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Boat loans??.


MJO21

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I am getting ready to break ground on my new home and locked in my rate about 2 months ago cause I know the rates are gonna keep going up. Lots of construction loans have 2 closings and the final close once house is done, is at current interest rate (I knew it would be higher in 6-8 months this time around). My credit union was single closing, locked in....so I was reasonable happy about that. I personally think we have 2 more "good years left and then who knows what will happen to economy. In meantime, gonna try to get as much equity in my house as possible so I am "safe" if things go south. Lucky to be in a pretty recession proof business myself but you never know what turn things will take nowadays. Nothing feels totally safe, just gotta make the best decisions you can and live with it. Everyone would have done something different in 2009/2009, I would have done everything different since I built custom high end homes then which was the first thing to tank. Learned a lot from my mistakes tho and guess that in itself is valuable now no matter what it felt like then.

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6 minutes ago, Infinitysurf said:

Everyone would have done something different in 2009/2009,

Nah, only thing i did in 2009 was buy some ford stock and a 2009 dodge 😁  I do agree that it is likely that the good times may end for a while in about 2020.5, but as long as you steer clear of adjustable rates and recession prone employment then life will go on. 

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I suspect getting a boat loan under 6% will be a thing of the past by mid summer. Rates are going no where but up. It will be a long time if ever when we see virtually free money like we did the last 6 years.

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Guess I am not catching what @bamaboy is saying... But the way I look at it, a loan is risk. Sure you can invest that cash and make more than the interest rate... but are you that well off that the risk is not even a thought? or are you close to paycheck-to-paycheck (even with a nice income) and risk could seriously hurt you..? Tell ya what, my family is playing the low risk way of life. Limited to no debt, cash for most things.. and we will have a nice nest egg and a pretty new boat as we get older. Living within our means along the way. Beans and rice and the old family malibu for the next few years for us.

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1 hour ago, AJwakedevil said:

Guess I am not catching what @bamaboy is saying... But the way I look at it, a loan is risk. Sure you can invest that cash and make more than the interest rate... but are you that well off that the risk is not even a thought? or are you close to paycheck-to-paycheck (even with a nice income) and risk could seriously hurt you..? Tell ya what, my family is playing the low risk way of life. Limited to no debt, cash for most things.. and we will have a nice nest egg and a pretty new boat as we get older. Living within our means along the way. Beans and rice and the old family malibu for the next few years for us.

what I was saying is that @Nitrousbird strategy of holding cash for a recession isn't sound.  He implied that people who take loans on boats and invest that cash in stocks are making a wrong choice because it is better to have cash in a recession.  During the next recession (which is coming soon), USD won't be worth squat.  I'm not saying the stock market will be worth a damn but USD CERTAINLY will NOT. Of course having a ton of debt and living pay check to pay check isn't smart.  However, banking on your cash being recession proof is a horrible idea.  There are a few investments that are pretty recession proof and USD surely won't be one of them.  

 

@AJwakedevil it sounds like you are very responsible with your money and investments.  

Edited by bamaboy
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9 minutes ago, bamaboy said:

what I was saying is that @Nitrousbird strategy of holding cash for a recession isn't sound.  He implied that people who take loans on boats and invest that cash in stocks are making a wrong choice because it is better to have cash in a recession.  During the next recession (which is coming soon), USD won't be worth squat.  I'm not saying the stock market will be worth a damn but USD CERTAINLY will NOT. Of course having a ton of debt and living pay check to pay check isn't smart.  However, banking on your cash being recession proof is a horrible idea.  There are a few investments that are pretty recession proof and USD surely won't be one of them.  

 

@AJwakedevil it sounds like you are very responsible with your money and investments.  

Do you invest in the market with doubloons?  Whether acquiring tangible or intangible assets, what are you going to use if not USD?  I'm srsly curious to hear your thoughts on currency arbitrage, bama.

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16 minutes ago, bamaboy said:

what I was saying is that @Nitrousbird strategy of holding cash for a recession isn't sound.  He implied that people who take loans on boats and invest that cash in stocks are making a wrong choice because it is better to have cash in a recession.  During the next recession (which is coming soon), USD won't be worth squat.  I'm not saying the stock market will be worth a damn but USD CERTAINLY will NOT. Of course having a ton of debt and living pay check to pay check isn't smart.  However, banking on your cash being recession proof is a horrible idea.  There are a few investments that are pretty recession proof and USD surely won't be one of them.   

We had a recession in the recent past - a pretty significant one.  The value of cash, regardless of currency, is the ability for one to buy goods/services.  Be that tangible assets (boats, cars, homes, etc.), or less tangible, such as stocks, bonds, etc.  I recall making the same income before the recession as I did after (actually, I made more due to a promotion at the time, but would have been flat without it).  Yet, homes were cheaper, services to get things done were cheaper (due to businesses being desperate for work), tangible goods were cheaper.  I don't recall spending more on groceries, utilities, etc.  Property value went down = lower property taxes.  Hell, stocks were worth a fraction of the price they were months prior - those were cheaper too.  Boats, ATV's, etc. were easy to come by cheap.

Please explain again how my cash was worth less when I was able to buy MUCH MORE with the same income/debt as I had prior to the recession?  With a pile of CASH on hand, you can buy those cheap homes, cheap toys and low priced stocks, that will bounce back and make you a tidy some of money...remember, cheap loans are harder to come by during a recession.  At least that's how it factually worked in our last recession.  We scored a home cheap (well, cheap for the size/area at least), one that pre-recession would have been out of our budget and now is worth a tidy some more as a result.  

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I think @bamaboy is referring to inflation and the value of the usd. To some level, I agree with him. If you have been tracking the value of the dollar, it’s been taking quite a hit lately.  I think he is making the case that hard assets rather than liquid assets are a safer bet. BICBW

Edited by hunter77ah
Typo
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28 minutes ago, bamaboy said:

what I was saying is that @Nitrousbird strategy of holding cash for a recession isn't sound.  He implied that people who take loans on boats and invest that cash in stocks are making a wrong choice because it is better to have cash in a recession.  During the next recession (which is coming soon), USD won't be worth squat.  I'm not saying the stock market will be worth a damn but USD CERTAINLY will NOT. Of course having a ton of debt and living pay check to pay check isn't smart.  However, banking on your cash being recession proof is a horrible idea.  There are a few investments that are pretty recession proof and USD surely won't be one of them.  

 

@AJwakedevil it sounds like you are very responsible with your money and investments.  

They should be stupid at Apple to have so many cash parked and according to their last financial disclosure they seem to prepare to pay for a huge tax payment that might be related to cash repatriation (hypothesis statement here). You need to give more meat to your thoughts otherwise we will have hard time to fully understand them. At least me and @shawndoggy.

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2 minutes ago, hunter77ah said:

I think @bamaboy is referring to inflation and the value of the usd. To some level, I agree with him. If you have been tracking the value of the dollar, it’s been taking quite a hit lately.  I think he is making the case that hard assets rather than liquid assets are a safer bet. BICBW

For a US average Joe, as long as what he is buying is not impacted by the value of the $, it has no consequence. Now US import a lot of goods, primary from China, and secondly from EU. If china renminbi jumps compare to the $, that will be an issue. Petrol is not an issue anymore, US is becoming self sufficient and net exporter. I will argue most of the big ticket items we are talking about are mostly locally produced (houses, cars, boats) with parts coming mostly from China :) or locally. As far as I know china renminbi is not traded freely against the $. Everyday China and the Fed agree on the exchange rate in a win/win situation or who has the biggest one on the table situation or whatever float their boats. Moreover, US is the numero uno consumer for China. If I am a Chinese producer and I want to sell my goods to my numero uno consumer and this guy is in a recession (less purchasing power), I will not increase my price as long as I can, I will not use my currency to make my price higher for him, I will do whatever I can (including bad quality :)) to reduce my cost in order to reduce my price. By the way, China is not an free economy, it is a government planed economy, so I guess the government will make sure the Chinese companies will continue to be successful and sell their good to the average US Joe, their numero uno consumer.

With all those inputs, I do not see any reason why the average Joe in the US would see the big ticket items going up during the next recession, but I am open to be contradicted with sound reasoning.

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Does any of this really matter? 

If there is a terrible recession and you can't make your boat payment,  don't make it.  Credit score takes a hit maybe they repo it.  Worry about food on the table and keeping the house.  

If you don't have a boat loan congratulations your credit score is safe.  Worry about putting food on the table and keeping your house. Sorry your boats value plummeted. 

 

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38 minutes ago, ahopkinsTXi said:

I wish there was a way to invest in at least one of these threads popping up every winter. 

I feel like “loan” in the title is a death knell. 

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The only way a loan makes sense is if the interest rate is lower than you make in cash/savings/money market accounts. 

 For example I bought a new $150k Tesla model S. Through one of Tesla’s Credit Union partner I was able get a rate at .99%.  One of my credit unions offers a checking account at 1.45%.  Thus I put the 150k into that account and I’m nearly making .5% on that loan which over 5 years is around $3000.  $3000 invested conservatively over 5 years making 8% on average gives me another $1500 in my pocket.   It’s all about being smart with your money not about how much “debt” you have.  I’ll always take on more “debt” for items as long as I can get under 1% interest with no prepayment penalties and in many cases you cans still find 0% loans (not on boats sometimes on autos, and frequently on big ticket items) 

 As another example I bought my wife a new peloton bike for chrismas.   I could easily afford the $4500 for the bike with cash but they offered 0% for three years so why wouldn’t I use their money.   It’s not a cash flow issue.  With my same 1.45% account the bike actually makes me $200, not to mention the  $300/month dues her spin class was costing me that I no longer pay  ($10,800 over three years) because I “splurged” on her Christmas gift. Lol  

I think where most people fall into a trap is they borrow money they don’t have to live a lifestyle they can’t afford. Then they get into a bind with cash flow especially if their job changes or unexpected expenses come up.  

Anyway. I think I’ve officially taken this thread “off the rails”.  Sorry. :) 

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8 hours ago, RCorsa said:

The only way a loan makes sense is if the interest rate is lower than you make in cash/savings/money market accounts. 

 For example I bought a new $150k Tesla model S. Through one of Tesla’s Credit Union partner I was able get a rate at .99%.  One of my credit unions offers a checking account at 1.45%.  Thus I put the 150k into that account and I’m nearly making .5% on that loan which over 5 years is around $3000.  $3000 invested conservatively over 5 years making 8% on average gives me another $1500 in my pocket.   It’s all about being smart with your money not about how much “debt” you have.  I’ll always take on more “debt” for items as long as I can get under 1% interest with no prepayment penalties and in many cases you cans still find 0% loans (not on boats sometimes on autos, and frequently on big ticket items) 

 I think where most people fall into a trap is they borrow money they don’t have to live a lifestyle they can’t afford. Then they get into a bind with cash flow especially if their job changes or unexpected expenses come up.  

This makes sense, because you have the cash safely stored in a non-volatile location (savings account, CD, etc.).  The interest rate is low, but if the market crashes hard, the money is still there.  You basically make payments out of this cash.  Parking it in the stock market is great until the market crashes, then you are stuck with a loan and have no money.  IMO, all semi-risky to risky investment money (stocks for instance) should be money that you can afford to lose and didn't borrow against in one way or another.  

1 hour ago, oldjeep said:

Pretty sure that spending 150k on a car as an example to show how you saved .46%  in interest is deserving of its own thread. 😂

No, his example made perfect sense.  If his money parked in a safe account makes more interest than the loan, it would be stupid not to keep it there. 
-  If anything ever happens, he can pay off the loan at any time
-  Builds additional credit.  If he ever needed less debt-to-income, could simply use the savings account money to pay off the loan
-  Allows cash on hand for an emergency

The whole point is about risk management and not buying things one can not really afford.  Needing a 20 year loan to "comfortably" afford a boat means you can't afford a boat.  But getting a 20 year loan that you make 4x the payment on monthly means you can likely afford the boat but are insulating yourself from risk.  Simply put, that same 20 year loan can be a good financial decision for one situation and a pretty stupid one for another.  

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6 minutes ago, Nitrousbird said:

This makes sense, because you have the cash safely stored in a non-volatile location (savings account, CD, etc.).  The interest rate is low, but if the market crashes hard, the money is still there.  You basically make payments out of this cash.  Parking it in the stock market is great until the market crashes, then you are stuck with a loan and have no money.  IMO, all semi-risky to risky investment money (stocks for instance) should be money that you can afford to lose and didn't borrow against in one way or another.  

No, his example made perfect sense.  If his money parked in a safe account makes more interest than the loan, it would be stupid not to keep it there. 
-  If anything ever happens, he can pay off the loan at any time
-  Builds additional credit.  If he ever needed less debt-to-income, could simply use the savings account money to pay off the loan
-  Allows cash on hand for an emergency

The whole point is about risk management and not buying things one can not really afford.  Needing a 20 year loan to "comfortably" afford a boat means you can't afford a boat.  But getting a 20 year loan that you make 4x the payment on monthly means you can likely afford the boat but are insulating yourself from risk.  Simply put, that same 20 year loan can be a good financial decision for one situation and a pretty stupid one for another.  

Point was that people who are able to pay $150K in cash for a car are not real likely to have pertinent advice for the OP;s question.   And if everyone who you think can't afford a boat stopped buying one then the boat companies would be out of business ;)

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13 hours ago, Nitrousbird said:

Please explain again how my cash was worth less when I was able to buy MUCH MORE with the same income/debt as I had prior to the recession?  With a pile of CASH on hand, you can buy those cheap homes, cheap toys and low priced stocks, that will bounce back and make you a tidy some of money...remember, cheap loans are harder to come by during a recession.  At least that's how it factually worked in our last recession.  We scored a home cheap (well, cheap for the size/area at least), one that pre-recession would have been out of our budget and now is worth a tidy some more as a result.  

If you notice my posts were intentionally directed at the next coming recession.  This recession, in which, the USD will be  a bright shiny turd.   What happened in 2008 is not indicative of what will happen.  But, yes, in general government fiat is not a sound holding to prepare for a recession.  Sometimes you might make out alright but overall there are much better options.  Your problem @Nitrousbird is that you are generalizing how you could have made out in 2008 to all economic recessions.  

 

13 hours ago, shawndoggy said:

Do you invest in the market with doubloons?  Whether acquiring tangible or intangible assets, what are you going to use if not USD?  I'm srsly curious to hear your thoughts on currency arbitrage, bama.

Not sure how this relates to the discussion at hand.  Of course, USD is the means in which to make an investment.  You have no other option ( well, kind of).  I simply took issue with the patronizing tone that @Nitrousbird took with others in insinuating that his cash heavy position was somehow preparing him well for the upcoming recession when in fact the exact opposite will be true.

 

@hunter77ah hit the nail on the head. The USD has been falling and it will continue to do so until it totally tanks. Then hyperinflation sets in and your heavy cash position doesn't look so great.  Hello Zimbabwe

Edited by bamaboy
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4 hours ago, bamaboy said:

If you notice my posts were intentionally directed at the next coming recession.  This recession, in which, the USD will be  a bright shiny turd.   What happened in 2008 is not indicative of what will happen.  But, yes, in general government fiat is not a sound holding to prepare for a recession.  Sometimes you might make out alright but overall there are much better options.  Your problem @Nitrousbird is that you are generalizing how you could have made out in 2008 to all economic recessions.  

 

Not sure how this relates to the discussion at hand.  Of course, USD is the means in which to make an investment.  You have no other option ( well, kind of).  I simply took issue with the patronizing tone that @Nitrousbird took with others in insinuating that his cash heavy position was somehow preparing him well for the upcoming recession when in fact the exact opposite will be true.

 

@hunter77ah hit the nail on the head. The USD has been falling and it will continue to do so until it totally tanks. Then hyperinflation sets in and your heavy cash position doesn't look so great.  Hello Zimbabwe

I hear during the next recession their will be Crypto Utopias  where you will be able to go to seek refuge and they will accept USD as payment to enter.  

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I think we're getting too far into planning our doomsday bunkers, when the OP asked for advice on rates/terms/new vs used.  

Here's an easy chart to look at from Wings Financial - I used them awhile back for a boat loan.

https://www.wingsfinancial.com/loanrates

Same rates for new vs used.  Longest terms are 10yr.  Shorter the loan, better the rates per usual.  

I pay cash for toys now, but that hasn't always been my mindset.  Then again, I paid less for my entire boat than most on here pay for options.  Boat loan rates from wings are very reasonable rates at what are what I consider smart financial terms.  If you can get long terms with low rates, go for it if you're going to pay it off faster.  Being upside down on a toy isn't a good place to be.  

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