Boat loans... Any suggestions?

Homerr · Mar 24, 2005

I want to trade my ski boat in for a fishing boat. My local dealer has agreed to pay my ski boat off in trade for a new fishing boat, however their financing company they go through isn't something I'm interested in. Does anyone recommend a lender that will do at least a 15 year loan on $35k max? I tried BoatUS.com, but it looks like they will only do 85% of the loan. Do all of them work this way, or will others do 100% loan? My local bank doesn't do 15 year boat loans

The only one's I've seen that do are on-line companies. My last resort is home equity, but I really don't want to do that. I like my little nest egg! H.

DJ · Mar 24, 2005

Re: Boat loans... Any suggestions?

Homerr, Not to pop your bubble, but there is not a boat made today that will make me sign up for 15 years. The banks know that too. That's why they won't do a 100% 15 year deal.

Homerr · Mar 24, 2005

Re: Boat loans... Any suggestions?

Good point... never thought of that. I was just thinking of payments... I intend to keep it for a long time, so I wanted the payments low. I didn't mind the contract I'm on with my current boat, since I was planning on trading it up anyway. H.

DJ · Mar 24, 2005

Re: Boat loans... Any suggestions?

Homerr, I don't want to lecture, but maybe you ought to rethink your strategy. 1. After 15 years, you are basiclly going to pay for that boat twice, if not three times. 2. Don't blame the dealer, he wants to sell new boats. That's no problem, just maybe not to you, this time around. He really doesn't want your trade. He's lowballing you on the value-trust me. Very few boat dealers make a living selling used boats. The smart ones do. 3. I think you'll do better off selling, on your own. This is the right time of year to do so. On the other hand, it's the WRONG time of year to buy. If you can wait out a summer, you can put some cash away and make a steal in the fall.

Fly Rod · Mar 24, 2005

Re: Boat loans... Any suggestions?

your best bet would be a home equity loan if ya own property!!! interest is about 4 1/2 to 5 1/2 % at the moment!!! I think you can get it for 8 years (may be wrong) before it converts automatically to your home loan at what ever interest your paying!!! 35k would cost you aprox. 350 bucks a month!!! The 2 best things about the home equity loan is you don't have to tell the bank what it is for!!! 2nd you pay at least half the interest of obtaining a regular boat loan!!!! One other thing is pay an extra hundred more a month on principal and you will see your payment go down!!!!

JasonB · Mar 25, 2005

Re: Boat loans... Any suggestions?

I wouldn't do it and I'm with DJ on this one, but with additional reasons. I understand the up-sides of the home-equity loan, as the interest can also be tax-deductable, but I would never tie a depreciating assed to my home like that. Is selling the existing boat and stepping into a reasonable used boat an option? Keep in mind, the lower/longer the payments, the more you pay in interest. That's the flushing sound you hear when you open your checkbook. Look at the total cost (interest included) rather than the monthly payment. At 15 years, that 35k boat will end up costing 55-60k if you aren't careful. Can't get ahead at that rate. Never finance a depreciating asset like a boat/car longer than absolutely necessary. You end up owing way more than its worth if you need to get out from under it down the road. ************** I just ran 35k through the calculator. assuming 8.5% over 15 years, your would end up paying 27k in interest for a total boat price of $62,000. If you want to play with the numbers, try this calculator, it's for morgages, but will work for this too: [http://realestate.yahoo.com/realestate/calculators/amortization.html[/URL] Not trying to be a downer or nag because it's not my money or boat, just throwing in a different perspective. This is why I have two 1976 boats and refuse to finance cars.

LubeDude · Mar 25, 2005

Re: Boat loans... Any suggestions?

Been there, done that in my younger years, It just wasnt worth it in the long run and as I look back I wish I wouldnt have done it. Obviously you owe about what your present boat is worth, maybe more. A bad desision in the first place. Car dealers do the same thing, roll the loan over to the new loan. Now you owe more on the vehicle, whatever it is, boat or car than it is worth. So, you get hurt or lose your job, (it happens), and you cant bail out because your loan is more than said vehicle is actually worth. If you make a loan, you need to put at least half down so the depriciation doesnt outrun the actuall value, ( What you can sell something for quickly), If you cant do that, you dont need it. I dont buy any vehicle new, it is just not practical, there are too many nice used vehicles out there that are well taken care of that someone else has already taken the initial beating on. My advice is to take a step back, take a deep breath, and realise that you are not making a rational decesion.

Grant S · Mar 25, 2005

Re: Boat loans... Any suggestions?

The rule of thumb I follow is: ' Dont borrow for depreciating assets.'

Terry H · Mar 25, 2005

Re: Boat loans... Any suggestions?

Listen to these guys Homerr, the know what they speak. Buy a boat that's already depreciated, or better yet, build your own...Chief

rolmops · Mar 27, 2005

Re: Boat loans... Any suggestions?

The idea of a home equity loan is very seductive.But do you really want to put your home at risk so you can have a nice boat???????

jtexas · Mar 27, 2005

Re: Boat loans... Any suggestions?

After 15 years, you are basiclly going to pay for that boat twice, if not three times.

That logic doesn't work from a strictly financial point of view. You still pay for the boat once. The interest charges are for the time value of money. Of course all of the following assumes that you've made an irrevocable decision to buy a $35k boat. The only reason to borrow instead of paying cash is if you have better uses for your cash than spending it on a boat. Okay, maybe you don't have $35k cash but assume you could get it, by selling your house. Then your decision would be, do I use the $35k buy my house back & borrow to get a boat, or spend the cash on a boat and live in a cardboard box under the overpass? (I know, there are alternatives between those two extremes, but let's just pretend I analyzed them all.) At any point during the term of the loan, from the second month through the 179th, you always have the choice of taking your available cash (or getting some by selling off assets) and paying off the loan. So, in effect, every month you face a new decision: sell the house & pay off the boat, or keep both? Only the amounts change. That's a silly way of putting it, but, if you had to liquidate a $35k investment earning 8%, or else get a boat loan at 6%, you would effectively realize a 2% return by borrowing instead of paying cash. Get a five-year loan instead of a 15, the decision is still the same, it's a question of allocating your monthly cash flow. Use it to pay off a loan faster, or to buy groceries? The fact that the loan is secured by the boat is a little more complicated because then you can't cash out the boat without paying it off, but if you keep the boat that is a moot point. You may also face some risk of loss if the boat gets totalled but only insured for the boat value & the loan is higher. But I believe that is an insurable risk, check with your agent. All that being said, "strictly financial" isn't the only point of view and not always the right one for everybody. Only you will know for sure.

Realgun · Mar 27, 2005

Re: Boat loans... Any suggestions?

Never ever get a loan longer than 5 years as it really hurts you more than you know.

Fly Rod · Mar 28, 2005

Re: Boat loans... Any suggestions?

A lot of good informitive reading!!!! Seems like everybody assumes that everyone has cash to buy a boat!!! I see a lot of people signing on the dotted line at the boat show!!! Lets assume that in order to puchase a boat for an X number of dollars and your way to purchase is through a loan!!! Would you pay the 10 plus percent that these boat dealers or banks want and you can't deduct it from your taxes or if you own your house outright, would it be best to get an equity loan at 4-5% over an 8 year term which can fluxuate that you can also tax deduct????

jtexas · Mar 28, 2005

Re: Boat loans... Any suggestions?

If you consider nothing but the numbers, home equity will always be the best among all your loan choices. Low interest rate and tax deductibility will always trump all other factors (unless you get one of those crazy 0% loans or something). But consider whether you want to encumber your equity. Your home improvement/remodeling choices will be limited. If you need to move for some reason your new home purchase budget will be limited. If home equity is your biggest (or only) asset, and for lots of people it is, then you are going to be in real trouble in the event of some big emergency, like if you need to post a $50k bond for your teenager or something. just think about it.

mattttt25 · Mar 28, 2005

Re: Boat loans... Any suggestions?

just my opinion... if you need to finance a $35K boat over 15 years to be able to make the payments, you can't afford the boat. the reasons the banks won't offer it are mentioned above. the boat won't be worth $23,000 in 5 years, which is what you'll still owe. see where the bank is at risk? you may be able to find a 10 yr loan on that money, but i would still recommend against it. 15 and 30 yr boat loans happen all the time and are offered by all banks, but you're talking about all the boats that cost $100,000 and more. the home equity loan is the way to go if you must have the boat. or better yet, refi and pull out $35k in equity. benefits are obvious, you write off the interest. but just asking the question makes me think you should lower your sites on the boat price. again, didn't mean to offend.

JasonB · Mar 28, 2005

Re: Boat loans... Any suggestions?

Matt, I think you just put in plain text what I fell I was beating around the bush with. FlyRod, speaking for myself, I make no assumptions about anyone's cash flow. I can only speak from my experience. Right before my Wife and I were married, someone gave us tickets to the Dave Ramsey personal Finance course (www.daveramsey.com). We were already part of the way where he teaches as both of us were working on Business degrees at the time. Long story short, we haven't made a car payment in 6 years nor have we EVER had a fight about money. We boughta house a few months after our wedding. When we sold it in October, it had been paid for 6 months. We earned and saved every penny except for 5k of it that was an inheritance. In that time, we have paid cash for 3 vehicles, two older boats, and a few other "toys" or wants. Granted, we were dinks at the time (dual income, no kids), but that has now changed. Before our daughter was born, my wife was able to walk from her stressful job. She now teaches a sport 2hrs a week for something to do the get out of the house for a bit. Even down to my income, which isn't that high, we are able to be fairly comfortable. We are saving for the next car replacement now. We should be ready to go buy the next slightly used vehicle in about 2 years. Neither of us can stomach the idea of a car payment. Now do we use credit cards. It's amazing what you have left over when the bank doesn't get 8-12% of your cash. I drove a $500 car for 3 or more years for us to save for that first paid-for vehicle. For that one, I still remember the look on the sales guy's face as he stumble to say "Let me get my manager" when we walked into his office after test driving 2-3 cars. We walked in and said "We'll take the blue one" as the check hit the desk. One other thought, when looking with cash, you can often get a better deal. The last car purchased for my wife was on the lot at 14,900. We wrote the the check for 11,400 out the door. My truck (different dealer) had a sticket in the neighborhood of 21-22k. I wrote the check for 17,500. It was just traded in and it wasn't out on the lot yet, the sales guy knew what I was looking for and called me. The cost of the truck new 2yrs/40k miles before....$37,000. Now that's a depreciation hit for ya. Glad that wasn't out of my pocket! Boats work the same, but I sometimes think they depreciate faster. We are far from wealthy. I want my children to understand, by example, that you can have what you want if you are patient and work for it. Contrary to popular belief, it's NOT necessary to have car payments or have house payments for 60 years. We've had one home paid for and its sale let us buy this one 2/3 paid for AFTER fees. We bought something we could pay off in 6-7 years. If that works out as we hope, we will have no payments on anything in 7 years or so when my the kids are in school and the wife can go back to work. That is going to be FUN! Also, I want to retire from my VERY high stress career by 52 to something less stressful, so I don't die of a stress induced heart attack. That gives me 22 years to get there....

Fly Rod · Mar 28, 2005

Re: Boat loans... Any suggestions?

Not questioning any of these replies Jason!! They are all good responses!!!! I don't know how a young person could aford a new boat, if they are carrying mortgage, any kind of a car payment,monthly normal bills with the average house around here 450 thou!!! But ya still see people signing on that dotted line at the boat show, so someone is doing loans!!!! Even seen one boat for sale, no price, just a sign saying 500 bucks a month, I wonder if anybody bought the bought!!! What do ya do for work that is so stressfull????

JasonB · Mar 28, 2005

Re: Boat loans... Any suggestions?

Sorry FlyRod, looking back at your post, I mis-read it, you have my apology. I wasn't trying to bash you either, just explain my point of view, which I now realize I wrote a small book on -sorry folks. I'm a Network admin for a moderately large private company. Coupled with being a Type A personality, and being from a family that loses most male members to sudden heart attacks, I want out of this career before my body self destructs. I may not retire at 52, but I want to move to something I can relax at more. The trend of sales these days is not to tell anyone the price, just the monthly payment. The Truth-in-lending statement is flashed by and the sum of payments is buried in the fine print. You don't even want me to get started on credit cards. We facilitated a class in which people were to bring in their credit cards when they were ready to get ahead. We had one lady bring in 12 cards I think. Everyone had at least 2-3. You can't make headway making paymentys on stuff, esp. stuff you can't afford. If you make 50k/yr, I don't think you have any business trying to buy a 100k boat. I won't get into what I make, but I will say that when we bought our "new" house 6mos ago, It scared me how much we could borrow. I've been in my profession for 10 years and work full time. My wife stays at home with the baby. We were approved to borrow 215k on a house! That was after we made the "downpayment" of what we sold our paid for house for. There is no way on earth I woul spend that much on what I make. I wouldn't borrow that if my wife was still working.... That is ludacris! we borrowed less than 25% of that so that we can still save money each month to make sure we can pay for items like cars without debt. I definetly catch your point on housing costs and how families starting out have a challenge ahead of them making ends meet. Unfortunately, too many think that they "need" or "deserve" those two 30k vehicles and that $400k house they can't afford. To make it work, they have no invented the Interest Only mortgages. I'm sure banks love those. I live 30 miles from my work because we feel the houses in the areas closer are way out of our reach while still achieving our retirement goals, the things we want, and the things we want for our kids. The commute is something I was willing to enfure for other things. Now gas prices are going to take a small chunk of that.

jtexas · Mar 29, 2005

Re: Boat loans... Any suggestions?

JasonB, you got started on the right track and stayed on it. Alls I can say is, congratulations. If anybody doubts the wisdom of how Jason is handling his personal finances and needs to hear the flip side of the coin I can tell you. Get yourself into unsecured debt early, you get the double whammy of trying to pay cash for everything while paying off debt, before you hit retirement. I still got 20 years & I just hope I can make it. Excuse me, I got to go practice "Welcome to Walmart" in three languages.

levittownnick · Mar 29, 2005

Re: Boat loans... Any suggestions?

Suggestions on boat loans. Never ever lend your boat (or your wife).

Boat loans... Any suggestions?

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