Financing older (< 2001) Nautiques

[TravisFling]

RE: Re: RE: Re: RE: Re: RE: Financing older (< 2001) Naut

Scag is right. In the big picture of financial gain SOMETIMES it makes sense to finance. I don't think the floor is going to drop that quickly to put you out of the picture on a 15-20k boat. You should anticipate putting at least 10% down on any "luxury" item. Credit unions are great, but I would also look at a smaller (400-500 million) local bank that's doing well, which should have similar terms/rates to a credit union. Just find one that's not in trouble. There are plenty that are doing great, who have managed their portfolio's well. Assuming you have top tier credit (740+) I would expect to pay 7-8% with 10% down, and be able to go 120-144 months. For a smaller loan amount (under 25k) you might pay a higher rate, maybe even double digits. You can also inquire with an actual marine financier like www.boatloan.com - (ask for JR) and he can give you the skinny. I would definately recommend a local bank, or joining a credit union.
The deal that Scag is talking about is that if you have 25k and could spend it on a boat, versus an appreciating asset is a great thought, just one that needs solidified with actual numbers. That same 25k invested at 10% (3 year annuity - very safe - right now is earning 8%) might net you more money that financing the boat, and I've included a look at some numbers below.
25,000 at a compounding average of 10% over 15 years is 111.347.99
25,000 loan at 8%, paying regular payments costs you 43,000.34 in cash.
This nets you 68.347.65 gain after cash and a boat title.
Or you pay cash for the boat, and pay the payment amount into the same annuity/investment
25,000 nets you a boat title.
Payments into annuity of 238.91 for 15 years compounding at 10% yields 99.021.11 so in that case it's a 30k higher gain.
There's a million ways to figure it out, but there's always one way better than another. Invest early, invest often. A boat, however, is more an investment into my children's smiles and family time, which doens't carry a quantifiable dollar figure.

[mf01]

RE: Re: RE: Re: RE: Re: RE: Financing older (< 2001) Naut

In a good economy, you could net 10%. Right now I doubt you get more than the % of your loan, so it would be better to buy outright.

I say buy toys or luxury items outright, because most people don't have the money to invest or buy the toy. They typically want something they can't afford and finance it. If you can't afford it, finance it. The American way that has gotten a lot of people into trouble.

[bchesley]

RE: Re: RE: Re: RE: Re: RE: Financing older (< 2001) Naut

Life is too short for the schemes and games of leveraging this and that. I thrive on a stress free living. If its paid for and I have the title, thats stress free. I am a 35 year old male with a wife and 7 and 3 three old boys. I am concentrating on raising boys and enjoying their youth as once its gone its gone. We might be different people and that is fine. Common sense though tells me if you have the money to pay for something then just pay for it.

[TravisFling]

RE: Re: RE: Re: RE: Re: RE: Financing older (< 2001) Naut

I hear ya! I actually got my boat because I could pay cash for it, and have the title in hand, even though I'm a finance guy and know the repercussions. The other thing is, you can't guarantee an investment. I know I'm throwing a lot of money at my investments right now and banking on things recovering. If and when they do, I should be sitting pretty. Would I love to have a 2001 SANTE? You betcha. Would I rather wait a year and have a 2001 SANTE Free and clear? You betcha.

[SkiTundra]

Re: RE: Re: RE: Re: RE: Financing older (< 2001) Nautique

This response is not so much for Scag as for others who might be considering financing a boat.

Scag raised the issue of it being better to finance if the finance costs are less than investment income. EG, opportunity cost of money. EG, I'm earning $2 per month on my money so it's OK to spend $1 per month in interest on a loan because I'll still be $1 ahead.

This is a very valid financial plan. But there is more to it. This only works if the investment income is nearly 100% certain and is significantly higher than the cost of borrowing. The cost of borrowing (the interest on the loan) is a 100% sure thing. You will be paying that money out. Investment income is NEVER a sure thing. No such thing. Doesn't exist. However, if I have money invested in something that has an extremely high probability of giving me 8% then borrowing against that at 5% MIGHT make sense.

Remember, that 5% WILL go out of my bank account. How sure am I of that 8% coming in to cover that 5%? And that after taxes and fees that I'll still be earning anywhere near 8%?

Like I said, the cash is there to back it up. But i'm not sinking 15-20 g's in a boat.

This statement alone indicates that getting a boat right now is probably a very bad decision for this person. If you are not willing to pay out $15,000 cash today, why on earth would you be willing to pay out even more, $18,600, tomorrow?

If you do have the cash and you ARE 100% willing to fork that cash over then maybe it's the right time for a toy. At this point you can make a decision if its better to pay cash (likely) or to finance (see above caveats)

Further considerations: The cost to buy a boat is only the beginning and often less than half the cost. Add on insurance, taxes, fuel, toys (skis, etc), maintenance, wear&tear on tow vehicle, storage, marina, etc. There is a reason why financial advisers call boats a black hole.

FWIW, I am a fairly high risk investor. I've worked for startups and about 50% of my investments are in startups. Even as high a risk taker as I am I waited to buy a boat, as much as I wanted one, until I could and was willing to pay cash. And even with fairly high returns on investments and low borrowing raites I did pay cash.

[scag]

JEEZUS, you'd think I was GM factory worker using credit cards and a reverse amortization mortgage to buy a $80K boat. I think we've high jacked this thread to death. Thank you to all of those who provided feedback on the origional question at hand.

Now i'm going to 15 year my 2010 TE out of spite! :twisted: jk Yellow_Flash_Colorz:

p.s.

skitundra, i'm not discrediting what your are saying. I think you bring up valid points and good things to consider when questioning the pros and cons of financing a boat. My point is that financing is not for everyone, but is for some, and can be used positively.

[SkiTundra]

Did you read the first sentence where I noted that my response was not directed at you?

[scag]

Did you read the first sentence where I noted that my response was not directed at you?

ya, but I couldnt help but notice the quote in the middle of your post...seemed kinda contradicting which is why I might have been confused....sorry bud..no hard feelings...

[2gofaster]

I'm with Scag on this. He asked a specific question and some people injected their own personal opinion on financial security into the thread. He didn't ask if it was a good idea to finance a boat or other toy. He asked specifically if banks loan on older boats. Half the people helped and half tried to school him on finances.

[SkiTundra]

mmm, same thing if someone says they want to take their kids surfing behind their stern drive or outboard and are looking for surfboard recommendations. Most people on here will respond that perhaps it'd be a good idea not to do it. Well, the OP wanted to know what board to get to kill his kids, not anything else.

[steve-o]

Man I just financed 16.5k to buy a luxuy item....someone call the finance police.

To the OP:
I used a local Credit Union to finance 16.5k for a '99 SAN. Basically they financed 100%. I paid the remainder cash ($500) as I bought the boat out of state and needed negotiation room. I have high credit score (740+) and was able to to 60 months for 5.5%. You will not get that at ANY bank no matter how local or how well they know you. The Credit Union looked up the NADA or the boat book value and it came in at 21-24k with the trailer so they happily handed me a check. The payment is $320 a month and insurance is $280 a year. One more advantage to the '99 was no taxes in La.

On top of that, if the need arose, is is not that hard to unload a SAN if you aren't under on it. I shopped them for some time and there were several out there that the owners still owed more than the boat was worth. They are still holding those boats and aren't coming down on price. If you do finance it, be sure you can sell it if you needed to. I shy away from new cars and boats for this reason. If you get in a bind, its alot easier and better for your financial health to throw a move quick price on it vs. telling the bank to come pick it up.

[east tx skier]

Financed my first boat, a 10 year old MC for 5 years, spent an extra $75 a month or two later to refinance at 2.9% through the local credit union (also 5 years). I think the original lender would've stretched it out to 12 years (2003). Paid it off early and ultimately sold it for more than I paid for it. Bought a nine year old Nautique with the proceeds. Paid cash with the proceeds from the sale of the first boat. I wouldn't trade the good times my family has spent on the boat for the amount in interest I paid per month (probably less than some people spend on a lunch). I'm not telling someone to go out and finance a boat he can't afford. I'm not telling someone to do anything I do. But in my case, at the time, I was making more than 2.9% in the market. It was the absolute right decision for me.

[Bimmerboyz]

My Credit Union was willing to finance my 1978 for $4500 2 years ago. I financed 2k and put that money in savings for a rainy day. The money in savings turned out to help (a little) on a down payment for my house so it worked out.


Credit Union is the way to go if you choose to finance it