financing a new boat

[amynbill]

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.

I'd never take personal offense on some bulletin board, it is a discussion imo. I hope others would feel the same on comments I would make. Please dont think on it at all.

I agree with you on the frivolity of many people. I just dont get it. My company is in the city, and I cant tell you how many times I see a Mercedes with custom rims in a driveway of a home where the car payments are obviously higher than the home (or rent) payment. And this is in a neighborhood where you probably wouldnt want to raise your kids. Or the guy who HAS to have a flat screen tv and puts yet another charge on an escalating Visa card balance while only being able to make minimum payments.

Poor, poor, poor financial decisions.

It is common sense, for the most part on being healthy financially. It also takes planning ahead, which is the most overlooked part of it all.

And lastly, it needs to fit your very unique situation. Every single one of us has a completely different situation, regardless of similarities. Too many variables to plan for anyone else (which is why if you have a "financial advisor" you take what they say as a base, but ultimately plan your own direction).

I just dont agree when the seeming answer to anything you want to purchase needs to be done in one way "pay cash". It will be difficult to create wealth in this manner most of the time. Especially if you understand or own a business and learn to leverage.


Everyone's milage may vary. I have found what works for me, and I stick with a plan. The result has been extraordinary.

 

[amynbill]

Re: financing a new boat

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.

​

Absolutely correct IMO. It allows for more options. Just ALWAYS be sure there is no prepayment penalties! I would never take a longer duration loan that had any restrictions.

It is easier to make a $300 payment if in financial trouble than a $600 payment. Nice option.

People seem to only look at the duration of the loan, and not the options of the loan to pay it off in the same timeframe as someone who took a 5 year loan vs. a 10 yr loan. No one forces you to pay it off over 10 years...heck, pay it off in a year if you can.​

 

[Chip73]

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.

That is the point allot of people don't realize. I bought my boat on loan, 12 years 1.9% cant beat it. I could pay for my boat right now with cash if I choose too but I would rather have the 15k in the bank. Owning my own boat and having no liquid assets is insane. It is a matter of spreading my money wisely, savings, retirement and life insurance. I like liquid assets (CASH)

 

[BamaAlum97]

Re: financing a new boat

That is the point allot of people don't realize. I bought my boat on loan, 12 years 1.9% cant beat it. I could pay for my boat right now with cash if I choose too but I would rather have the 15k in the bank. Owning my own boat and having no liquid assets is insane. It is a matter of spreading my money wisely, savings, retirement and life insurance. I like liquid assets (CASH)

My guess is that the 15K in the bank is earning something greater than 1.9% If that is true, there is no reason to pay off that boat early. Cash loses value over time...if I can give you 15K today...OR keep it...earn some interest on it...and then give you 15K 5 years from now...I will take that deal every day...

I did stay at a Holiday Inn Express last night!!!!

 

[Chip73]

Re: financing a new boat

My guess is that the 15K in the bank is earning something greater than 1.9% If that is true, there is no reason to pay off that boat early. Cash loses value over time...if I can give you 15K today...OR keep it...earn some interest on it...and then give you 15K 5 years from now...I will take that deal every day...

I did stay at a Holiday Inn Express last night!!!!

You are correct. Over 5k my money market goes up in earned interest. Plus my shiny new paid off boat does not pay for braces, new HVAC etc... that may jump up when least expect it. I could have bought used but I am the type to know what I am getting into and not have to guess how well the last owner did or did not take care of my boat. I know how I take care of it.

 

[bomar76]

Re: financing a new boat

Having a shiney new boat in the driveway that you have to make 180 payments on (15 years) is NOT "creating wealth"

 

[BamaAlum97]

Re: financing a new boat

Having a shiney new boat in the driveway that you have to make 180 payments on (15 years) is NOT "creating wealth"

If your cash in the bank is earning more interest than you are paying on your loan...then Yes...yes it is.

 

[Chip73]

Re: financing a new boat

Having a shiney new boat in the driveway that you have to make 180 payments on (15 years) is NOT "creating wealth"

Having 15k in the bank making 7% is. Having 15K in a new boat that lost 35% of its value when I drove it off the lot is not. Paying 180 payments at 1.9% is easy. Of course you have to have excellent credit to that, some people do not.

 

[amynbill]

Re: financing a new boat

Having a shiney new boat in the driveway that you have to make 180 payments on (15 years) is NOT "creating wealth"

Depends on what you are doing with the money

And you certainly can create wealth while making 180 payments if you understand the "game" and how it is played. It works for many people I know who most certainly could pay for a boat in a matter of a couple of years or less. I dont recommend making 180 payments, as it becomes a severe asset reduction in the end, but it can still work. Id rather these people take the 15 (12 or 10) year loan and pay it off asap than take the duration.

 

[AguaSki]

Re: financing a new boat

Back in 2005 I bought my first boat for 5K. I used an unexpected bonus to pay cash for the boat. The boat is a 1978 Glastron in perfect cosmetic and structural condition. A pic of the boat is below. After buying the boat I was bitten by the boating bug and I found myself at the 2006 Boat Show looking at the shiny new 2006 boats. Wow, I loved how those new boats looked compared to my old boat. I came up with a plan that will allow me to get a 2006 (or newer) boat by 2011. To accomplish my goal, I have $60 dollars deducted out of my bi-weekly paycheck, and deposited into a Short-Term Corporate Bond fund. The growth has been slow and steady. Today the account has about $4k in it. I figure the account balance will be nearing $8K in 2011. The growth of the account balance, combined with the equity in my 1978 Glastron, and a likely bonus in 2011, should be about right to allow me to pay cash for one of those shiny 2006 boats I saw at the boat show. Of course a 2006 boat will then be 5 years old, and less shiny than when I first saw it, but thats ok. For the present time, I still enjoy my 30 year old Glastron. I was just out in the Glastron yesterday, and I had a great time. I was all smiles yesterday because I was having a great time on a boat that is paid for, and I have the knowledge that a plan is in place that will allow me to be able to upgrade my boat in 3 years.

My plan won't work with most people because they can't see past tomorrow. I wish more people set financial goals and then saved for them. To often people want the instant gratification that consumer debt offers, and then they look for a government program to bail them out of their bad decision.

 

[amynbill]

Re: financing a new boat

Back in 2005 I bought my first boat for 5K. I used an unexpected bonus to pay cash for the boat. The boat is a 1978 Glastron in perfect cosmetic and structural condition. A pic of the boat is below. After buying the boat I was bitten by the boating bug and I found myself at the 2006 Boat Show looking at the shiny new 2006 boats. Wow, I loved how those new boats looked compared to my old boat. I came up with a plan that will allow me to get a 2006 (or newer) boat by 2011. To accomplish my goal, I have $60 dollars deducted out of my bi-weekly paycheck, and deposited into a Short-Term Corporate Bond fund. The growth has been slow and steady. Today the account has about $4k in it. I figure the account balance will be nearing $8K in 2011. The growth of the account balance, combined with the equity in my 1978 Glastron, and a likely bonus in 2011, should be about right to allow me to pay cash for one of those shiny 2006 boats I saw at the boat show. Of course a 2006 boat will then be 5 years old, and less shiny than when I first saw it, but thats ok. For the present time, I still enjoy my 30 year old Glastron. I was just out in the Glastron yesterday, and I had a great time. I was all smiles yesterday because I was having a great time on a boat that is paid for, and I have the knowledge that a plan is in place that will allow me to be able to upgrade my boat in 3 years.

My plan won't work with most people because they can't see past tomorrow. I wish more people set financial goals and then saved for them. To often people want the instant gratification that consumer debt offers, and then they look for a government program to bail them out of their bad decision.

You made a plan and are sticking to it...congrats! That is a great way to work the money in your favor. Foresight is half of creating wealth

We wanted a brand new boat....thats just the way we are with things. Cars, quads, etc..We got to pick exactly what we wanted, with specific options and colors. Plus, we are the ones who get to maintain from the start. I just love that feeling. We wil have this boat for years, no plans (or need at all) to go up a size. Theoretically, we could have this boat for 20 years if we wanted to (though Im sure we will get something new before then...new technology etc...)

As well, we only bought this boat specifically for a large lake near our new home, with an occasional trip to Winnipisaukee and some other New England lakes.

For us, plunking down 30 somthing k is foolish when that money has been put to generate income and returns which FAR out paces any finance "waste" .

 

[Zamboni]

Re: financing a new boat

Financial planners don't earn any commisions if you buy a boat or other toy instead of stocks through them. Many people upside down on their homes because they invested the 'equity' of their home in the stock market on financial planners urging.

 

[yourkiddin]

Re: financing a new boat

Man I guess i have touched on a very sensitive subject. Truly amazed at the response,I have enjoyed reading these replys. The whole reason i guess i even ask will probably get even more response. First let me say that I love to bass fish. Was given a 15 ft glastron that with some work had it running in no time. Put a trolling motor,platform and bass seat on it. Now it has ugly interior ,but it will go anywhere on the lake. Problem is my son and wife are like scared to death on it. They say that Im trying to scare them on purpose. But im really not,when i give it throttle to get on plain they tell me to slow down. It runs around 38 to 40, even if I go like 20 miles an hour,believe me they are ready to go home and im ready to take them. Anyway one day my wife says lets get a pontoon. Its slow and probably relaxing and i could probably be ok with a pontoon. but other concerns are what if they still dont want to go out with me. Then I would be stuck with a pontoon instead of having a bass boat for my enjoyment.

 

[amynbill]

Re: financing a new boat

Financial planners don't earn any commisions if you buy a boat or other toy instead of stocks through them. Many people upside down on their homes because they invested the 'equity' of their home in the stock market on financial planners urging.

Who said anything about financial planners or care if they get commissions?

 

[amynbill]

Re: financing a new boat

Man I guess i have touched on a very sensitive subject. Truly amazed at the response,I have enjoyed reading these replys. The whole reason i guess i even ask will probably get even more response. First let me say that I love to bass fish. Was given a 15 ft glastron that with some work had it running in no time. Put a trolling motor,platform and bass seat on it. Now it has ugly interior ,but it will go anywhere on the lake. Problem is my son and wife are like scared to death on it. They say that Im trying to scare them on purpose. But im really not,when i give it throttle to get on plain they tell me to slow down. It runs around 38 to 40, even if I go like 20 miles an hour,believe me they are ready to go home and im ready to take them. Anyway one day my wife says lets get a pontoon. Its slow and probably relaxing and i could probably be ok with a pontoon. but other concerns are what if they still dont want to go out with me. Then I would be stuck with a pontoon instead of having a bass boat for my enjoyment.

You do what the family in general decides on as long as you think that everyone WILL use it like you said.

You can still fish off a pontoon, I would think?

I thought a pontoon was a pain to trailer around? My parents have one but they live on a river. Do you have somewhere to dock it?

 

[redfury]

Re: financing a new boat

I'd be more concerned with being able to load the boat by myself if you plan to fish off whatever it is you buy by yourself. If that's the case, perhaps a smaller pontoon will do the trick. My friend that is loosing his current boat plans to buy a 16ft pontoon later on for the family. He'd rather putt putt around on a platform that the kids and wife will be happy to go the lake on than try to deal with them on a pure fishing boat ( " Dad, I'm bored! I'm uncomfortable!" ).

I certainly agree with the comments about financing a boat at a lower interest rate than you can earn with money in the bank. You shouldn't take away from an emergency fund to pay for anything that is truly unnecessary.

 

[jspringator]

Re: financing a new boat

I still have my 1989 Bayliner, that I bought new, financed, and have always stored indoors. Long term ownership equates value.

 

[BamaAlum97]

Re: financing a new boat

Back in 2005 I bought my first boat for 5K. I used an unexpected bonus to pay cash for the boat. The boat is a 1978 Glastron in perfect cosmetic and structural condition. A pic of the boat is below. After buying the boat I was bitten by the boating bug and I found myself at the 2006 Boat Show looking at the shiny new 2006 boats. Wow, I loved how those new boats looked compared to my old boat. I came up with a plan that will allow me to get a 2006 (or newer) boat by 2011. To accomplish my goal, I have $60 dollars deducted out of my bi-weekly paycheck, and deposited into a Short-Term Corporate Bond fund. The growth has been slow and steady. Today the account has about $4k in it. I figure the account balance will be nearing $8K in 2011. The growth of the account balance, combined with the equity in my 1978 Glastron, and a likely bonus in 2011, should be about right to allow me to pay cash for one of those shiny 2006 boats I saw at the boat show. Of course a 2006 boat will then be 5 years old, and less shiny than when I first saw it, but thats ok. For the present time, I still enjoy my 30 year old Glastron. I was just out in the Glastron yesterday, and I had a great time. I was all smiles yesterday because I was having a great time on a boat that is paid for, and I have the knowledge that a plan is in place that will allow me to be able to upgrade my boat in 3 years.

My plan won't work with most people because they can't see past tomorrow. I wish more people set financial goals and then saved for them. To often people want the instant gratification that consumer debt offers, and then they look for a government program to bail them out of their bad decision.

Sounds like a great plan...hope it works out for you.

 

[BamaAlum97]

Re: financing a new boat

Man I guess i have touched on a very sensitive subject. Truly amazed at the response,I have enjoyed reading these replys. The whole reason i guess i even ask will probably get even more response. First let me say that I love to bass fish. Was given a 15 ft glastron that with some work had it running in no time. Put a trolling motor,platform and bass seat on it. Now it has ugly interior ,but it will go anywhere on the lake. Problem is my son and wife are like scared to death on it. They say that Im trying to scare them on purpose. But im really not,when i give it throttle to get on plain they tell me to slow down. It runs around 38 to 40, even if I go like 20 miles an hour,believe me they are ready to go home and im ready to take them. Anyway one day my wife says lets get a pontoon. Its slow and probably relaxing and i could probably be ok with a pontoon. but other concerns are what if they still dont want to go out with me. Then I would be stuck with a pontoon instead of having a bass boat for my enjoyment.

I was in a similar situation...my wife is scared to death to be in my fishing boat. She loves to be on the water...just not in my boat. We very recently financed a new Tahoe. The key for us is that we looked at our budget and savings to make sure that it was a doable situation. We wanted to buy last summer, but decided that this year was better.

There is no single plan that works for everyone. Just make sure you have a plan.

 

[ebry710]

Re: financing a new boat

I figure that time determines method. If you desire to boat and it is a passion, not for a day, but for a decade, then method for buying the boat is not an issue. What you buy is. Many boats can be bought second hand and they will give you the same thrill as a new boat. Spending $25,000 out the gate and having to borrow it doesn't make sense. Whalers, Bayliners, yachts, aluminum fishing boat, kayak and canoes all have a place in boating. Determine what make sense to you and then jump into the big payment.