Financing question

[85 Barefoot]

OP, my recommendation on financing would be this: pay enough down and have a short-enough term so that getting upside down is impossible. You may need to do some homework to trend used values but a long term loan virtually assures you'll be upside down at some point thus forcing you to keep the boat if you don't want it, or you'll have to come up with a chunk when it comes time to sell.

[Armyguy]

I highlighted what I said was not true which was this: "Go buy a house..lowest you get right now is 4.75~. Imagine what your interest is on a 30 year loan with that. Unless you have all cash, your gonna get screwed with interest." I pointed out why that's not true. 1) rates are not that high and 2) explained why financing a house (including interest) is not the same as financing a boat. One has tax and loss (or gain) leverage, the other (boat loan) does not. Those are not opinions, those are facts. If someone is still wants to finance a boat for 15 years, knock yourself out, I already said everyone can decide what makes the most financial sense for them. Doesn't mean that justifying financing a boat is comparable to financing a house because it's not.

I don't care how people spend their (sorry, the banks') money, heck keep the economy moving and enjoy life. Doesn't mean that the comparisons are accurate as to boat and home loans.

Ok I did input the wrong interest rate for the home, I put a 4 instead of a 3 which is what I meant. You got me...very in accurate. And my point was not to compare a home to a boat loan. My point was about long term financing ANYTHING. I was simply saying that the longer you finance the more you interest will be, but the lower your payments will be. Everyone's financial situation is different.

Sit back, take a breath, and relax. Don't over analyze stuff... You'll live a longer healthier life to enjoy all of that interest you saved..haha

[85 Barefoot]

Go ahead and draft up a business plan on how you will deliver a 2013 wakeboat to the market for less than 40K and I will be your first investor!

go to your dealer and order a basic A20. Pick it up from the factory and you will come pretty darn close.

[85 Barefoot]

Ok I did input the wrong interest rate for the home, I put a 4 instead of a 3 which is what I meant. You got me...very in accurate. And my point was not to compare a home to a boat loan. My point was about long term financing ANYTHING. I was simply saying that the longer you finance the more you interest will be, but the lower your payments will be. Everyone's financial situation is different.

Sit back, take a breath, and relax. Don't over analyze stuff... You'll live a longer healthier life to enjoy all of that interest you saved..haha

Armyguy, I'm not over-analyzing. I'm pointing out, in the context of your comparison, in which you said you always get "screwed" with interest, that you you don't pay for interest at all on a mortgage. 1) its deductible 2) even if your asset loses value (which in the history of our country we've had a whopping 4 years where that's occurred) the lost basis gets shown as a loss. Seems to be a particularly relevant counterpoint in this thread.

[Armyguy]

Well from what I understand, yes you can write off your interest or a portion thereof for the first 5 years or so with a good return. After that, it decreases over time on the amount you are actually saving...moot point.

I am done going back and forth with you. Everyone has their opinion and is going to do things that is best for them. The way I do things has worked very well for me.

I can see why your post count is so high now. If you feel you want to try to school me in investments, interest, etc. feel free to shoot me a PM instead of cluttering up this thread with politics.

Back to the topic.

Edited April 9, 2012 by Armyguy

[85 Barefoot]

Well from what I understand, yes you can write off your interest or a portion thereof for the first 5 years or so with a good return. After that, it decreases over time on the amount you are actually saving...moot point.

I am done going back and forth with you. Everyone has their opinion and is going to do things that is best for them. The way I do things has worked very well for me.

I can see why your post count is so high now. If you feel you want to try to school me in investments, interest, etc. feel free to shoot me a PM instead of cluttering up this thread with politics.

Back to the topic.

No schooling, just pointing some things out in context of the financial advice being given. I have yet to say anything about politics, that was someone else. Feel free to re-read to confirm that.

OP, check with your local dealer. Mine has connections with several institutions, usually allowing better terms than cold-calls to banks etc. IF you anticipate you will use that dealer for service might be a good way to start a relationship.

[Soon2BV]

is paying interest bad? sometimes.

is paying cash the best? sometimes.

there are no absolutes. a smart financial plan balances income, spending, saving and risk.

If every decision was purely financial, i would still be living with my mom, driving the car they gave me, eating their food, and saving every penny i made. of course, their decision to let me do that would be financially driven, so they would have probably thrown me out by now.

I would have - no truck, no boat, no wife, no kids. no fun (it doesn't make financial sense) - why use that cash?

not sure if i would have gone to college, still doing the math.

and i would not be posting here, computers are pretty expensive.

and the cost of high speed internet - WOW - i should walk to the library and use their computers instead.

Edited April 9, 2012 by Soon2BV

[JWBurns]

OP, my recommendation on financing would be this: pay enough down and have a short-enough term so that getting upside down is impossible. You may need to do some homework to trend used values but a long term loan virtually assures you'll be upside down at some point thus forcing you to keep the boat if you don't want it, or you'll have to come up with a chunk when it comes time to sell.

Sound advice indeed.

I may need to wait one more year, and try it again this time next year. By then I'll have even more capital to throw at my toy.

Thanks to all.

[JDubya]

Possible financing options to consider (ranked by likelihood of lowest rate/likelihood of approval:

1. Credit Union - private money that is less regulated than a general bank. Historically speaking their rates have lower than run of the mill banks. However some of been overleveraged in recent times and have had to contract their lending criteria. Consider multiple credit unions and many have discounts for this or that which could add up to significant savings over the life of the loan.

2. Insurance co bank - Many of today’s insurance companies have complementary full service banking (e.g. Farm Bureau) with highly competitive rates and discounts for holding insurance policies.

3. Traditional bank - although conventional wisdom says that traditional banks like B of A might be the last place you would look for a boat loan in most cases their rates are competitive. However, the typically have tighter qualification criteria to get those good rates. (Note: this is where a Credit union could prove to be a better choice as they traditionally have more relaxed qualification criteria for the lower rates)

4. Home Equity line of credit (choose your source) - Given the general decline in the housing market I would put this as a last option (unless you will never move). While the interest is indeed tax deductible, if you market contracts you will have effectively increase the cost to obtain your boat. Bottom line unless you are getting a ridiculous rate, have your house mostly paid off and plan to never move I would put other alternatives ahead of this one.

It is honestly all about the rate in the end. Once you have decided on what monthly payment you can afford use an amortization schedule to calculate the amount you can finance at the rate you are quoted. I have attached a link to an online calculator which will allow you to plug in a number of factors and it will spit out the payment and total interest paid over the life of the loan. You can also evaluate what possible additional payments will do.

Keep in mind that by financing your boat for 15 years you will effectively be paying for 1.5 times the initial value of the boat. Which means unless you put down a sizable down payment you are almost assured to be upside down from day one until you own it outright.

I will restrict my personal perspective and attempt to offer only objective fact based information. But just to put this into perspective I majored in Finance and I'm a Pricing Analyst by trade. So needless to say I am somewhat well informed as to the cost of financing a personal luxury much like a boat. That being said I bought my boat when I was in college and financed 100% of it ($9,500) because I had no money and my credit union approved it @9.5% for 36 months). Was it a wise financial decision...no. But it was a calculated one. As long as you educate yourself on the financial risks and are willing to accept them then it is between you and god.

My final thoughts would be spend some time running some scenarios on paper or the link I posted below. You might be surprised at what paying in an extra $50 a month could do to save you time off the loan and on the total amount of interest you pay Once you find one that you are comfortable with go for it. Life is too short to do what "you are supposed to do?" Just make sure you are making a informed and calculated decision. Just make sure you evaluate the cost annual maintenance, storage, insurance, upkeep, equipment and cost of using the boat (fuel, beer, etc.) as these are often times more than the payment.

Hope this was helpful; if I can help further feel free to PM or post a reply.

http://www.bankrate....calculator.aspx

[jetskipro550]

What is this place turning into? We used to help people spend their (or the banks) money. I'm ashamed

[Sride]

go to your dealer and order a basic A20. Pick it up from the factory and you will come pretty darn close.

The entire point of your posting is that Malibu boats are too expensive and they should all be priced as they were ten years ago, or at the price that you can "buy an engine and some fiberglass" and put it together in your garage. Or they should all be priced like an Axis?

I will not disagree that they are expensive boats, but you will never see boat prices of the past.

[Indyxc]

Just another data point:

Paid 25k for my boat roughly 15 months ago,

Borrowed 21K from my local credit unit @ 7% for 8 years (shortest they would do) with GOOD credit. Most places did not want to finance a boat older than 5 years.

15 months later, I owe roughly 13.5k on my loan, making large extra payments each month. On pace for a 3 year pay off, with 3k in total interest. Not happy in 3k interest, but could I borrow a Malibu for 3 years for 3k? Doubtful.

I have more than 13.5k savings, and could pay off the boat. It's my 3 month rain day fund, if for some reason I didn't work. No one is going to loan me money to keep my house payment going if I become unemployed, so to me it makes sense to keep that money in savings (even though my GF could afford our life on her income alone).

Edited April 10, 2012 by Indyxc

[JWBurns]

Possible financing options to consider (ranked by likelihood of lowest rate/likelihood of approval:

1. Credit Union - private money that is less regulated than a general bank. Historically speaking their rates have lower than run of the mill banks. However some of been overleveraged in recent times and have had to contract their lending criteria. Consider multiple credit unions and many have discounts for this or that which could add up to significant savings over the life of the loan.

2. Insurance co bank - Many of today’s insurance companies have complementary full service banking (e.g. Farm Bureau) with highly competitive rates and discounts for holding insurance policies.

3. Traditional bank - although conventional wisdom says that traditional banks like B of A might be the last place you would look for a boat loan in most cases their rates are competitive. However, the typically have tighter qualification criteria to get those good rates. (Note: this is where a Credit union could prove to be a better choice as they traditionally have more relaxed qualification criteria for the lower rates)

4. Home Equity line of credit (choose your source) - Given the general decline in the housing market I would put this as a last option (unless you will never move). While the interest is indeed tax deductible, if you market contracts you will have effectively increase the cost to obtain your boat. Bottom line unless you are getting a ridiculous rate, have your house mostly paid off and plan to never move I would put other alternatives ahead of this one.

It is honestly all about the rate in the end. Once you have decided on what monthly payment you can afford use an amortization schedule to calculate the amount you can finance at the rate you are quoted. I have attached a link to an online calculator which will allow you to plug in a number of factors and it will spit out the payment and total interest paid over the life of the loan. You can also evaluate what possible additional payments will do.

Keep in mind that by financing your boat for 15 years you will effectively be paying for 1.5 times the initial value of the boat. Which means unless you put down a sizable down payment you are almost assured to be upside down from day one until you own it outright.

I will restrict my personal perspective and attempt to offer only objective fact based information. But just to put this into perspective I majored in Finance and I'm a Pricing Analyst by trade. So needless to say I am somewhat well informed as to the cost of financing a personal luxury much like a boat. That being said I bought my boat when I was in college and financed 100% of it ($9,500) because I had no money and my credit union approved it @9.5% for 36 months). Was it a wise financial decision...no. But it was a calculated one. As long as you educate yourself on the financial risks and are willing to accept them then it is between you and god.

My final thoughts would be spend some time running some scenarios on paper or the link I posted below. You might be surprised at what paying in an extra $50 a month could do to save you time off the loan and on the total amount of interest you pay Once you find one that you are comfortable with go for it. Life is too short to do what "you are supposed to do?" Just make sure you are making a informed and calculated decision. Just make sure you evaluate the cost annual maintenance, storage, insurance, upkeep, equipment and cost of using the boat (fuel, beer, etc.) as these are often times more than the payment.

Hope this was helpful; if I can help further feel free to PM or post a reply.

http://www.bankrate....calculator.aspx

This is an exceptional bit of information, and I truly appreciate you taking the time to compose and post it.

[JWBurns]

Just another data point:

Paid 25k for my boat roughly 15 months ago,

Borrowed 21K from my local credit unit @ 7% for 8 years (shortest they would do) with GOOD credit. Most places did not want to finance a boat older than 5 years.

15 months later, I owe roughly 13.5k on my loan, making large extra payments each month. On pace for a 3 year pay off, with 3k in total interest. Not happy in 3k interest, but could I borrow a Malibu for 3 years for 3k? Doubtful.

I have more than 13.5k savings, and could pay off the boat. It's my 3 month rain day fund, if for some reason I didn't work. No one is going to loan me money to keep my house payment going if I become unemployed, so to me it makes sense to keep that money in savings (even though my GF could afford our life on her income alone).

I'm the same way my friend. My wife and I currently have 6 months of living expenses set aside as our emergency fund. It's great piece of mind knowing it's there in case the worst happens.

If I weren't so dang hard to please, I'd settle on something more than two years old. It's just hard for me to justify knowing the amount of money I'm spending. Like I said in my earlier post, I want to be happy when I write that check every month. I'm not sure how long I'd smile writing that check for a 21 foot V-Ride, when the LSV23 would fit my family better.

Decisions decisions..

Hopefully this topic will help other buyers in my same situation. It's always good to gain different insight from a mass of people.

Edited April 10, 2012 by JWBurns

[bamabonners]

I work to play. I spend my money on my boat for the enjoyment of my family and friends. It brings me joy to see others having fun on the boat. I could care less about what Dave Ramsey says about that.

Edited May 8, 2012 by bamabonners

[85 Barefoot]

The entire point of your posting is that Malibu boats are too expensive and they should all be priced as they were ten years ago, or at the price that you can "buy an engine and some fiberglass" and put it together in your garage. Or they should all be priced like an Axis?

I will not disagree that they are expensive boats, but you will never see boat prices of the past.

All I said was that using the price of a Taurus as an analogy to wakeboats' price increase doesn't hold water because there is nothing fundamentally different about a 2012 wakesetter and the models made 10-15 years ago. A little more fiberglass and ballast pumps are all thats different sans malivue. Malibu should price their boats so that they maximize profit. I have no issue with that.

[ibleedgreen]

I was surprised Bank of America gave me a better rate than my credit union. 5.25% on my 2009 VLX

Pay to play now, who knows when your time will be up. Within reason of course!

[Lakenut]

I too work to play. I also enjoy having the fam and friends out on the boat. Its just so much more enjoyable with out having to write a check each month . I know, I am old fashioned. I know my boat is 10 years old....I can't imagine having 5 more years till I paid it off.

Go ahead and flame away and enjoy writting that check each month

[Lakenut]

"All I said was that using the price of a Taurus as an analogy to wakeboats' price increase doesn't hold water because there is nothing fundamentally different about a 2012 wakesetter and the models made 10-15 years ago."

10-15 years ago, boats could not be financed for 15 years either. If banks limited boat loans to 5-7 years max, I bet we would see the price of some of these boats come down.

[85 Barefoot]

"All I said was that using the price of a Taurus as an analogy to wakeboats' price increase doesn't hold water because there is nothing fundamentally different about a 2012 wakesetter and the models made 10-15 years ago."

10-15 years ago, boats could not be financed for 15 years either. If banks limited boat loans to 5-7 years max, I bet we would see the price of some of these boats come down.

Well they would surely sell fewer thats for sure.

[mwood86]

"All I said was that using the price of a Taurus as an analogy to wakeboats' price increase doesn't hold water because there is nothing fundamentally different about a 2012 wakesetter and the models made 10-15 years ago."

10-15 years ago, boats could not be financed for 15 years either. If banks limited boat loans to 5-7 years max, I bet we would see the price of some of these boats come down.

Not true, I know someone who bought a boat in 99 and financed it through bank of america with a 15 year note.

[Sride]

Hate to beat a dead horse. Considerations for Malibu: Cost of Materials, Cost of Labor (Wages, Heath Care, Insurance), Cost of Production, Facilities OPEX, Cost of Capital Program (cost of Debt), Carrying Costs of Inventory, Market Demand, Shipping and Transport Cost (Fuel), Regulatory Factors, Product Liability, Foreign Competition.

At a fair negotiated dealer price (not MSRP) I am not seeing a problem with Malibu's MSRP pricing strategy.

[JDubya]

Hate to beat a dead horse. Considerations for Malibu: Cost of Materials, Cost of Labor (Wages, Heath Care, Insurance), Cost of Production, Facilities OPEX, Cost of Capital Program (cost of Debt), Carrying Costs of Inventory, Market Demand, Shipping and Transport Cost (Fuel), Regulatory Factors, Product Liability, Foreign Competition.

At a fair negotiated dealer price (not MSRP) I am not seeing a problem with Malibu's MSRP pricing strategy.

C'mon guys, let's stay on task here. The OP asked about financing options, not the cost and pricing strategy of Malibu boats...

LET IT GO FOLKS...let's stay focused!

Edited April 17, 2012 by JDubya