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Old    Hydrodynetahoe            06-03-2012, 7:45 PM Reply   
what are the negatives of doing a boat loan
Old     (jaed)      Join Date: Feb 2012       06-03-2012, 7:54 PM Reply   
Old     (tx_foilhead)      Join Date: Apr 2009       06-03-2012, 8:16 PM Reply   

It's definately not the quickest way to buy, but when gas goes up or Wetsounds drops a bunch of new gear it's nice not to have any payments.
Old     (ferral)      Join Date: Sep 2007       06-03-2012, 8:26 PM Reply   
As opposed to what?
Old    Hydrodynetahoe            06-03-2012, 8:27 PM Reply   
buying the boat with cash
Old     (nauty)      Join Date: Feb 2004       06-03-2012, 8:27 PM Reply   
Bought my Supra brand new in 2005. I put only $1000 down, rolled in the tax, title, and license into my loan and financed right at $40k @ 6.25% for 180 months (15 yrs) with payments of $333 per month. I kept the boat for 75 months paying a total of $24,975 in payments. At the time I sold it I owed $26k and sold it for $27k.

The bottom line is that it would have been awesome if I could have paid $40k cash for that boat or even if I could just have taken the $24,975 worth of payments I made and paid cash for something different. However, I was not in a financial position to come up with $25-$40k to pay cash for a boat. The way I see it, I paid about $25k to use a boat whenever I wanted for 6 + years. That breaks down to $3996 a year which is about what you might spend on a vacation. The riding season in Texas runs March-October, so I certainly got my $3996 worth out of it every year.

Of course paying cash is optimal, but I don't have any regrets about financing my boat. I think if you're going to finance you just have to be smart about it. You have to get a good deal on the boat as well as a decent rate. At no point during my loan was I upside down. The value of my boat was always more than the balance I owed. Cash is always best, but if the deal is right and your perspective is right, it's an option worth considering.
Old     (tx_foilhead)      Join Date: Apr 2009       06-03-2012, 9:00 PM Reply   
Good thing you didn't need to sell it in 09.

Let's look at it a different way, had you spent those years saving that payment you could have bough the same boat only used. Now, use that a few years and you only loose a couple thousand or so which put with your payment that you've been stashing still, buys something a little bigger and a little newer. That will keep snowballing along as long as you want and should you decide you want to do something different you get most of that money back not just $1000 and no more payments.

Taken to the extreme, I have a good friend who is a finance major although there is absolutely no way he would finance anything ever. 15 years ago he bought a car, sold it a bough another with the money he made. He stuck to it although I thought it was a bit strange when he opened a car lot with 5 cars. These days he probably has 50 employees who take care of 4 lots and well over 200 cars at any given time. He can stay home or take off when he wants even though he rarely does. Best of all his house is on 3 acres of Lake Austin waterfront. Paid cash for it all and is paitent enough to wait for a deal when he buys anything. I'm not really laughing at those old diesel Mercedes and Buicks he was trying to sell anymore. There's someone like that with a pile of cash patiently waiting for people who finance their toys to hit a bump in the road.

It sucks initially that way, but in the long run the Ballers go broke and the bums end up looking pretty good.
Old     (Dmac420sj)      Join Date: Mar 2012       06-03-2012, 11:48 PM Reply   
Gayper !
Old     (cwb4me)      Join Date: Apr 2010       06-04-2012, 4:59 AM Reply   
I payed cash for my 2007 boat and sold it in 2011. It cost me roughly 12000 to own it for 4 years and use it for 425 hours. I financed my current boat for 5 years @3.99% . That being said it all depends on your free cash available at the time of purchase. I figured at 3.99% it wasn't much to pay to keep my cash cushion.
Old     (h2ohangtime)      Join Date: Aug 2002       06-04-2012, 8:15 AM Reply   
Cash is king. Don't waste your money on the interest. With prices staying stable or even going up in the used boat market you're better off buying a boat that is a couple years older (with 100% cash) and then saving to buy up in a couple years.
Old     (boardjnky4)      Join Date: Dec 2011       06-04-2012, 9:27 AM Reply   
A $40k boat with only $1000 down? You are a bank's dream.

Financing is not a bad way to get into a boat, but you should try and put 25% or so down on it.
Old     (saberworks)      Join Date: Sep 2010       06-04-2012, 11:06 AM Reply   
Like a lot of people I don't have tons of cash to buy a boat. If I waited 7 years I could save it up, but I feel like by then I'll be too old to enjoy it! Anyway, I have no problem financing things, but as a policy always make sure you owe less on it than you could sell it for. That way if you lose your job or get injured, you can get out from under the payments quickly. This probably rules out buying any new boat, and means you should have a reasonable down payment for a used one.
Old     (williamburell)      Join Date: Sep 2011       06-04-2012, 12:17 PM Reply   
your last comment hit it right on the head. Get it while you are young enough to enjoy it. Hate to sound like a financial lunatic but who gives a crap. I bought my first boat at 27 b/c I was "saving up". I bought a 20k boat and financed 5 of it. In the end I could have bought a boat years earlier and enjoyed the water alot more.
Old     (rodltg2)      Join Date: Oct 2005       06-04-2012, 12:39 PM Reply   
I agree, In five years you could be dead! I rather pay more in the end and enjoy it now! I however had to buy my boat cash , can't get approved for a loan!
Old     (williamburell)      Join Date: Sep 2011       06-04-2012, 12:52 PM Reply   
ps I don't think anyone on this board or any board is ever ever going to equate buying a boat to a smart financial decision. They are expensive as hell and never give it back except in memories and fun. One thing about spending all your cash on a boat is you better leave money for toys, gas, and repairs. It takes about 12 seconds to run through a couple of payments in repairs and toys
Old     (boardjnky4)      Join Date: Dec 2011       06-04-2012, 1:03 PM Reply   
Financing toys is never smart financially. But like everyone has said, there is a price to pay to enjoy yourself.

With that said, you should be able to protect yourself in case things go south and you can't afford to keep the boat any longer. Make sure you are not upside-down on the loan...EVER. This is where the talk of down payment and loan term come in. Put enough money down on the boat so that the amount you owe on the boat is less than what you would sell it for. If the loan term is too long, you are more likely to become upside-down. For example, you would not take a 15 year loan on a 10 year old boat. Chances are the boat will go down in value faster than you will be paying it off. If you are buying a brand new $80k boat, you can go with a longer term loan because it will more than likely hold it's value pretty well while you pay down the loan. Also remember that longer term = more interest paid. A $30k loan spread over 15 years (bad idea) would end up costing you more like $50k all said and done.

So be smart. You don't need the fanciest boat on the lake to have fun on the water and get a good wake. There are a lot of used boat price points that will get you on the water without an $80k loan breathing down your neck.

Personally, I ended up buying a used boat and paying cash. I happened to have the money available at the time. My backup plan was actually to sell my car (which is paid off), finance a new car (loans are cheaper for cars) and throw the cash towards a boat. If you have a car that is paid off and worth 10-20k, it's a good way to shift the money around.
Old     (williamburell)      Join Date: Sep 2011       06-04-2012, 2:59 PM Reply   
Good point on buying an older/cheaper boat but lets be honest the money hole can open up pretty good on older boats. A functional question out of this is how are you with your hands? If you can't change a light bulb buying an older boat is not going to work. Mechanics are $$$. If you can handle a wrech and know your stuff then I'd say go with what you feel comfortable with. I'm pretty freaking good with boats and I got burned on my boat for a monster bill b/c me and 2 mechanics couldn't find a bad connection on a fuel pump.

Expenses will happen.

One of my buddies has an old 2001 that he paid like 3k for and I still swear they have more fun in that boat than mine
Old    LR3w8kbrdr            06-04-2012, 3:08 PM Reply   
^^^bc its a Nautique and we all know people with nautiques have more fun!!

Totally joking, hope mhunter stays out of this thread

But the 2001 still throws a serious wake and can be picked up on the cheap
Old     (johnny_defacto)      Join Date: Sep 2006       06-04-2012, 3:19 PM Reply   
With a used boat, they do not depreciate in value at a fast rate. If you buy a $80k new boat, put %20 down ($16K) and finance $64k, you will be driving off the lot with a brand new boat that is probably only worth $65k-$70k. So a slightly used boat will offer a little bit more protection from being upside down if you finance. With what D said about his friend, that is great, but wakeboarding is a young mans game, and waiting 6 years to save up money is a tough one in this game. A boat is not an investment (exception to those who make money flipping) and so financing your "liability" to enjoy a sport with family and friends is worth it to me.
Old     (nauty)      Join Date: Feb 2004       06-04-2012, 3:26 PM Reply   
"your last comment hit it right on the head. Get it while you are young enough to enjoy it."

This was the case for me. I was 36 when I bought my Supra. I was at the peak of my wakeboarding addiction. The $4k I was spending a year in payments on my boat was worth every penny. I sold my boat when I was 43. The last couple of years my desire to ride or go boating was shrinking year by year. I didn't realize it at the time, but I was pretty much done with wakeboarding/boating.

While waiting for the sale of my boat to go through I thought that once the boat was gone I would still get out and ride, but I just wouldn't have all the hassle of boat ownership (cleaning, repairs, etc). Once my boat was gone though, so was my desire to ride. I've ridden 3 times since October and have zero desire to do it again.

So then, had I decided to save my money 7 years ago so I could buy a $25k boat, I would have enough right now to go pay cash for it. The problem is I wouldn't have wanted it now. I guess the upside would be that I would have $25k in my bank account The downside would be that I would have missed out on those 5 or 6 years in my prime for enjoying the sport.

Again, everyone's scenario in life is different, but I have no regrets with the way mine worked out.
Old     (trdon)      Join Date: Sep 2007       06-04-2012, 7:16 PM Reply   
Just what I did, my opinion.

I bought my first boat at 21, paid 9500 for a 85 sn2001. bought it using a 4 year loan for about 235 a month. Had it for 7 years, sold it for 7500. Used that money to put down on a 93 sport nautique I bout for 14500. Had a 4year loan of 225 a month. Spent some money in a shower and a tower. Sld it 3years later for 12500. Used that to roll into the 03 sante I have now. Had a loan for 389 a month for 5 years. Paid it off in 3.

I have always had a decent job and a wife with one too. We have a modest house payment and the drive to pay off things. I am now 31 and I am so glad I did a loan had had what I did. I have a cumulative total of 550 hours on boats that I would not have had otherwise. If I would have waited until now to buy, I would have lost out on all that time and I would probably never felt ready to drop 30k on a boat all at once. I work construction and don't know day to day if I will have a job so it is hard to give up that fallback coin in the bank.

Cliffs, do a loan if it works for you. If you need cheap, do what I did and work your boats up to what you want. It will take some time, but it keeps payments low while you can still ride.
Old     (nitrousbird)      Join Date: Sep 2008       06-04-2012, 8:05 PM Reply   
Length of loan is a big factor too. If you have to get a 15 year loan in order to buy the boat, you can not afford it. If you can do it reasonably on a 3-5 year loan, go for it.
Old     (jon4pres)      Join Date: May 2004       06-04-2012, 8:20 PM Reply   
I agree. Live your life and there is nothing wrong with debt as long as you manage it responsibly.

I went the cheap route and bought an 82 nautique 2001 that I could pay cash for with intentions of upgrading but have been so busy enjoying the boat over the past 7 years that I forgot to upgrade.
Old     (wakeboy01)      Join Date: Apr 2009       06-05-2012, 9:16 AM Reply   
My $0.02 [and I may be reiterating what other people said]

Figure out how much you can afford on a monthly basis for a boat. Subtract about $100 from that and that would be your monthly boat payment. You have to keep in mind for insurance (american family insurance has decent boat rates don't know how they are with claims though), gas, and maitanance. You don't want a paper weight sitting there soaking up sun because you can't afford gas or maintenance. Also make sure you have a year's worth of an emergency fund in case you lose your job. You wouldn't want the bank rolling up taking away your boat that you've spent $XX,XXX on. Banks have loan calculators so you can see how much you would be paying in interest (could shy you away) but like other people said you only live once enjoy it while you can. Also shop around for banks different loan terms for different types of loans. Newer boats you can get longer terms which is nice for lower payments but sucks for interest.

Or save up enough for a used boat and work your way up like TRDon did (only he did it with loans). Be sure you have about $2,000 on top of that for just in case maintenance on boat or tow vehicle.

Do your research and have the boat looked over by a mechanic (or two like others have said some mechanics are hit or miss). For me I didn't want to deal with wood stringers. Didn't like carbureted engines.

Have fun and good luck.
Old     (scotthons)      Join Date: Mar 2010       06-05-2012, 10:03 AM Reply   
Originally Posted by Hydrodynetahoe View Post
what are the negatives of doing a boat loan
Payments during the winter time...

I took out a loan for our first boat and paid cash for the second. I don't regret doing either. The first boat was a repo direct drive and the payments were cheap which allowed us to pay it off early and start saving for the next one. It took six years, but we enjoyed the hell out of the that Malibu Sportster! Plus when we already had the Sportster we were very patient and waited for the right deal until we found our current boat.
Old     (phatboypimp)      Join Date: Apr 2005       06-05-2012, 10:47 AM Reply   
When I first read the title of this post I thought it said "Negatives of a boat LON". Kinda disappointed.
Old     (mim3)      Join Date: Sep 2006       06-05-2012, 11:54 AM Reply   
Most of the "BIG TOYS" in the marina had For Sale signs on them. I wonder how much they put down? Big or small they are not investments.

Do what is right for you and your family. I have a huge stack of memories to last a lifetime!
Attached Images
Old     (cwb4me)      Join Date: Apr 2010       06-05-2012, 5:31 PM Reply   
Originally Posted by mim3 View Post
Most of the "BIG TOYS" in the marina had For Sale signs on them. I wonder how much they put down? Big or small they are not investments.

Do what is right for you and your family. I have a huge stack of memories to last a lifetime!
I bet that puts out a monster wake.
Old     (will5150)      Join Date: Oct 2002       06-06-2012, 7:10 PM Reply   
^^ That boat is a different story- you can write off the interest under a second home mortgage allowance. Haven't see a wake boat that qualifies for that yet- although the G23 should- that thing is huge $$$$$ ching! WHO can afford a 100K wakeboat?!? I can't and I do pretty friggin well!
Old     (dougr)      Join Date: Dec 2009       06-06-2012, 8:07 PM Reply   
when do you want to get a boat, if you are hungry to get out on the water and have your heart set on a boat, the interest rates for boat loans are uber low. my loan in 08 was in the upper 6's. now i have a 4% loan and a new boat. I try to prep my dealer 6 month ahead of time and work out a deal when they are placing there first boat order for the season. may manufactures bonus there dealers when they order more boats up front. so if you can wait and want a new boat, try and work out a deal that gives you 25 to 30% off the new boat and you then have a cusion so you are not upside down. then look at rates.

everyone thinks you cant get a killer deal, but most dealers will blow a boat of 2 out each year if you find out how many boats they sell each year. in 09 the bank repo's were everywhere so you could get a killer deal on just about any boat you wanted. dealers went under and existing dealers cut there orders way back. that put pressure on the manufactures to press the dealers to order a few extra boats. anyways, your should have balance, not all cash or all financing unless the cash will not stress your life or the payment make you uncomfortable. get to a medium where you can sell the boat quickly if you have to without loosing your pants and keep enough money to make at least 2 years of payments ( as if you didn't have the money) you can always buy down your rate to a point where you you cut the term way down or the % is so low that it only makes sense to hold your cash. There will always be something in your life that puts you in a payment, but if you can generate the same amount of revenue as the interest paid, you basically are floating the banks money at no interest.
Old     (illini88)      Join Date: Oct 2007       06-06-2012, 9:51 PM Reply   
I am a big advocate of paying cash for toys. That being said, there is something to be said for buying stuff when you can enjoy it. With boats, two big issues are time (yours and friends) and the physical abuse. Both tend to come into play and affect your ability to enjoy the boat. Also, to be fair, those of us that enjoy activities like boating would likely spend the cash on something else recreational if we weren't boating.
Old     (Orange)      Join Date: Jun 2012       06-07-2012, 12:59 AM Reply   
I totally understand the idea of buying a boat when you're young enough to more fully enjoy it. BUT.... Do you need a loan to buy a decent boat? Or you need a loan to buy a spectacular boat? For the same cash as you would pay for the downpayment on brand new Nautique, Mastercraft, Malibu, etc, you CAN buy a very enjoyable older boat, but then you wont have payments every month and it won't depreciate anywhere near as much. It will save you literally tens of thousands of dollars over a 4-5 year period.

So ask yourself... Are you really borrowing money in order to be able to enjoy wakeboarding or waterskiing at all? Or are you really so good that a 8-10 year old wakeboard boat isn't capable of producing a wake up to your skill level? Or are you just impatient and want the bling now?

I've seen so many people use loans and leases to obtain cars, boats, RVs, etc. that they really shouldn't have afforded. Over the last five years I've watched a great many of these people - good friends - declare bankruptcy, lose their houses, and have to uproot their families. Some of them learned their lesson and understand the errors they made. Some are still clueless... Went right back to their prior habits as soon as somebody was dumb enough to loan them money again. They'll be right back where they started if there is another recession. Sad.
Old     (dougr)      Join Date: Dec 2009       06-07-2012, 8:20 AM Reply   
if you have to liquidate all your cash to buy a boat, then no, get a loan, that way if you loose your job, get hurt, cant work for sometime, you can live, you can always sell the boat, thats why i would make sure you are buying something that will not put you upside down. yes interest is a bummer, but a hundred bucks a month down the drain is better than sitting on a mound of bills and no job or money to pay them. just be smart and balance it out so you can have security and the boat that you want.
Old     (rallyart)      Join Date: Nov 2006       06-07-2012, 9:06 AM Reply   
It's a bit of a philosophy question about a boat loan. Getting a new boat is not any kind of necessity but maybe having some kind of boat is, or not. Is it a toy or a lifestyle choice? I've always looked at my boat as an 'extra' money thing. I don't buy toys on borrowed money. Those are nice to haves but I don't want a 'nice to have' to control the rest of my life.


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