Deferred Down Payments

hey guys , i just wanted to get some opinions on this idea. in order to spark some boat buying interest in this slow economy, I am thinking about offering a deffered down payment option. possibly give the buyer till the end of summer to come up with the down. good idea??

Sounds like most of the boats will be repossessed at the end of the summer. If they don't have it now, why would they have it then?? seems like they would spend more coin hauling and gassing and outfitting the new ride so cash would be tighter.

Lean times coming. Time for everyone to adjust their lifestyle a bit.

It sounds like you'll be chasing a lot of money come September. It's not a terrable idea but i'd use it more as a negotiating tool. If you could do a down payment match up to a certain dollar amount say $2000 then just deduct it off the gross. Obviously hitting hot buttons right now such as gas or defereing monthly payments is going to be your best bet. With the economic future being uncertain people may feel unsettled knowing they have a down payment hanging over their head.

You might spark some interest, but like the others said, it may be a pain in your butt later. That sounds like a great idea when the economy is rocking, but now it sounds a little iffy.

The gas idea isn't a bad one, especially if you can negotiate a deal with a major gas company. Say you give them a 500 dollar gas card to Shell or what not if they buy a boat, and you may be able to get that card for 450 bucks from Shell if you set up an agreement and move enough boats.

my theory on that type of a plan is they tend to attract the borrowers that have poor credit and you will be chasing your money later and bottom line is probably tough to approve. the people with good credit have good credit for a reason and that won't matter much to them... not saying there is not exceptions, but that might be a tough one.... good for advertising to get people in the door, but then only offer it to 720 beacons and better......

Rod,

What you want to do is defer the first payment. There are a couple of ways to do this. You can pay the first two or three payments up front or have a deal with a lender that you pay the intrest on the loan to defer the payment for as long as you want to. Don't let a boat leave with money owed on it.

If someone can't come up with the down payment they can't afford to buy a boat period. If they don't put a up a down payment they are automatically upside down on that boat, not real smart if you ask me. This is why our economy is the way it is right now. Please don't add fuel to the fire.

Did our society not learn anything from the morgage mess? If you can't afford something, don't buy it! Damn, if you can't get the down on a boat, how are you gonna afford to put gas in it. Or buy all the crap that everyone does when you buy a new boat.

Rod, I do wish you luck, as it is a tough time for boat sales, and certainly isn't gonna get easier anytime soon. But it seems that this idea while it might get the sales numbers you want now, will kill the bottom line down the road.

nu bu, I've bought 3 boats ( over 6 years, all late model), 1 brand new...I've never been upside down. I never put in money down on a boat.

(Message edited by wake1823 on June 05, 2008)

Sam

I'm all ears tell us your secret!

You are the rare exception my friend. Good for you. So what boat are you rocking now?

(Message edited by 05mobiuslsv on June 05, 2008)

1st boat older prostar 190 ( 98), bought from a kid who needed cash, put about $800 in it, net profit was about $3k when I sold it--bought on a CC, paid $150/month. 2nd boat antoher prostar (205) broke even when I sold it. bought on another CC, paid $200 month. broke even when I sold it. 3rd boat 04 SSV , 15 year loan, made $1500 when I sold it ( traded in) . I owe right at 52k on a new SSV loaded. in another 2 years when I sell I should be right at break even, and yes I took cash at signing on the new boat.

No secret, just waiting for good buys...I've never sold a boat b/c I had too....when I see a great deal, I'll usually buy then sell my current boat.

I'm a tad worried on the new one.

Sam used boats don't count by the way. Based on the fact that you're buying mostly used leads me to believe that you bought a leftover model and not a brand new current year boat am I wrong. Buying in these two categories increases your odds of being able to buy them right tremendously. So am I on the right track here Sam?

Sam you need to put the coolaid down if you think you're gonna get $52K for that boat in 2 years sorry dude, good luck with that.

(Message edited by 05mobiuslsv on June 05, 2008)

No need to put money down as long as you don't finance for 15yrs. if you can afford the monthly payment and finance for 5yrs then you could sell in 12-18 mths and be ok. Still have to be able to afford the payment.

the new boat was an 07 bought last year. I owe a tad under 52k now. I'll probably owe 49 ish in two years....with current inflation, and the historical price gouging on new boats...I think I might. Base MSRP from skier's choice on the 08 SSV is 56k, you can easily add 5-8 k in options real quick ( z-5 cargo rack, engine upgrade, and stereo=close to 7k)

Yeah, as long as these prices keep going up 7-10% a year, I'm not going to have a problem breaking even on my boat after a few years. Right now I'd take an a$$ kickin' though Oh well, it's only money.

"Yeah, as long as these prices keep going up 7-10% a year, I'm not going to have a problem breaking even on my boat after a few years"

That's what everyone said when they were buying houses they couldn't afford!

That's what everyone said when they were buying houses they couldn't afford!


True dat!

you can't hardly compare the meager 3-4% price increase on boats to what homes prices did over the last 10-15 years in some places...people making 10-20% a year on homes....come on.

There will be a 10% price increase on boats across the board for 09'. Yes you can compare, when demand goes down so will these outrageous prices. I wouldn't be counting on anything if I were you.

I personally can't imagine boat prices continuing to go up 7-10% a year. While those with a lot of money may continue to buy, on an overall basis boat sales are struggling and will continue to do so. Less demand is going to lower boat prices, used and new.

If the raw materials continue to rise, manufacturers will either be forced to lower their margins in order to drive volume, or possibly bring out "cheaper" models.

Sam, are you taking the interest cost & any maintainence costs into your figures? I am curious.

Rod, bad idea in general and worse when it is on a depreciating "asset". at least from a financial standpoint. By the time they start paying it down it is worth even less than when they start out.................

Tractor, I doubt he was factoring in "cost of ownership" which he shouldn't on a depreciating asset luxury item. His goal with these boats as is much of ours is to have fun while not loosing our ass. It's not as if he was looking at making money on these boats as if he were fliping a house or building new construction for resale.

If they can't raise the DP, it will be very tough for them to save over summer because we all know running these things cost more than buying them

Boards, jackets, ropes
Fuel,oil, OIL CHANGES
Waxes, cleaners
Additional ballast
etc etc etc

Since you will be responsible for the defered DP you will be getting a percentage of boats back with 50 hrs on them and no servicing done done, dirty and full of scratches.

you would be better off paying then DP for them and then adding it to the purchase price. Then the relationship is between the buyer and the finance company, not you.

find a different lender.. and one who is not willing to scam the consumer out of an additional 90 days of deferred interest.. work with a lender that is willing to be realistic about current market prices.. volume talks.. sell more boats and better lenders will follow..

Unless you have some inside line on lenders that I don't know about, you will have a tough time getting this done. More than a couple dealers have been caught playing the "phantom down" game, and it ain't pretty when the lender demands payment of the loan in full on discovering it.

Or you may be thinking you can get the boat financed with a deferred down, but then you are at risk if the guy doesn't pay you the down. I know that the lenders will be looking pretty hard at this stuff, most have already tightened up their qualifiers and word is folks with marginal credit are going to have a very tough time getting bought by the major marine and RV banks pretty soon.