What to expect for a boat payment?

[bruiser]

last guy I would be listening to is Dave Ramsey....

[Pezman38]

Before you borrow 30k on a boat I would make sure the following are covered.

1. 401k plan or roth - you need one
2. Health/life/benefits - yes your company may provide some but is it enough
3. Lease/rent payments in that area - 55-70k doesn't go far in some places
4. Current transportation - how reliable is your car, do you need a new one soon

If you have a plan for all the above, and your 55-70k still looks good then perhaps look for a boat, I would spend less than 30k if I were you.

My first boat I paid cash for and it got me by. The money I saved without payments allowed me to buy new 3 years later.
I am no expert though and spend to much now.

[beeman]

I figure if you can not pay cash for it you can not afford it. Now there are plenty of people making good money and it does not mater. If someone making 100k year can not afford to pay cash

[SVT1]

Originally Posted by beeman

I figure if you can not pay cash for it you can not afford it. Now there are plenty of people making good money and it does not mater. If someone making 100k year can not afford to pay cash

I disagree, there have been a few times that I have borrowed instead of paying cash. For some people they would rather use their cash for other things like investments than buying a boat. Id rather pay the bank interest if my cash is making more interest elsewhere. This is coming from a guy that pays cash for alot of stuff but sometimes I can see why someone would not. Just cause you took out a loan doesnt mean you cant afford it or dont have the cash it may just mean you have more important things to do with your money.

[reclending]

Originally Posted by SVT1

I disagree, there have been a few times that I have borrowed instead of paying cash. For some people they would rather use their cash for other things like investments than buying a boat. Id rather pay the bank interest if my cash is making more interest elsewhere. This is coming from a guy that pays cash for alot of stuff but sometimes I can see why someone would not. Just cause you took out a loan doesnt mean you cant afford it or dont have the cash it may just mean you have more important things to do with your money.

We agree with this. Some people seem to focus on the 144 or 180 month term. NOBODY makes 144 or 180 minimum payments on a boat. We always suggest putting a solid down payment in and paying extra each month. The other thing is that very few people keep a boat much longer that 3 - 4 years anyway. Someone way smarter than me said that using other peoples money is the key. With interest rates being where they are, you are not out much of you take out a loan. Be smart on the front end and the long term will be fine. - Ken

[jmiko]

I wonder how banks and credit unions make any money if everyone is paying cash for everything?

cu here quoted 5.15 for ten years. Dealer 4.9 something for 144 months

[ohiojmj]

You "save up and only buy with cash" guys think everyone has poor money skills? You assumed it here. What is so wrong with borrowing responsibly to buy something now instead of waiting? Yes, responsible borrowers have set aside a % toward savings, 401k, 403b, whatever and cover other bills, but loans and credit cards are not all evil and actually help to buy something sooner or spread larger planned/unplanned expenses over more paychecks. Can't imagine a life without credit.

[ohiojmj]

Originally Posted by SVT1

I disagree, there have been a few times that I have borrowed instead of paying cash. For some people they would rather use their cash for other things like investments than buying a boat. Id rather pay the bank interest if my cash is making more interest elsewhere. This is coming from a guy that pays cash for alot of stuff but sometimes I can see why someone would not. Just cause you took out a loan doesnt mean you cant afford it or dont have the cash it may just mean you have more important things to do with your money.

I agree, my own 401k was feverishly returning 15% last year while my SUV payment is on a 2.9% loan. In fact, my average annual return over 10+ yrs was much better than 2.9%. Returns are unpredictable, so this hindsight doesn't always work. Just look at shorter periods like 2009, 2000, 1982, etc....

[bowhunter99]

i work in the banking industry and a good guide line is the rule of 20 on a 5 year loan for example
20000 x .2 = 400 per month on 5 year
30000 x .2 = 600 per month on 5 year

on a used boat you would have to check on length on loan, you may be able to get longer term but with a lot more interest
you may want to look at opening a line of credit, be careful though if you do not pay it down this will cost you huge and banks love interest

the guideline to lending is to not lend to somebody who is exceeding 42% of there TDSR (Total Debt Service Ratio) for monthly obligations so if you are making 5000 per month gross and have a total 2500 in bills you are at 50% which is too high

my advice is to really focus on your housing situation if you are in your early 20 s and can get into the housing market for a payment you can afford and leaves you some room to enjoy other interests (boat) you will be so far than most people at your age.

Also if you are not putting any money down and financing over a long period regardless of interest it may be harder sell boat if you have to. the boat is depreciating faster than you are paying it down

this is what we use in Canada as banking guidelines I do not imagine USA is that much different
good luck