Boat Show Crazy Deals?

[wakecrashin]

the 6% over 12 yrs doubles the price of the boat is WRONG...Here my deal...06 VLX $52000 Financed over 15yrs at 6%= $78,985.80 in total payments...Rule of 72 doesnt work on loans.... that i know of

That doesn't calculate. Put money down?

52000+26985 (interest @6% over 15 yrs)= $78,985.00 What doesnt calculate?????? No money down except for taxes...

[jshap]

the 6% over 12 yrs doubles the price of the boat is WRONG...Here my deal...06 VLX $52000 Financed over 15yrs at 6%= $78,985.80 in total payments...Rule of 72 doesnt work on loans.... that i know of

That doesn't calculate. Put money down?

52000+26985 (interest @6% over 15 yrs)= $78,985.00 What doesnt calculate?????? No money down except for taxes...

He's correct. The Rule of 72 does not apply to legitimate, simple interest loans. It has to do with compounding interest on an investment...the length of time it would take to double your money.

Notice I said legitimate. Now, say, you got a loan from a loan shark and the interest was added back to principal, then the Rule of 72 would probably apply since it's compounding. If you let it go, you end up with busted kneecaps and a double loan balance.

Edumacation

According to the example on that page, the Rule of 72 works if you make no payments. In an amortizing loan, this isn't the case.

Edited December 12, 2006 by jshap

[NorCaliBu]

52000+26985 (interest @6% over 15 yrs)= $78,985.00 What doesnt calculate?????? No money down except for taxes...

Used the wrong formula. I used a formula for an investment (where principle doesn't diminish) instead of for a loan where it does. I'll be quiet now.

Nah!

[Lakenut]

According to the example on that page, the Rule of 72 works if you make no payments. In an amortizing loan, this isn't the case.

Gotcha. Learn something new everyday.

26K in intrest is still crazy.

[jetskipro550]

There was a thread last summer on WW talking about boat loans and probably half of the people were not on a 15, but 30 year loan Thats where the HUGE interest is coming. It was pretty funny when someone started doing the math for them and showing how much they were spending on interest

I guess thats how young people with marginal jobs can afford 60k boats