Financing question

[Armyguy]

It is a great deal when the lowest interest rate around here is 5.9 even with excellent credit. I agree with you about the interest but that goes with everything you buy. 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. One thing I do with everything I buy, I get the lowest interest possible with the longest term. It makes my payments as low as possible. Then I just make double payments as much as I can without any penalties and put the second half strictly towards principal. Then if you have a bad month and can only make the original payment, at least it is a small one.

And 2.99% is unheard of. Please let me know which bank as well as I might use them instead before I hand over this check.

Edited April 8, 2012 by Armyguy

[JWBurns]

It is a great deal when the lowest interest rate around here is 5.9 even with excellent credit. I agree with you about the interest but that goes with everything you buy. 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. One thing I do with everything I buy, I get the lowest interest possible with the longest term. It makes my payments as low as possible. Then I just make double payments as much as I can without any penalties and put the second half strictly towards principal. Then if you have a bad month and can only make the original payment, at least it is a small one.

And 2.99% is unheard of. Please let me know which bank as well as I might use them instead before I hand over this check.

Agreed.

Just like on my home loan, I make an additional principal payment a year in order to cut years off the life of the loan. I'll do the same with the boat loan. With low rates and a quick payoff, it's cheap money. Of course I could pay cash for the boat, but I'd rather use the banks money and keep my cash. Besides, the only debt I have is my home loan - so I'm in a comfortable position to borrow on the boat.

Edited April 8, 2012 by JWBurns

[gslinger]

I'm in Wisconsin. They usually will only go 10yrs on boats. But with the value so high and good credit they will extend it to 15.

[bamabonners]

We bought ours last year. We used local credit union because they were best rate at the time, including USAA. 143 months @ 5.5 and we have excellent credit. No down required, but we put 20 percent down.

[Armyguy]

Gslinger,

Which bank did you use to get that rate? You can PM it to me if you want. It would be appreciated.

[Sride]

As I see it, it just seems like more stuff that can break to me, however cool the touchscreen stuff may be. I bet you love the extra room in the 23 footer eh Sride? I just was a roomy boat for all my crew, and to be able to surf and board at will. From what I'm seeing on the market.. 2010 21 foot V-ride's are in the 52k range, and the LSV23's are about 10k more. So safe to assume the 23 rides are 55k maybe? Just not many of those on the market right now.

I am sure that in the longrun the MaliView is reliable, but growing up with/around boats its just my personal preference to keep it simple. Even the vRide LCD display has plenty of electronic stuff to break. Regarding prices, I would start at a Malibu dealership and also work the used market. Have a look at inventory that dealers have carried for a while, negotiate during the off season, or look at the serviced used inventory. DragonBottom is a good example of that.

I am used to bowriders in the 18ft range, so for me the 23 feels massive. With very large family and friends it was worth it for me to step up to 23.

[Lee52]

Agreed.

Just like on my home loan, I make an additional principal payment a year in order to cut years off the life of the loan. I'll do the same with the boat loan. With low rates and a quick payoff, it's cheap money. Of course I could pay cash for the boat, but I'd rather use the banks money and keep my cash. Besides, the only debt I have is my home loan - so I'm in a comfortable position to borrow on the boat.

Using the bank's money doesn't allow you to keep your cash, it just makes you feel like you have more money while the bank charges you interest on a loan you didn't need.

I've come to the conclusion that interest is a mind game the bank wins as soon as they close a loan. It completely exploits immediate gratification at the expense of long term planning and willingness to do basic math, and the lending industry has convinced people that because rates are low or credit is easy to get, that somehow makes borrowing a good deal. A bank won't lend unless they're going to make money on it. Long-term borrowing with low monthly payments actually costs you the most money. With home loans and then personal loans that are the size of small home loans, most people end up losing hundreds of thousands of dollars over decades, but they don't even notice because the monthly payments are low. The most economically sound way to take a loan is to start with the largest possible downpayment, coupled with the shortest loan term that you can afford each month.

Thirty year mortgages cost insane amounts of money, typically more than triple the interest of a comparable 15 year loan. The same goes for a six year versus twelve year auto or boat loan. Unless you can prepay a long loan on the same schedule as a shorter one - in which case, why get the longer loan at all? - the borrower still ends up spending tens of thousands more in interest.

The idea of a 15 year boat loan astounds me, but then again, so does the average price of a new Malibu. This link has an excellent loan payment/prepayment calculator. It's for mortgages, but that's basically what a 15 year boat loan amounts to anyway. http://www.mortgage-x.com/calculators/extra_payment_calculator.asp

[85 Barefoot]

It is a great deal when the lowest interest rate around here is 5.9 even with excellent credit. I agree with you about the interest but that goes with everything you buy. 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. One thing I do with everything I buy, I get the lowest interest possible with the longest term. It makes my payments as low as possible. Then I just make double payments as much as I can without any penalties and put the second half strictly towards principal. Then if you have a bad month and can only make the original payment, at least it is a small one.

And 2.99% is unheard of. Please let me know which bank as well as I might use them instead before I hand over this check.

The above is not true. One, 30 year and 15 year mortgage rates are under 4% for starters, secondly, a home is an APPRECIATING asset, which a boat most certainly is not, and thirdly, interest on mortgages is tax-deductible. There is nothing comparable between a 15 year mortgage and a 15 year boat loan. One is more fun, sure, but the financial planning of which has no comparison. When you finance a boat you are taking it on the chin on both sides, depreciation and using bank money for instant gratification. A home purchase is the opposite, it's a savings account that, generally, "makes" money when tax and appreciation is considered. I understand that everyone can view financing their own way, but for me and my family, the only time we will consider financing is when we can "make" money on whatever is borrowed. For example, bought a new car last year at 1% which we did because even tho we had the cash, I can make more than 1% with the $ invested. So, sure, I'll use bank money to make money. But financing a boat for 15 years at 5% is flawed financial planning in my opinion.

[jkendallmsce]

The above is not true. One, 30 year and 15 year mortgage rates are under 4% for starters, secondly, a home is an APPRECIATING asset, which a boat most certainly is not, and thirdly, interest on mortgages is tax-deductible. There is nothing comparable between a 15 year mortgage and a 15 year boat loan. One is more fun, sure, but the financial planning of which has no comparison. When you finance a boat you are taking it on the chin on both sides, depreciation and using bank money for instant gratification. A home purchase is the opposite, it's a savings account that, generally, "makes" money when tax and appreciation is considered. I understand that everyone can view financing their own way, but for me and my family, the only time we will consider financing is when we can "make" money on whatever is borrowed. For example, bought a new car last year at 1% which we did because even tho we had the cash, I can make more than 1% with the $ invested. So, sure, I'll use bank money to make money. But financing a boat for 15 years at 5% is flawed financial planning in my opinion.

NOt sure where you are referring to, but there are exponentially more areas (both entire states and metro areas) that are depreciating rather than appreciating. And with the surplus of housing the banks are holding, the trend will continue for years if not decades. ANd although the available rates are advertised as 4 and under, getting that rate, even with OUTSTANDING credit is highly unlikely. I am sure you'll be able to parse my facts, but the facts are that the housing market and lending continue to fizzle because of govt'sprior and present involvement, as it was the Fed govt forcing banks to provide loans to folks who would have never been qualified under normal conditions. Read up on CRA, started by that moroninc peanut farmer (Carter) and then modified by clinton. And to be fair, bush did nothing during his 8 years to fix the mess. And I am not even going to try to detail/explain MERS and the impact it is having on the housing market.

That APPRECIATING asset you referred to, will not be back to the high of say 2007-8 in most lifetimes. Here in N CA, as I know the area best, continues to depreciate and will for years to come Yes there are isolated areas that have bottomed out, but they are in no way appreciating. ANd there are segments, say your high end markets, that are doing better than others, but as a whole, prices continue to trend downward. The only thing that has changed, is the downward spiral has slowed. Just in the new yesterday, houses in several states, you can buy for less than a car...and several were newer (built after 1995) houses. Yes they were smaller, 1500-2000 sf, but an ENTIRE house for less than a camry.

Look at zillow, although not terribly scientific exact, you'll see most areas continue to trend downward.

Edited April 9, 2012 by jkendallmsce

[JWBurns]

And here I thought all along that Dave Ramsey was a Mastercraft fan.. But apparently he frequents our site as well.

While I appreciate the insight on all things finance, I'm a big boy, and can decide for myself which route works best for my family. I created this topic simply to hear from those who've recently financed their boat, and to see if any special rates and terms are availaible at this point.

Thanks to those who have contributed in that regard.

[85 Barefoot]

NOt sure where you are referring to, but there are exponentially more areas (both entire states and metro areas) that are depreciating rather than appreciating. And with the surplus of housing the banks are holding, the trend will continue for years if not decades. ANd although the available rates are advertised as 4 and under, getting that rate, even with OUTSTANDING credit is highly unlikely. I am sure you'll be able to parse my facts, but the facts are that the housing market and lending continue to fizzle because of govt'sprior and present involvement, as it was the Fed govt forcing banks to provide loans to folks who would have never been qualified under normal conditions. Read up on CRA, started by that moroninc peanut farmer (Carter) and then modified by clinton. And to be fair, bush did nothing during his 8 years to fix the mess. And I am not even going to try to detail/explain MERS and the impact it is having on the housing market.

That APPRECIATING asset you referred to, will not be back to the high of say 2007-8 in most lifetimes. Here in N CA, as I know the area best, continues to depreciate and will for years to come Yes there are isolated areas that have bottomed out, but they are in no way appreciating. ANd there are segments, say your high end markets, that are doing better than others, but as a whole, prices continue to trend downward. The only thing that has changed, is the downward spiral has slowed. Just in the new yesterday, houses in several states, you can buy for less than a car...and several were newer (built after 1995) houses. Yes they were smaller, 1500-2000 sf, but an ENTIRE house for less than a camry.

Look at zillow, although not terribly scientific exact, you'll see most areas continue to trend downward.

Politics has no place in this thread. BUT EVEN WITH the last 4 years of depreciating home values (which will be cured far before the end of "most lifetimes"), you're able to show loss and use tactically with taxes. So, even with a large loss, its strategically superior. Can you do that with boat? No. Can you write off interest expense? No. The point is they are fundamentally different, and I stand by my position that financing a boat is not in any way comparable (or superior as some have implied) to financing a home.

JW, absolutely. Far be it from anyone to tell anyone how they should spend money. I responded to a post that was inaccurate and required clarification, in order to consider these ramifications broadly and stated my personal philosophy. You are in the best position to evaluate your needs and budget.

Edited April 9, 2012 by 85 Barefoot

[sp0tts]

While I appreciate the insight on all things finance, I'm a big boy, and can decide for myself which route works best for my family. I created this topic simply to hear from those who've recently financed their boat, and to see if any special rates and terms are availaible at this point.

Thanks to those who have contributed in that regard.

Right on. I'd definitely check with your dealer. Dealer's need to be able to finance these boats to sell them so they generally know what banks have good rates. Credit unions and internet searches may also be helfpul. If you can get a home equity line, IMO that's the best way to go (assuming your financially sound) because you'll be able to write off the interest.

[Sride]

The price of a new Ford Taurus is 25-40K but people are surprised that a Malibu can crack 50-70K? The 90's have been over for 12 years...

[Bobby Light]

The price of a new Ford Taurus is 25-40K but people are surprised that a Malibu can crack 50-70K? The 90's have been over for 12 years...

[85 Barefoot]

The price of a new Ford Taurus is 25-40K but people are surprised that a Malibu can crack 50-70K? The 90's have been over for 12 years...

Taurus is hardly the car it was 20 years ago in terms of mechanicals. The engines especially have come a long way, whereas a Malibu is essentially the exact same thing it was. Slab of fiberglass and a small block chevy. A touchscreen and 8 pumps are all that are really new. Heck, we bought a brand new 2000 Wakesetter VLX for about 30 and that hull just recently came out of service, and that engine STILL gets put in these boats. Really not that much has changed.

[Sride]

Taurus is hardly the car it was 20 years ago in terms of mechanicals. The engines especially have come a long way, whereas a Malibu is essentially the exact same thing it was. Slab of fiberglass and a small block chevy. A touchscreen and 8 pumps are all that are really new. Heck, we bought a brand new 2000 Wakesetter VLX for about 30 and that hull just recently came out of service, and that engine STILL gets put in these boats. Really not that much has changed.

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!

[JTech]

For those of you that are employed by someone else, ask you employer if they pay the payroll on a cash in/cash out basis or if they have a line of credit to float payroll. You would be surprised how many have a bank loan to cover payroll while they wait on receivables. Mind you, I don't care for banks all that much but they are still necessary for funding many of the things that we enjoy on a daily basis. Large shopping malls don't get built without a bank loan. Most boat dealers don't own the inventory of which they sell.

"My local dealer mentioned to me yesterday that they are seeing (on new Malibu purchases) 180 months @ 4.25% for excellent credit. That also includes 10% down."

"That is a great deal."

On a 75K boat w/10K down, you are paying over 23k in intrest. How is that a great deal? The intrest on that boat is almost what I paid for mine.

Kinda hard to pay $23k for a used boat when no one will finance a new one.

[Slayer]

Momma`s rules............... no cashy no boaty. no financing toys in this house hold.

We have the same rules....

[IXFE]

Why does every thread about financing turn into the Suze Orman show?

[saidainc]

damn I hate that b****....she ruins every stupid purchase I want to make

Edited April 9, 2012 by saidainc

[JWBurns]

Her and Dave Ramsey both!

[jetskipro550]

Love Dave, but can't stand Suze!

Caller - "Hey Suze, I have 500k in the bank, 1m in retirement, and no debt, can I afford a new riding lawn mower for 7k?"

Suze - "Denied! When you have 600k in the bank you can MAYBE look at buying that mower"

[Lee52]

And here I thought all along that Dave Ramsey was a Mastercraft fan.. But apparently he frequents our site as well. While I appreciate the insight on all things finance, I'm a big boy, and can decide for myself which route works best for my family. I created this topic simply to hear from those who've recently financed their boat, and to see if any special rates and terms are availaible at this point. Thanks to those who have contributed in that regard.

Sorry to contribute to hijacking your thread. I've absorbed enough financial blows over the past decade to shudder at the idea of paying for another ten or fifteen years for a boat. Mainly I had no idea that it's so common for boat loans to be that long.

[Armyguy]

The above is not true. One, 30 year and 15 year mortgage rates are under 4% for starters, secondly, a home is an APPRECIATING asset, which a boat most certainly is not, and thirdly, interest on mortgages is tax-deductible. There is nothing comparable between a 15 year mortgage and a 15 year boat loan. One is more fun, sure, but the financial planning of which has no comparison. When you finance a boat you are taking it on the chin on both sides, depreciation and using bank money for instant gratification. A home purchase is the opposite, it's a savings account that, generally, "makes" money when tax and appreciation is considered. I understand that everyone can view financing their own way, but for me and my family, the only time we will consider financing is when we can "make" money on whatever is borrowed. For example, bought a new car last year at 1% which we did because even tho we had the cash, I can make more than 1% with the $ invested. So, sure, I'll use bank money to make money. But financing a boat for 15 years at 5% is flawed financial planning in my opinion.

There is nothing "not true" about my post. I was simply stating things through MY perspective. I didn't go into things such as, well this makes you money while this depreciates. I dont know where you are from but here where I am at and most places I hear about are not "appreciating in value". That is just not the case with homes anymore. If that was true, we wouldn't of had the huge collapse that we did where people are now upside down and are/have lost their homes.

My statement was simple. Are you going to lose money because of depreciation on a boat, of course. That is basically with anything you finance. Yeah in 15-? years the market HOPEFULLY will return to normal and homes will appreciate again. I don't see that happening for a very long time. You may not think buying a boat with a 15 year loan is smart, but good for you. Not all of us have the cash to go buy a 40k+ boat cash. I was simply saying that for ME, I like to get the best interest rate possible to begin with. I know the longer I take to pay it the more screwed I'm going to get with interest, that is a given. However, I like to make my payments the lowest possible. Especially on something I get to use only 4 months out of the year. Now on that same token, I will make extra payments whenever I can and have the boat paid off sooner, which I'm turn relates to less overall interest paid. If you are having a hard month financially, well guess what? Now instead of paying a $500/mo payment because I was trying to be smart getting at 6 year loan or whatever, I only have to pay the $300 for the 15yr loan(pulling numbers from the sky) but you get my point.

I was just giving my opinion on something the OP asked for. I'm glad the you have the cash to go buy things straight out and you feel that you way is the best way of doing things. You have to remember we are not all in your situation.

[85 Barefoot]

There is nothing "not true" about my post. I was simply stating things through MY perspective. I didn't go into things such as, well this makes you money while this depreciates. I dont know where you are from but here where I am at and most places I hear about are not "appreciating in value". That is just not the case with homes anymore. If that was true, we wouldn't of had the huge collapse that we did where people are now upside down and are/have lost their homes. My statement was simple. Are you going to lose money because of depreciation on a boat, of course. That is basically with anything you finance. Yeah in 15-? years the market HOPEFULLY will return to normal and homes will appreciate again. I don't see that happening for a very long time. You may not think buying a boat with a 15 year loan is smart, but good for you. Not all of us have the cash to go buy a 40k+ boat cash. I was simply saying that for ME, I like to get the best interest rate possible to begin with. I know the longer I take to pay it the more screwed I'm going to get with interest, that is a given. However, I like to make my payments the lowest possible. Especially on something I get to use only 4 months out of the year. Now on that same token, I will make extra payments whenever I can and have the boat paid off sooner, which I'm turn relates to less overall interest paid. If you are having a hard month financially, well guess what? Now instead of paying a $500/mo payment because I was trying to be smart getting at 6 year loan or whatever, I only have to pay the $300 for the 15yr loan(pulling numbers from the sky) but you get my point. I was just giving my opinion on something the OP asked for. I'm glad the you have the cash to go buy things straight out and you feel that you way is the best way of doing things. You have to remember we are not all in your situation.

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. Nor does that mean I'm passing any judgment by pointing that out, I'm not. I do have my own "rules", and they work for my family but I don't expect anyone else to agree or disgaree. Just clarifying for the OP the big distinctions which could get missed in light of some posts.

Edited April 9, 2012 by 85 Barefoot