People who are very well off have different tax and investment concerns than most of us. There are scenarios where a loan would make sense.

1. I took a $100K loan on a $200K boat. I'd be paying it off in a lot less than 20 years, tho.

2. I have the assets to pay off in cash, but those assets are invested in long-term, high-yield instruments that pay more than the monthly payments on the boat. I'd be foolish to cash them in.

3. I'm a retired person drawing monthly income from a big 401-K. A $100K lump-sum withdrawal will incur a huge tax hit. If the interest rate is really low, I'm better off making payments over some number of years (but again, not 20).

The tipping point for me would be whether or not that loan would ever be 'upside down' (the asset being worth less than the loan balance). I've never let that happen. Bought my current house in 2000 on a 30-year fixed mortgage. BUT, I put 30% down and I've overpaid the principal since day one. I'll be clear in 2015, 15 years ahead of 'schedule.' No matter how much the market tanked, even if I lost my income and had to sell in a depressed market, I'd still come out with money in my pocket.

Took a new car loan once, on a 5 year term. BUT, I put 40% down and paid it off in 4 years. At any given point in time the car was worth more than I owed on it.

Long-term loans can provide a low-minimum-payment 'safety net', but you need to be generous with the down payment and disciplined about paying more than the monthly minimum. I still wouldn't do it on a boat, tho.

My .02

 

[bruceb58]

Re: 20 year boat loan

For some of us, the only way to maintain a decent standard of living is through the wise use of credit.

Or another way to say, "keeping up with the Jones" is the wise use of credit.

Frankly, if you need credit to achieve a certain standard of living, you can't afford that standard of living. The people that are losing their homes, losing their cars and boats to repossession and going bankrupt are proof of this.

I know a lot of my friends that buy brand new cars and put nothing to their retirement or have 6 months of living buffer in their bank account. Simply amazing!

 

[Friscoboater]

Re: 20 year boat loan

Credit has its uses, and must be treated with respect. I run a company and we run everything through our company credit card for the points and milage. We always have the assets in hand to pay it off every month. Also short term loans are how business works.

I agree though... so many people us credit as a way to live a plush lifestyle. It always catches up with you.

Now with a boat loan... Not many people that buy boats can shell out 100K on a boat, and if we did not have loans like this, the boating industry would implode. Also boat loans are long for a reason... boats really do not depreciate like cars do. Banks are not stupid, and would not offer loans if they did not think they could recoup their investment. If you wanted to make sure you did not have to deal with alot of depreciation, get a boat a few years old (2008-2009) and it will have already taking the "New" loss.

I think most of us on this board own our own boats, and love doing the cash thing, but that is what works for us. If I was coing to buy anything over about 50K, I would finance that beast

 

[bruceb58]

Re: 20 year boat loan

Also boat loans are long for a reason... boats really do not depreciate like cars do.

I bought my 3 year old boat for $22K. The guy bought it for $42K 3 years before. Sounds like a lot of depreciation to me.

 

[Natty Light]

Re: 20 year boat loan

well I'm the odd one out here I guess. Those 20 years of boating could be the best 20 years of your life. If that's the only way you can get into the boat you want and you're sure the payment won't sink you; do it. I took out a 10 year loan on my boat. Yeah that's a long time, but my payment is 130 bucks a month and that includes a full coverage warranty. If I have some extra cash I'll thow some on top of the normal payment, If it's a tight month...it's just 130 bucks.

 

[smokeonthewater]

Re: 20 year boat loan

I bought my 2 year old boat for $22K. The guy bought it for $42K 3 years before. Sounds like a lot of depreciation to me.

So the PO bought it a year before it was built?

 

[H20Rat]

Re: 20 year boat loan

Now with a boat loan... Not many people that buy boats can shell out 100K on a boat, and if we did not have loans like this, the boating industry would implode. Also boat loans are long for a reason... boats really do not depreciate like cars do.

Back to a previous point, if you can only afford at 100k boat with a 20 or 30 year loan, you can't afford the maintenance, fuel, and insurance for that boat.

Also, although it may be true for some boats, MOST boats depreciate faster than cars. A 2 year old boat is often at half of its new value. I paid less than 25% of the new price for my boat, and it was only about 4 or 5 years old, with very few hours.

(there are always exceptions to the rule, and once you are talking older boats, the value will bottom out and then start climbing! i've sold all but one of my previous boats for more than I bought it for, but they were all well past 10+ years old.

 

[bruceb58]

Re: 20 year boat loan

So the PO bought it a year before it was built?

LOL... I edited my post and forgot to change both numbers...I meant 3 years.

I bought the boat around 2 1/2 years after the original owner bought it.

 

[Zerbel04]

Re: 20 year boat loan

:facepalm: I have to say reading through this thread actually made me chuckle and cringe simultaneously. I see this type of thing all too often in my line of work. A few of the replys to this are almost scarier than the OP. I just shudder to imagine taking a 20 YEAR LOAN on a boat. People wonder why the American economy is where it's at.

All I can do is recommend reading the book "Crushing Debt" by David Trahair and watching the documentary "Inside Job".

And if you haven't the time to either all I can say is DON'T DO IT!!!!!

 

[jkust]

Re: 20 year boat loan

I suppose I'm in the extreme but I pay cash for everything except the house and I wouldn't take a 20 year loan on one of those either. I wouldn't take a one year loan out much less a 20 year version. If I want a 200k boat, I write a 200k check. Now my British friends have a you-only-live-once attitude and enjoy the heck out of life while I sit on piles of money. Which is better?

 

[Tail_Gunner]

Re: 20 year boat loan

Hmmm i once went thourgh this...Go to a credit union and ask about 84 months loans at 2.9% intrest at the same amount of the boat. Then look and compare it to the 20yr loan. That be one chunk of money for a boat. Can you get a 84 month loan at 3% on a car probably on a boat...Not..toy's have a price..:cower:

 

[ssobol]

Re: 20 year boat loan

well I'm the odd one out here I guess. Those 20 years of boating could be the best 20 years of your life. If that's the only way you can get into the boat you want and you're sure the payment won't sink you; do it. I took out a 10 year loan on my boat. Yeah that's a long time, but my payment is 130 bucks a month and that includes a full coverage warranty. If I have some extra cash I'll thow some on top of the normal payment, If it's a tight month...it's just 130 bucks.

I take out my car and boat loans with the above sentiment in mind. While I may be able to pay cash for a car or boat, it will probably deplete my readily available cash. So I get a loan with a longer term on it (my boat loan is 10 years). This way I can pay as much as I want when I feel like it. If things are tight for some reason, then I only HAVE to pay a relatively small amount each month. There is nothing that says I cannot pay more than the monthly payment. I usually end up paying off the loan in a fraction of the time stated in the loan agreement.

Further, getting a loan and paying it off without missing payments helps maintain/improve one's credit rating. These days having a good credit rating is not something to be taken lightly. Paying cash for everything does not build a credit history.

 

[dingbat]

Re: 20 year boat loan

Now my British friends have a you-only-live-once attitude and enjoy the heck out of life while I sit on piles of money. Which is better?

Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.
- Donald Trump

 

[OllieC]

Re: 20 year boat loan

I personally wouldn't do that, however I can see the reasoning behind it. Not necessarily as keeping up with the Jones's. Some people buy cabins and some people buy boats (some both).

My wife and I eventually would like to put ourselves in a large Express or even a Trawler as we slow down. Up-keep, slip space, etc. would probably be about as much as up-keep and taxes for water front cabin property. If we sell enough oven mitts, we could even pay for gas and go on a little trip.:lol:
I wouldn't purchase a cabin or large boat thinking about resale and depreciation, although I wouldn't purchase without cash in hand either.

Always remember - "You can't take it with you"...and if you don't believe me then ask yourself; "Have I ever seen a hearse towing a haul?"

 

[jkust]

Re: 20 year boat loan

Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.
- Donald Trump

Excellent quote.

 

[bruceb58]

Re: 20 year boat loan

Further, getting a loan and paying it off without missing payments helps maintain/improve one's credit rating. These days having a good credit rating is not something to be taken lightly. Paying cash for everything does not build a credit history.

Although there is some truth to this, the bottom line is you don't need to go into debt on a boat or car to increase your credit rating. I have mortgages on my primary home and two rental houses. I have never not paid the entire balance of a credit card at the end of the month. My credit score is 800.

Curious how many people getting 10 year boat loans on here are making sure they fund their retirement first with at least 15% of their gross income.

 

[theBrownskull]

Re: 20 year boat loan

I agree that funding the retirement is the first best choice, but what if the retirement is not there when you need it or you die first. I say the middle of the road is the best option. Don't go too deep into debt but don't hoard it either.

By the way even if a person has everything paid for and a medical problem develops all the assets are gone. So unless you are swimming in money, or have a very creative trust, it is all gone. The government looks back 5 years.

 

[bruceb58]

Re: 20 year boat loan

I agree that funding the retirement is the first best choice, but what if the retirement is not there when you need it or you die first. I say the middle of the road is the best option. Don't go too deep into debt but don't hoard it either.

By the way even if a person has everything paid for and a medical problem develops all the assets are gone. So unless you are swimming in money, or have a very creative trust, it is all gone. The government looks back 5 years.

Huh! :facepalm:

Curious what your financial planner thinks of this plan!

And one wonders why people have economic problems later in life!