Boat Financing?

[guest]

OK so I am saving for a Ranger 2050 I have looked at financing it but at 40-50k @ about 6% it's a joke. I am curious what intrest rates you guys are seeing on new boats. I can get 1.9 2.9 etc on ATV's Snowmobiles cars etc why not boats?

[dutchboy]

Perhaps because snowmobiles and ATV'S cost $5,000 - $7,000 and not $40,000?

Would you lend me $40,000 at 1.9%?

[Yooper2]

I was able to secure 5.5% / 60 Mos. when I purchased my boat this spring. When I was lookinga at local banks & credit unions, there was nobody that was even close to being under 5% unless the loan was very short (1-2 years).

[Guest]

Perhaps because snowmobiles and ATV'S cost $5,000 - $7,000 and not $40,000?

Would you lend me $40,000 at 1.9%?


With the right down payment on a new product with good enough credit, Why not? You can get these rates and better on a new truck or car. Why would a boat be any different? In most cases people take better care of their boats then they do their cars/trucks and the boats tend to last longer.

Also if I had 40k I would just buy the boat and would not be concerned with the financing.

It does not matter to me the cost of the boat so much as the interest rates you are getting with new boat purchases. I could easily go to the dealers and ask but then they give you the run around want to pull credit etc. And I don’t want to waste my time or theirs.

Thanks

[big_crappie]

Finance rates from the major lenders are running around 7.5% right now and you better have excellent credit and a good down payment. This isn't the old days anymore where you qualified if you were breathing. The days of free easy money are over unless you are a politician but that is for another forum. :smirk:

[yarcraft91]

OK so I am saving for a Ranger 2050 I have looked at financing it but at 40-50k @ about 6% it's a joke. I am curious what intrest rates you guys are seeing on new boats. I can get 1.9 2.9 etc on ATV's Snowmobiles cars etc why not boats?

Those low financing rates are being offered by the manufacturers on products they want to sell quickly. Heck- Toyota will give you 0% financing on a 2010 Camry, because they want to get rid of them.

Ranger apparently does not feel they must offer low-cost financing to sell their products.

[eye-hunter]

big_crappie is right, boat loans are 7.5 to 8% right now (depending on credit rating, amount, down payment, and length of loan). Lenders are being much more cautious than just a few years ago.

[Dave A]

Boats are more difficult for a bank to sell off if someone defaults. Its not like a car or property which always has more potential buyers available and is not seasonally sensitive, so there is a greater risk attached to the item, hence higher loan rates.
Avoid the traditional loan, go for a line of credit, secured by your property. Lines of credit can be found at prime or prime plus 1%, making them very attractive AND they are 'open', meaning you can pay down as much as you want on a monthly payment over and above the monthly interest.
There is also no penalty for paying down the line of credit should you come into some extra cash).

[Gman621]

Boats are more difficult for a bank to sell off if someone defaults. Its not like a car or property which always has more potential buyers available and is not seasonally sensitive, so there is a greater risk attached to the item, hence higher loan rates.
Avoid the traditional loan, go for a line of credit, secured by your property. Lines of credit can be found at prime or prime plus 1%, making them very attractive AND they are 'open', meaning you can pay down as much as you want on a monthly payment over and above the monthly interest.
There is also no penalty for paying down the line of credit should you come into some extra cash).

Dave took the words right out of my mouth LOC or secured LOC is where it's at, let's you get ahead faster :)

Cheers,
Lundfisher
(soon to be Rangerfisher)

[ColumbiaR]

I certainly wouldn't expect interest rates to come down any time soon. With all the debt this country is facing, inflation has to be right around the corner.

[bob oh]

big_crappie is right, boat loans are 7.5 to 8% right now (depending on credit rating, amount, down payment, and length of loan). Lenders are being much more cautious than just a few years ago.

They are being more cautious because they are using the money for bonuses for those master minds who lost all their money LOL Loans didn't get the banks in trouble, their greed did. Please explain he high boat loan rates to me again since home loans are at near historic lows and the housing market still sucks ????? Of better yet please explain bankers' minds to me :-

[triple t]

My only concern is why is the fed at 1/4 % and banks can only find there best rate on paying me interest at 3.5% and they want 8 % on a boat purchase.
Are the boat purchases etc. paying for the housing write downs that the fed gave astonishing rates to banks to help come clean.
Banks in the 1950 s only needed 2 percent over what they borrowed money to be profitable why does it take 6%-8% to operate ?
Its simple math, bank execs did not have 50-100 million dollar bonuses .
In essence banks internally lack the ability to keep their spending in check.
I am retired from the banking industry but it is shameful to see what has transpired over the last 24 months .

[ohiojmj]

Check a credit union; mine has been doing 5.5% for 7 yrs for the longest time. An equity loan for a toy is not a good idea in my book, tax savings or not. I don't care to spend my equity and increase risk with the roof over my head.

[bob1]

A home equity loan would be cheaper and tax deductable!

[mcbreth]

I just got 2.9% amortized over 10 years on a 2008 Ranger 620 through my CU. The dealer had me at 7.9%.....

[Nimstug]

better yet please explain bankers' minds to me :-

Not even bankers can do that.....

[B Squared]

Banks didn't operate on 2% net interest margins in the 50's and they're not getting 8% today. It's fun to blame everything on the CEOs that make insane amounts of money, but we're talking about very few guys and very little money in the grand scheme.

Real estate and auto rates are very low right now. Refinance what you've got to save some money. Get a HELOC to finance your boat - it's the best deal going. Offering a boat as collateral will cost you because your local banks and CUs see a lot of risk in that proposal. Toys are the first things to go when times get tough and most banks & CUs are seeing way too many boats and RVs coming in to their collections department right now. And they're not easy to liquidate in most areas.

If you don't have sufficient equity in your home, can't offer a large down payment or very short term on a boat loan, then don't be surprised when your banker asks you for a higher rate to reward his risk.

[bigdipper]

Risk is the issue here.... If things get tight what gets paid first? The house... The car... Credit cards... The boat???... Banks know this, hence the higher rates.

As far as using a heloc (home equity line of credit) - use caution because rates are starting to trend back upward... And helocs are tied to Prime - which means they are a variable rate product... And we know where the boys at the Fed are taking the Prime in the next few years... Which means that 3-4% heloc rate could easily be 7-9% over the next few years.

If you go with that option, make sure you are paying more than the min. interest only payment and prepay it as fast as possible.

All that being said, you should be able to write off the interest on a heloc which helps.

In the end, I'm not sure how bent I would get over a $30-$40k note at 6-7%... You're not talking about a $300k+ loan here...(in which case the rate is far more critical) Try to put as much down as you can and prepay that sucker.

Good luck...!

[Kdawg1966]

FWIW, I just bought a new boat and looked into dealer financing. They were at 7.49%. I went and talked to my bank, and the best they could do on a "boat" loan was 7%. They suggested a home equity loan, in which they paid all closing costs. I got it at 5.9% for 15 years with no penalty for prepayment. Personally, I just look at the history of the cost of borrowing money and I feel pretty darn good about the rate I got, even though I plan on having it payed off fully in less than 2 years, so the interest rate isn't a huge factor. Also, this way the interest is tax deductible. All around, it's not a bad way to go if a guy doesn't have an extra 30 - 50K cash laying around. The sooner you pay it off, the sweeter the deal it is. Lastly, they did offer the line of credit tied to prime as well, but personally, I'll take a guaranteed 5.9 over "who know's what's comin down the pike" any day. Good luck.

[larrym]

We are still in one of the biggest economic downturns most of us has seen in our life times. 9% unemployment but when you add in those who are part time and want full time as well as those who have stopped looking for work the number could be as high as 20%. Even with that so fresh in our minds we are still borrowing money to buy toys. Save your borrowing capacity to buy things that appreciate or fund your buiness but don't use it to buy depreciating things like cars, trucks boats etc. (and you sure don't want to moertgage your home to buy that stuff!) If you can afford to make the payments you can afford to save up the money. Be patient (don't need every thing right now) pay cash and keep the interest for yourself. :)

[eye-hunter]

I get the "save up for it" concept, but there is also value in having some items now, and getting several more years of use out of it. For some people, that isn't worth the price of interest, for others it is.

Say you want a new boat that costs $20k, and you could afford the $237/month payments at 7.5% interest for the next 10 years. You could instead save $237/month for only 7 years and then pay cash — saving yourself about $8500 in interest and paying for 3 less years. However, to many many people that extra $8500 (3 years worth of payments) is totally worth it to get the boat 7 years sooner.

[larrym]

I get the "save up for it" concept, but there is also value in having some items now, and getting several more years of use out of it. For some people, that isn't worth the price of interest, for others it is.

Say you want a new boat that costs $20k, and you could afford the $237/month payments at 7.5% interest for the next 10 years. You could instead save $237/month for only 7 years and then pay cash — saving yourself about $8500 in interest and paying for 3 less years. However, to many many people that extra $8500 (3 years worth of payments) is totally worth it to get the boat 7 years sooner.

I expect your right, many would rather pay out the interest and have what they want now. On the other hand there are those using credit w/o doing the calculations you just did. Many have come to the conclusion that unless they can finance it they can never afford it and, as a result, spend thousands over a life time on interest. I know because I've spent time with dozens of them trying to help them sort out the financial mess they find themselves in. Turns out that good financial management is less about how or where to invest and more about learning to control our "wants"....and that's hard to do.

[ZooMNFinancial]

Stay away from the big boy banks, if you ask me. Credit Unions are the way to go with your loans and not the big boy banks. I financed my 2006 Triton for 6 yrs @ 5.5% last fall. I believe the rate was actually 5.7% but I got the .2% discount for having auto payment. One more year left on the truck (@ 4.35% - 2yr loan) and I start doubling payments on the boat.

If you can get a amortized LOC that is the way to go. Get the ~25% tax benefit.

[bigdipper]

There are 2 distinct types of home equity financing products: 1. A "fixed rate" home equity loan that is a "closed end" loan which is amortized (paid off) over a pre-determined number of years at which time the loan is paid off and 2. A checkbook home equity "line of credit" that is a usually composed of a minimum interest only payment. A Heloc is typically considered a revolving account (similar to a credit card) because as you start to pay it down - you could, essentially borrow more (up to the pre-determined limit) by writing an additional check. Care should be used with this type of account.

Both of these products have their uses... But the goal should always be prudence and to prepay these as quickly as possible.

[snelly]

A HELOC is a bankers word for second mortgage.

[REW]

Guest,
Simply put -
The going rate to borrow money these days is 6-7%.

If you finance an object, car, boat, airplane, snowmobile and get financing for less than 6 or 7%, you are having someone else pay for the financing.

i.e. the money is still being lent to someone for 6-7%.

If you get the object for 1-2%, you are paying more for the object and the 4-6% financing charges are simply being picked up by the seller and are being passed on to you.

Money is not free. You have to pay for the privilidge to use it. If you don't pay for it directly in the form of a stated finance charge, you are paying for it by the dealer paying for it and swallowing the cost in reduced profit, or the item selling price is being inflated to cover the cost of the finance charge.

Nothing is free in life.

Take care
REW

[bigdipper]

Guest,
Simply put -
The going rate to borrow money these days is 6-7%.

If you finance an object, car, boat, airplane, snowmobile and get financing for less than 6 or 7%, you are having someone else pay for the financing.

i.e. the money is still being lent to someone for 6-7%.

If you get the object for 1-2%, you are paying more for the object and the 4-6% financing charges are simply being picked up by the seller and are being passed on to you.

Money is not free. You have to pay for the privilidge to use it. If you don't pay for it directly in the form of a stated finance charge, you are paying for it by the dealer paying for it and swallowing the cost in reduced profit, or the item selling price is being inflated to cover the cost of the finance charge.

Nothing is free in life.

Take care
REW


EXACTLY - REW...

it cracks me up when i here people say 6%!!!! - That's SOOOO High!!!!

huh? high???.... WHAT???? - are you crazy? lol

In my opinion, people looking to borrow money really need to consider the entire scenario - NOT just the rate... people are so fixated on rate, when the truth is - they need to understand the entire loan scenario. (amount borrowed, term, lender fees, APR, prepay penalties, annual fees, etc. etc...)

Give me a break already people. We are so ridiculously fortunate to live in a country where we have the ability to borrow money for LUXURY items like boats and jet skis and RV's and snowmobiles, etc..... lol

[ozarkeyes]

The historical cost of money believe it or not, is 6%. I have seen notes and mortgages from the 1800's 6%, even during the depression- 6%. As REW has eluded to, 6-7% is not outrageous.

[Crashtest7]

Two months ago. 3.75%. 60 months. Boat and land up north as collateral.:smash:

[Derwood]

Not judging at all... but what do people "generally" do when they take out a 15 year loan on a new boat? Do they eventually pay it down/off when they come into some money. Do they buy and use a brandnew boat for 4-5 years with the lowest payment possible and then sell it and pay down the rest of the note in one payment? Just curious is all...

[eye-hunter]

Derwood - my boat loan isn't 15 years (although my house loan is). That said, I intend on keeping it for a long time. With regards to payments, I over-pay every month so it'll be paid off much faster than the actual term on the loan.

[guest]

REW and Bigdipper

My question is due more to curiosity then to complain about 6-7% If and when I borrow I don't mind paying inters on that money. Knowing I am paying a fair rate.

To me a fair rate is the lowest rate I can find on the best priced boat of choice I can find. I have great to perfect credit so that is not an issue. I have payed under 2% on my last 2 vehicles So seeing the 6+% for a boat I started to wonder what other where getting and why you never see special financing like you do on ATV etc.

The paying cash thing is great for those who do it. But on the other hand maybe I can and would rather make 8+% on investment returns on that money while making payments at a lower rate. Or maybe I work an ok job and really want the boat. now and not 3 or 4 years from now.

Anyway the object to this post was to find out what Rates people were able to secure and how. Not to look down on how others spend money. Maybe there are other out there like me who have not thought of this way or that way and it will open some doors.

Thank you everyone for your post, I will have to work on registering so I am not always a guest.

[huntermda]

I find myself in the same situation as you. My initial plan was to pay for my just ordered boat (ranger 2050) in cash. As I thought it through with my wife it made more sense for us to use some of that money to pay off our vehicles and a few other small balance outstanding loans. This improves our monthly cash flow dramatically and will allow us to pay more principal off monthly on the boat loan as we're able. My best rate qouted was 6.99. I saw my parents save nearly every dime in anticipation of traveling after retirement. Needless to say that never happened due to decline in their health and they were never able to enjoy some of the things together that they had worked so hard for. Just think through the process and enjoy that boat!!!:cheers:

[B Squared]

Not judging at all... but what do people "generally" do when they take out a 15 year loan on a new boat? Do they eventually pay it down/off when they come into some money. Do they buy and use a brandnew boat for 4-5 years with the lowest payment possible and then sell it and pay down the rest of the note in one payment? Just curious is all...

Most people that use a 2nd mortgage to finance a boat, car, etc. will follow a track that goes like this: Get the loan, make payments for a couple years, trade the asset and refinance the loan, pay on that one for a while then get another new asset and another loan... Eventually the person sells their home and the 2nd is paid off. After a year or two they're back at the bank getting a 2nd on the new home to buy the next boat/car/whatever. It doesn't stop until there's a life changing event - kids get off the payroll, hit retirement, etc.

I've known people that had debt on their home for 20 years after the original mortgage was paid off. It's usually the only asset a person has that they can use as collateral and with the tax and loan rate savings available, it makes sense to keep borrowing against the house to pay for life's bigger purchases.