How should I finance a boat?

[kbomb]

Re: How should I finance a boat?

A lot of folks here are more conservative than I would have guessed. I'm in the no debt club too. I would save up and pay cash. You'll likely make a better purchase decision if you pay cash instead of financing. It will force you to think more about what you really want. You also may find that you'll enjoy your time on the water more knowing that you aren't making payments.

Good luck and have fun in the search!

 

[BWR1953]

Re: How should I finance a boat?

I saw the CEO of Regal boats on the Fox Business Network this afternoon. He said that even his best customers with PERFECT credit scores were unable to obtain boat financing.

And later, on Happy Hour, Rebecca Diamond (obaby obaby!) was saying that when she tried to refinance her HOME that the bank insisted that she pay down the balance by $160k and that the finance ratio had to be 65/35 instead of the expected 80/20! Ouch!

Getting financing for a boat is gonna be TOUGH!

 

[skargo]

Re: How should I finance a boat?

Not everyone wants to own a 30 year old $1500 boat, or spend boating time repairing it.

Not everyone with an old boat spends time repairing it. Some people own old vehicles because they actually know how to maintain them and how to turn a wrench when needed.

And not everyone wants to be up to their ears in debt, different strokes for different folks,

 

[OJ_Simpson]

Re: How should I finance a boat?

I disagree with alot of the advice given. Assuming you have good credit, you should be able to obtain a new or used boat loan for 5.5% to 6.0%. I guess I'm little more bullish than the rest, but i think you should hold onto your cash, and invest the saved boat funds into a reserve type account. In todays market you should be able to find a very good 2-3 year old boat for around $10,000. Financing $8,000 at 6% for 8 years will cost you about $100 per month and about $2,000 in interest for the life of the loan. Investing the $8,000 reserve funds, and assuming you can earn 6% in the market which i believe is obtainable, you will earn over $4,500 in investments over the life of the boat loan. Considering the health of many of the boat dealers, using a bank or credit union adds a layer of security to the transaction. The key is to be certain you have the funds in reserve, in addition to the necessary descretionary income to afford the loan, maintenance costs, and storage fees.

 

[BWR1953]

Re: How should I finance a boat?

I disagree with alot of the advice given. Assuming you have good credit, you should be able to obtain a new or used boat loan for 5.5% to 6.0%. I guess I'm little more bullish than the rest, but i think you should hold onto your cash, and invest the saved boat funds into a reserve type account. In todays market you should be able to find a very good 2-3 year old boat for around $10,000. Financing $8,000 at 6% for 8 years will cost you about $100 per month and about $2,000 in interest for the life of the loan. Investing the $8,000 reserve funds, and assuming you can earn 6% in the market which i believe is obtainable, you will earn over $4,500 in investments over the life of the boat loan. Considering the health of many of the boat dealers, using a bank or credit union adds a layer of security to the transaction. The key is to be certain you have the funds in reserve, in addition to the necessary descretionary income to afford the loan, maintenance costs, and storage fees.

And at the end of that 8 year loan, his boat will be worth $2,500, resulting in a net loss of some $4,000! LOL!

 

[truckermatt]

Re: How should I finance a boat?

I say that is you can afford the payment and have a backup plan... go for the loan.... the interest over the loan will only cost a little... if you go the entire term.... butyou will have a newer bigger boat that YOU enjoy..... now just something that you had the cash for..... Your supposed to ENJOY your toys....

If you have the cash, great... but not every body has the cash...

I financed my boat for $5000.... but i will only have the loan open for 8 months (or less) of the 36 month loan.... and if i went the entire term, it would cost me $300 for interest..... not bad..

I could have waited for more money on hand, but the summer was going by fast, and i wanted to boat, and i know my money situation

 

[sickwilly]

Re: How should I finance a boat?

I am going to assume you are adult enough to make up your own mind whether not not debt is a good financial tool for you to use at this point in time in your life, and just address your original question.

There are plenty of options for financing a used boat, most requiring 10% down and many with payoff terms that are pretty long. When I was looking, USAA, our insurance company had good terms. Start with who you do most your banking with.

Unless you recently bought your house, you can also tap your home equity line of credit. Lastly, if you have a long term, good history with your credit card company, you might even use a credit card check.

I would definitely recommend going for used since you can often pick up a boat after the depreciation, along with many of the goodies you will need to buy right off the bat, and still have a newer reliable boat to use.

For example, my boat was 3 year old with only 14 hours on it, and it came with everything I needed to go boating. I compared my options at the time and arranged a credit card check wired to my bank. I paid a little more up front because of the minimum fee, but I locked in a 3.9% APR for the life of the balance. Set up automatic payments and never miss one. This also gave me the option of paying it off anytime I wanted to. It was a better deal than I could get anywhere else.

I am not of the wait till you can afford to buy with cash camp. We sold our last family boat when I was 19. I stayed in school forever earning an advanced degree, then had kids. If it could do it again, I would have sacrificed other things to get my family back into boating even earlier. I was gone from boating too long.

Its all about balancing your priorities. Your kids will only be this age once. Also, if you love water sports like me, your body will only work against you more and more each year you wait.

All that being said, renting a boat or a local boating club are great option too, and do not include financing. Also, look for someone to own the boat with. I tried with a couple of people. One of them has since asked to now buy into half, but its too late for me -- I am already too attached to my boat to share it.

That's my $0.02

 

[Lion hunter]

Re: How should I finance a boat?

I disagree that getting a fixer upper takes time away from family. Have them help and join in the fun. It sucks to make payments on something that is only used part of the year.

 

[grego]

Re: How should I finance a boat?

A reasonable thought"" The market is down right now, if you are not with a credit union,you should sign up with one!
"I" like some others do NOT! buy unless we can pay for it outright ,I hate payments. If you want a boat""". STOP! looking for one this late in the season, everyone wants NEW boat prices. "The ecom. at THIS point is bad enough that this winter the toys are going to have to go.. I have a place on KY lake and see new "for sale" signs go up almost every other week. "Save your money,"WORK your a*ss off". get into a credit union,shop smart and you will buy a much better boat than you had planned to buy,for less money!!!"

 

[skargo]

Re: How should I finance a boat?

People used to work and save for the luxuries in life, but now, people think they should finance even toys. No wonder this country is in the situation it's in.

Oh well, I am secure knowing we are debt free and REALLY enjoying life.

 

[BWR1953]

Re: How should I finance a boat?

Well alansauce, what have you decided to do?

 

[Bilgamesh]

Re: How should I finance a boat?

Go here to learn everything you need to know about financing:
http://www.daveramsey.com/

 

[sickwilly]

Re: How should I finance a boat?

People used to work and save for the luxuries in life, but now, people think they should finance even toys. No wonder this country is in the situation it's in.

That is an overly simplistic analysis of why this country is in the situation it is in. I am glad the debt free life-style works for you. Many of us can and do use finance responsibly.

The vast majority of people who use finance as a financial tool pay in full, on time, each and every month. People who had no business using it as a tool were being given credit that they did not deserve and any reasonable banker could see that they could not pay back. The actual percentages of these people, when compared to the overall bulk of those using finance are really small.

Dave Ramsey is great, he is even a boater! His program is wonderful, but not for everyone, the same way abstinence is not the best program for everyone who ever consumes an alcoholic beverage.

If the thread had started saying something like I can't qualify for a loan but need to finance a boat, then I would be in total agreement with you. It did not. It simply asked how people finance boats.

 

[Bilgamesh]

Re: How should I finance a boat?

Sickwilly, IMHO, you should re-read his question, and re-think chastising those who offered an opinion. Specifically he said:

My family isn't the most wealthy family...

Should I finance it...

If you have any tips on purchasing a boat, it would be very appreciated...

All the posts I saw offered appropriate commentary, even if they did not address every aspect.

My experience with forums is that most people are looking for information AND dialog with persons of a shared interest. If it was just about information, they would probably just go to the search button or Google.

Back to the original poster's question:

Alansauce, I bought a $7000 boat a few weeks ago, and saw several priced lower that were serviceable if not sexy. I would recommend you buy a used boat out of pocket, and learn more of what you want in a boat before you take on a note. You can then sell the used boat and use the money as a down-payment on the new one.

 

[south texas]

Re: How should I finance a boat?

Another option, not sure if was mentioned, would be to rent.. Some people do not use the boat enough to justify a payment. Maybe you'll only go out a few times per season, factoring all of the expenses associated with these few trips, you will probably be money ahead to rent. Just a thought..

We paid cash for our boat, but I don't mind working on it if needed..

Good luck!

 

[sickwilly]

Re: How should I finance a boat?

Sickwilly, IMHO, you should re-read his question, and re-think chastising those who offered an opinion. Specifically he said:

I am sorry if it sounds like I chastised anyone. That was not my intention. My intention was to disagree.

"My family isn't the most wealthy" could means the guy has hundreds of thousands in the bank but isn't a millionaire, or has nothing in the bank with ruined credit. I assumed he was somewhere in between.

I will stick with my point -- financing is a viable and practical option for buying a boat if one can use it responsibly.

 

[Bilgamesh]

Re: How should I finance a boat?

...financing is a viable and practical option for buying a boat if one can use it responsibly.

Point taken! I agree.

It can come off as a sort of "do as I say and not as I do" philosophy. Financing has risk, but I have certainly taken on my share. You have to weigh the risk against the benefit.

Alansauce, you are right, the kids are only young once. Though I believe your itch could be scratched with a used boat, if you can't buy one out of pocket, financing may be worth the risk to optimize that most valuable commodity, i.e. lasting memories of quality family time.

On the other hand, while kids have a short childhood in the big scheme of things, they also have a short attention span. You could be paying for a boat for a long time that the kids have already given up for the next video game. FWIW

 

[devildog1679]

Re: How should I finance a boat?

I disagree with alot of the advice given. Assuming you have good credit, you should be able to obtain a new or used boat loan for 5.5% to 6.0%. I guess I'm little more bullish than the rest, but i think you should hold onto your cash, and invest the saved boat funds into a reserve type account. In todays market you should be able to find a very good 2-3 year old boat for around $10,000. Financing $8,000 at 6% for 8 years will cost you about $100 per month and about $2,000 in interest for the life of the loan. Investing the $8,000 reserve funds, and assuming you can earn 6% in the market which i believe is obtainable, you will earn over $4,500 in investments over the life of the boat loan. Considering the health of many of the boat dealers, using a bank or credit union adds a layer of security to the transaction. The key is to be certain you have the funds in reserve, in addition to the necessary descretionary income to afford the loan, maintenance costs, and storage fees.

Agreed, plus you can't forget the value of those great days you had with your family. To me that is priceless.

And at the end of that 8 year loan, his boat will be worth $2,500, resulting in a net loss of some $4,000! LOL!

True but the memories with family that the 4K brings will be pricless.

 

[boostnm3]

Re: How should I finance a boat?

I agree with the people saying save up the money and buy a boat. If you dont have the money up front for something, then you cant really afford it. I paid for my boat in cash. Didnt have to finance a dime and im not rich but i am debt free so i can do that. If you like to use the banks money to buy things, remember its never really yours till you pay it off. As long as you can stay debt free, you can afford to buy things outright. If you finance everything and have credit card debt, you will always be in the hole wondering when it will end. Its a never ending cycle, dont get used to it. Now financing a house is a different thing altogether. Boats are pleasure not needs. I WOULD NOT finance pleasure.

 

[jetter2]

Re: How should I finance a boat?

I agree with the people saying save up the money and buy a boat. If you dont have the money up front for something, then you cant really afford it. I paid for my boat in cash. Didnt have to finance a dime and im not rich but i am debt free so i can do that. If you like to use the banks money to buy things, remember its never really yours till you pay it off. As long as you can stay debt free, you can afford to buy things outright. If you finance everything and have credit card debt, you will always be in the hole wondering when it will end. Its a never ending cycle, dont get used to it. Now financing a house is a different thing altogether. Boats are pleasure not needs. I WOULD NOT finance pleasure.

So you don't own your house or car right?

Financing is a great option for those of us that can responsibiliy use it. It offers somewhat of a "pay as you go" option so you can keep your liquidity tied up in more profitable vehicles. I plan on financing about half of my first boat, just because I want something I'm going to keep and use for a few years.

Personally, Id rather finance the big toys (boats, cars, houses) and pay cash for everything else (vacations, televisions, home stuff etc). I don't want $20k of my cash tied up in a car or boat that could take a while to move, id rather pay a few points in interest for the "privilege" of using someone elses money, if you have good credit its really hard to turn down financing.