loan rates

[wakedncsu]

USAA also does 100% financing on boats. I know a couple buddies that have taken advantage of this. They bought for "free" pay the monthly payment on the longest loan and then sold the boat when they moved on to the next duty post.

[Josh4mc]

Any bank offering lower rates for longer term loans needs a new CFO...stat! It makes no financial sense whatsoever to offer lower rates while taking risk over a longer term. None.

They have you paying interest for a longer period of time so they make more. You are also more likely to take out a larger note with the longer term.

Edited January 26, 2016 by Josh4mc

[RTS]

APR less and risk is for longer period of time? Not buying that.

[thtrog]

USAA Boat Rates

[Josh4mc]

This is an USAA approval for $45,000. With a longer term loan you are paying very little towards the loan balance, almost all interest in the beginning.

180-Month Loan

$355.45

per month

4.25% APR See note2

120-Month Loan

$489.46

per month

4.49% APR See note2

72-Month Loan

$799.91

per month

6.75% APR See note2

Edited January 26, 2016 by Josh4mc

[thtrog]

Yep, if you plan on doubling up be sure and designate the extra payment as principle only.

[pauley71]

I bought a 2003 Mastercraft X30 to save money and last year I spent more time working on it (mechanically) and trying to improve the wave than spending time with my family. When I looked at something newer with a surf system (surfgate or gen2 tabs) you get into 2012-2014 boats and they wanted 65k+ for a used boat. For 79k I ordered a 23LSV - so I put 40k down and finance 40k. I'll still do a 15yr but pay two payments a month b/c its still cheap money and you should never be cash poor. Love the 5 year warranty! Financing isn't evil .. irresponsible spending is the evil.

edit: I also looked at cheaper brands like the Moomba mojo and was very close to pulling the trigger but in the end .. resale sucks on some brands. Another note is that the used market will finally tank when interest rates begin to rise.

Edited January 26, 2016 by pauley71

[boardjnky4]

You've got that backwards. The rates typically go up with the term, and it doesn't matter wither it is mortgage, car loan, boat loan, student loan, or other secured debt. And fixed rates are higher than adjustables. I would use the term "always," but I don't want to go down the absolute path - I will say that I've never seen, nor heard of it. But the longer the term, the more exposed lending institutions are to rate changes (since they can't refinance the way consumers can). Therefore, the longer term the loan, the higher the rate.

USAA Boat Rates

this.

[robbennett]

Any bank offering lower rates for longer term loans needs a new CFO...stat! It makes no financial sense whatsoever to offer lower rates while taking risk over a longer term. None.

They usually have higher minimum loan amounts so in the end they still make way more money even with the lower rate.

[RTS]

They usually have higher minimum loan amounts so in the end they still make way more money even with the lower rate.

So 'they usually' want to put more money at risk for a longer period of time for less return annually?

Please direct me to this bank.

[shawndoggy]

So 'they usually' want to put more money at risk for a longer period of time for less return annually?

Please direct me to this bank.

losing money on every sale, but making it up in volume.

[RTS]

losing money on every sale, but making it up in volume.

Gotcha ...

How exactly can one lose money on 'every sale', but 'make it up' in volume? Seems like if you were losing money on every sale, you would want to have as little volume as possible....including but not limited to closing said business ASAP.

[05hammerhead]

Gotcha ...

How exactly can one lose money on 'every sale', but 'make it up' in volume? Seems like if you were losing money on every sale, you would want to have as little volume as possible....including but not limited to closing said business ASAP.

Im sure he meant "not make as much per sale but make more by increasing volume"

[shawndoggy]

Gotcha ...

How exactly can one lose money on 'every sale', but 'make it up' in volume? Seems like if you were losing money on every sale, you would want to have as little volume as possible....including but not limited to closing said business ASAP.

Old joke with a friend about bad business practices generally.

[RTS]

Old joke with a friend about bad business practices generally.

OK...sorry about that then....

[shawndoggy]

apparently the joke is older than I thought: http://www.barrypopik.com/index.php/new_york_city/entry/we_lose_money_on_every_sale_but_make_it_up_on_volume

[williemon]

I waited till i was 49 to move up to the 01 bu. Have had an old i/o that was used and old in 99 and have used the mess out of it.

I used lightstream for my loan on my 01 i bounght in 2014. I have since paid it off since we cashed out a retirement plan that was tanked bad and i could not roll it into anything better. We have three others that are much better so i still feel good.

Every loan i have seen gets higher intrest with longer term. I would finance a toy again of this price and pay it quick since id lose 2 years at least trying to save the cash to buy the toy. It does make me feel bad though to know that paying any interest is money thrown away vs cash.

[Nitrousbird]

Why do you seem to care so much about people who disagree with you? Your opinion is far from the holier than though you are putting off here. You made a choice to have an older boat that is paid for, others are making choices to have a pyt & a new boat. Jealous bro? Your s***ty comment back a few pages to me about my family, suck it bruh. My $330.00 a month pyt on a new boat will hardly jeopardize my family. If you get something terminal in your early 50's I doubt your thoughts will be about how glad you are to have a boat paid off.

Jealous?

If your payment is $330/month, you aren't buying a new wake boat unless you are putting a ton of money down:

- 20 years @ 60k @ 3.25% = $329/month

- 20 years at the 4% you are probably paying @ $54,500 = $330/month

Assuming a 75k new wake boat, plus 7% tax = $80,250. Let's call it 80k. That 10-20% down you claimed previously is actually 31%. That "if the market tanks, they can repo the boat" = take my $25,000 PLUS whatever equity I paid into this boat via payments.

Let's talk those payments. Because of your down payment, you'll never be underwater, but after 10 years, you will still owe over 32k on that $54,500 loan. You will have paid 22k in 10 years, or $183/month average on a $330/month payment. It will take over 11 years just to pay down the same amount that you put as a down payment.

Now, just imagine if you bought a 40k boat (plus tax) and put 25k down. Now you have the same boat payment but a paid off boat in 5 years. Due to depreciation, that 40k boat in 5 years will likely get you at least 30k resale. That will cost you $2500/year, about half of what you will likely loose on a brand new boat. Then in another 5 years, you do the same thing, sell and get a 45-50k boat. Then at that 10 year mark, you will likely have a boat of similar age as your 10 year old (bought new) boat, yet you'll be free and clear vs. owing 10 years on a boat.

And yes, if I'm terminal in my 50's, I'll be glad I didn't leave my family with a bunch of debt. Actually, we will be debt free by the time I'm in my mid 40's on the current plan. The same plan where we take multiple nice vacations, have a nice home, fun car to drive, a boat I get compliments on all the time and serves the family well. Long loans and heavy debt should NOT be the American way.

[racer808]

Jealous?

If your payment is $330/month, you aren't buying a new wake boat unless you are putting a ton of money down:

- 20 years @ 60k @ 3.25% = $329/month

- 20 years at the 4% you are probably paying @ $54,500 = $330/month

Assuming a 75k new wake boat, plus 7% tax = $80,250. Let's call it 80k. That 10-20% down you claimed previously is actually 31%. That "if the market tanks, they can repo the boat" = take my $25,000 PLUS whatever equity I paid into this boat via payments.

Let's talk those payments. Because of your down payment, you'll never be underwater, but after 10 years, you will still owe over 32k on that $54,500 loan. You will have paid 22k in 10 years, or $183/month average on a $330/month payment. It will take over 11 years just to pay down the same amount that you put as a down payment.

Now, just imagine if you bought a 40k boat (plus tax) and put 25k down. Now you have the same boat payment but a paid off boat in 5 years. Due to depreciation, that 40k boat in 5 years will likely get you at least 30k resale. That will cost you $2500/year, about half of what you will likely loose on a brand new boat. Then in another 5 years, you do the same thing, sell and get a 45-50k boat. Then at that 10 year mark, you will likely have a boat of similar age as your 10 year old (bought new) boat, yet you'll be free and clear vs. owing 10 years on a boat.

And yes, if I'm terminal in my 50's, I'll be glad I didn't leave my family with a bunch of debt. Actually, we will be debt free by the time I'm in my mid 40's on the current plan. The same plan where we take multiple nice vacations, have a nice home, fun car to drive, a boat I get compliments on all the time and serves the family well. Long loans and heavy debt should NOT be the American way.

You do what you do then. We have an alright house, paid off vehicles, some money in the bank. You'd be an idiot to take the money from savings when borrowing is so cheap. I don't need to justify my purchases to you, if you think people are dumb for buying what they want, then shut your pie hole & smile smugly to yourself about it. We don't do vacations, our vacations are lake time & camping. I get thousands of compliments on my boat as well, I still want a newer one & am getting one. But that also means ditching Malibu & going Supreme where all of it comes together for me for what we want & the price tag & pyt. I don't know anyone who intends to pay off a 20 year note on these things. I will use the s*** out of it for 5 years & sell it. Even if I have to bring a few grand to the table to get rid of it it will be money spent for recreation. Your vacations are not an asset & you probably spend anywhere from 5k to 10k to go on a week long trip? Yeah that's smart spending there buddy, you get a whole week of memories for a years worth of pyts on a toy. Keep patting yourself on the back & do what you do, you've been fortunate & I can only hope to someday wake up as enlightened as you so I can tell everyone how spending money their way is stupid but spending money my way is okay What if your wife decides to leave & take half your s*** leaving you with nothing but things you wished you would've bought? Happens all the time. When my dad died at 58 after doing nothing but saving it changed my mind on a lot of things. Seeing friends with excellent financial planning getting divorced & wrecking everything they built is eye opening as well. Even the best planning with money can take a sudden turn & leave a guy totally f*****d. And if something happens to me, they'll be fine from the insurance. In the mean time, I will be enjoying my new toy this summer not giving two s***s what Nitrousturd thinks.

Edited January 27, 2016 by racer808

[robbennett]

So 'they usually' want to put more money at risk for a longer period of time for less return annually?

Please direct me to this bank.

Example:

$75,000 for 84 months at 6% will pay $3923.84 in interest the first year. 17,033.76 over the 7 years.

$100,000 for 120 months at 5.5% will pay $4881.41 in interest the first year. $30231.20 over 10 years.

The second scenario with .5% lower rate makes the bank nearly double the money.

[shawndoggy]

Example:

$75,000 for 84 months at 6% will pay $3923.84 in interest the first year. 17,033.76 over the 7 years.

$100,000 for 120 months at 5.5% will pay $4881.41 in interest the first year. $30231.20 over 10 years.

The second scenario with .5% lower rate makes the bank nearly double the money.

Is that right? I'm ignorant... are boat loans compound interest and not simple interest like vehicle loans?

[robbennett]

That's how it's always been with me. Every bank and loan product has its own rules though. They have their own way of marketing their loan products and maximizing profits. You just have to be able to crunch the numbers and figure out what option works best in your situation.

[isellacuras]

Is that right? I'm ignorant... are boat loans compound interest and not simple interest like vehicle loans?

It's simple interest. You have a larger balance on the longer term. On the shorter term loan, more of your payment is going toward principal where the longer term loan is not being paid down as quickly which means more toward interest. We see it with car loans all the time. A few banks really specialize in low interest long term loans. Our average loan length is about 27 months. Not term, but actual payoff. This is most commonly due to being traded in. If you take a 60 month term and an 84 month term and make minimum payments through 27 months and then payoff, the 84 month term will net a larger interest amount paid.

[DarkSide]

Not to mention making people feel more comfortable with larger purchase. Like in the example above, 100,000 @5.5% for 10 years has lower payment than 75,000 @6% for 7 years.

[shawndoggy]

the difference being with a simple interest loan you pay just as much interest in year 15 as year 1. Only compounding loans front load the interest expense.