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Random Quote: I refuse to have a battle of wits with an unarmed person.
Does it really matter if you bought a bought for $200k 5 years ago and it is worth $90k today and you paid cash or you financed 90% and still owe $165k? - either way you are out $110k (depreciation), its just a matter of whether you paid the loss upfront or on the tail end.
Own all my boats, my non-primary residence houses and the non-leased cars outright just because there is no sense paying non-tax deductible finance charges and income taxes on that same money as an investment payout.
Being underwater on a boat loan is much different than a home loan, because only the insane could believe a boat's value does anything but drop like a free-falling stone once taken from the dealer.
Not upside down in mine, I paid cash for it. My father always told me, if you can't afford to pay cash for it, you can't afford it.....or need it. Only way I would finance a boat is if I were to finance a small protion of it and would then only do it with a home equity loan to get the tax deductibility of the interest.
My father drilled in my head long ago, never buy a new car or boat, buy one a year or two old that has been well cared for and let someone else take the major depriciation hit.
Go to a fire sale and buy you a used boat. Ta Dah. Let someone else take the hit. If the engines have good compression and they don't look like TBS's contender, you got a deal. Handle any other problems out of pocket.
Probably best with all financed items that you save enough to initially put down so that you are never upside down on the loan. I wouldn't buy a new boat, that's just me, but if I came into money and changed my mind, I wouldn't consider financing more than 50%. You will never be in a pickle then. I think it's best to be able to fully afford your toys, rather than livin the dream to the expense of your sanity and stress level. Something very satisfying about driving a car that is paid off, using my boat that is paid off. I have zero worries about if something goes wrong.
only the insane could believe a boat's value does anything but drop like a free-falling stone once taken from the dealer.
Not true.
I've read on this forum (so it must be the absolute truth) that you can buy a Yellowfin and sell it two years from now for more than you paid for it.
Only way I would finance a boat is if I were to finance a small protion of it and would then only do it with a home equity loan to get the tax deductibility of the interest.
Can't do that legally, can only deduct home equity loan interest on money borrowed for home improvement purposes.
And despite the free-falling values of boats in general, some people still buy new...
Sorry in advance to the boat manufacturers...but in my opinion you'd need far more money than brains to buy a new (production) boat these days. The depreciation hit out the door is unjustifiable from a financial perspective.
You can get some better prices on new boats out there right now than the same boat used...
__________________ Hypocrite: A Person Who Acts in Contradiction to His or Her STATED Beliefs or Feelings....
Be careful when making extra payments towards principal. I have heard a few horror stories....
-Sometimes you have to make separate payments and put "apply to principal balance" on the check or they will post to future scheduled payments instead.
-Keep very careful records of any extra payments. Banks screw up, loans can be sold, banks can be taken over, etc. When you ask for your satisfaction, you may need to prove any extra payments you made.
My nephew was way, way under water on a boat and could no longer make the payments. The bank took the boat last week and will likely lose nearly $100k when it sells. What should he expect the bank to do to try and recover the loss ?? Has anyone else had this experience ?? What did your bank to to recoup the loss ??
If your nephew has nothing to lose ... the bank is the only loser.
They can certainly come after him for the difference between what he owed and what they netted after costs on the sale of his boat. That could include attachment of wages (if he lives in a state where that can occur). There are limits to the portion of wages they can attach. Disposable income is generally the portion they can go after. If there are other judgements, attachments, child support, taxes, it all figures in and the bank might have to wait it's turn.
5 years down the road, people will be in line to lend him money again.
__________________
1984 Bertram 54 Big Buddy
1981 Bertram 28 Third Strike II
Northport, ME
Chesapeake Bay, MD
My boat when I purchased it sold for 195k in fact the guy in the room next to me was buying the same boat as me just a different color for sticker and I payed 129,999.00 and I thought I was good on the buy. I did put money down but unfortunately it all went towards the negative I had in my donzi that I was tadeing so I ended up financeing 147k after taxes and trailer. Now Ive only payed off 7 ot 8k and im being told the boat is worth around 75 to 80k on trade and 110 if im lucky on retail. I wanted to step up to a 38 fountain but unfortanetly my buisness needs to wait for the economy to turn so I can afford to come out of pocket.
How do you know what the guy in the next room was paying? Sounds like dealer jargon to me!!!!!!
Does it really matter if you bought a bought for $200k 5 years ago and it is worth $90k today and you paid cash or you financed 90% and still owe $165k? - either way you are out $110k (depreciation), its just a matter of whether you paid the loss upfront or on the tail end.
Own all my boats, my non-primary residence houses and the non-leased cars outright just because there is no sense paying non-tax deductible finance charges and income taxes on that same money as an investment payout.
Being underwater on a boat loan is much different than a home loan, because only the insane could believe a boat's value does anything but drop like a free-falling stone once taken from the dealer.
You can take a tax deduction for non-primary residence mortgage insurance. You can also take a deduction for the interest on a boat loan if the boat/yourself meet certain criteria.
And yes, it does matter what you bought the boat for 5 years ago and if you paid cash or financed. Paid cash, you have the purchase price in the boat. You financed it, you have thousands of dollars in interest in the boat, as well as the original purchase price. Simple economics my friend, always pay cash or finance as little as possible and pay it off as fast as possible and you're better off.
"My nephew was way, way under water on a boat and could no longer make the payments. The bank took the boat last week and will likely lose nearly $100k when it sells. What should he expect the bank to do to try and recover the loss ?? Has anyone else had this experience ?? What did your bank to to recoup the loss ?? "
"The bank. . . .will likely lose nearly $100K"?? No - the bank doesn't take a loss when it sells - your nephew just finds out how large the shortfall between his remaining indebtedness and the sales proceeds from the collateral (boat). Giving up the collateral does not equal paying off the debt.
The bank can probably sue your nephew for the shortfall/unpaid balance, plus whatever they may have spent to repo it and the costs of selling it - when he took the loan out, he most likely agreed to repay the full amount of the loan, regardless of whether the collateral covered it. If so, he's personally liable for the shortfall.
The best course of action in these deals is to go to the bank (or have a bankruptcy lawyer) go to the bank with the keys before the repo man shows up in an effort to get the bank to agree to take the boat and forgive the shortfall.
Oh yeah, if the bank does forgive the shortfall, the debtor usually has to pay taxes on the forgiven debt.
I don't finance toys with one exception: if it's cheaper money than you can get elsewhere, with all tax consequences accounted for. But, boat loans are typically more expensive than auto, and far more expensive than house (lower rate, tax deductible) so it's the last thing I'd finance. Home equity line or a even a car loan at a lower rate is a better place to put debt than high interest boat loans.
The fella above who finances toys b/c banks don't like giving money to small business? Defintely get that. . . banks are hostile to us business owners.
Just sold my Pursuit, and took incredible care of it and put a lot down initially, so luckily I didn't have to write a check at closing... (Got a small check back...) Actually, I wouldn't have sold it if I had to write a check at closing.
The boat I'm in the process of buying right now... The Pioneer 175... I will own this baby outright in short order, and be able to maintain myself. I have enough headaches, at the moment, than to buy too much of a guaranteed "depreciating asset."
I am in the pay cash for toys group. That said, I don't see much difference if you pay $50k cash for a boat and have to sell it for $25k, or finance the $50k and sell it for $25k.. You're still out the $25k. I guess most (myself included) would rather lose the $25 when they buy it than when they sell it, maybe I'm not so smart afterall...
I would guesstimate I'm about 20k in the hole on this one. I put 30k on it when I first bought it and felt I was on par with the market values for a bit but then of course the market fell out. So what am I going to do...what can I do??
I would double that 20K "in the hole" to be conservative.
I've paid cash, and I've financed boats. To me boating seemed less stressful when the boat was paid for. When I was making payments I felt obligated to use the boat, and felt guilty on weekends I didn't.
Now I just use the boat when I want, and don't feel bad if I'm busy and can't get out for a month. That said, I still may finance a boat in the future, but I don't think I'd ever want a long term 20 year loan. I think my max time period would be 4 or 5 years.
cash for my 2006 29 Reg in 2009 
