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Finance Planning for New or Newish Boats.

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Finance Planning for New or Newish Boats.

Old 03-04-2019, 10:10 AM
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Default Finance Planning for New or Newish Boats.

NOT A BASHING THREAD - please be objective.

I see a lot of folks selling EXPENSIVE 3-7 year old boats everywhere - and read that a good percentage of them are financed with 30 year mortgages or balloon payments, so they don't have to build up any equity - in effect they're operationalizing the cost, it's always there - like a fun tax.

For folks on THT that have done this, what are the benefits, risks and issues you've faced. I'm trying to wrap my head around it and see if it makes sense for me to do. I am fairly conservative when it comes to finances, and I'm trying to find the same logic as I do in buying a new truck every 7 years (less time in the shop, smells better, more peace of mind).

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Old 03-04-2019, 11:02 AM
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Lots of people are riding the uptick and demand for new. You can buy a high demand boat fish it a few years and sell without paying much more than interest and operating cost. Just like in 07 lots of people are going to get stuck holding the bag and take a massive haircut.
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Old 03-04-2019, 11:03 AM
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Its a personal choice based on individual finances. For most of us, boating is not a required expense and we do what we need to in order to afford our hobby / lifestyle. If you asked 5 people what their reasons are, you may get five different responses. If you can afford to pay cash for a boat, do it. If you can't, finance it. I have done both at different points in my life and both options have worked well. For me, the beauty of the loan is you don't have to come up with all the money up front and you can pay for it over time. When I paid cash I felt bad about depleting that much money out of savings. I have never entered a boat transaction with the expectation of building equity. I am happy if and when I sell that I can sell for a fair market price which I anticipate to be less than what I paid for the boat along with anything I've added to it (i.e. - safety equipment, extras) or any money I've spent enjoying the boat (i.e. - fuel, maintenance, storage, etc.). Good luck on your purchase.
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Old 03-04-2019, 11:06 AM
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It's musical chairs. A lot of fun, until the song ends and you are stuck without a seat.
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Old 03-04-2019, 12:24 PM
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Originally Posted by peninsula_jumper View Post
NOT A BASHING THREAD - please be objective.

I see a lot of folks selling EXPENSIVE 3-7 year old boats everywhere - and read that a good percentage of them are financed with 30 year mortgages or balloon payments, so they don't have to build up any equity - in effect they're operationalizing the cost, it's always there - like a fun tax.

For folks on THT that have done this, what are the benefits, risks and issues you've faced. I'm trying to wrap my head around it and see if it makes sense for me to do. I am fairly conservative when it comes to finances, and I'm trying to find the same logic as I do in buying a new truck every 7 years (less time in the shop, smells better, more peace of mind).
first of all, most boat loans are 20 years not 30

second, i have been playing the game. but a one year old boat with some warranty remaining, use for a couple years, sell for basically what i paid. like another poster said its musical chairs.
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Old 03-04-2019, 12:27 PM
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i used a 30 to get a boat once, it was heloc though, worked out great, had a ridiculously low minimum in case times got tough, it was a boat i'd have been happy keeping 30 years, but i paid it off quick, used it several years & sold for $2k profit, economic downturn would spoil that, but those are rare, & if it hits ya, keep the boat!
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Old 03-04-2019, 12:40 PM
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a boat will probably never make financial sense, its not an investment. But if thats your hobby and you enjoy it, then you only live once. Dont do something stupid and put yourself in a bad spot, but
you know if you can afford the pmt or not. Life is too short not to be happy
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Old 03-04-2019, 12:47 PM
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So I did the math on my boat. I have an $80K note on it after putting down $15%
I pay an extra $100/payment which knocks 4 years off of my 20 year note
From there I have also thrown an extra $5K on it in a lump sum which I told myself I would do every other year which knocks a few more years off of the note

With that said if you are going to take out a long term high dollar boat loan the only way you are getting out of it is death or throwing $5k-$10K bombs on it.
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Old 03-04-2019, 12:57 PM
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I have had good luck with home equity lines and loans. In my situation lenders are aggressive, no closing costs, no prepayment penalties, very good rates, and interest is deductible. Paying cash for doesn't make sense to me. I pay for depreciating assets over time as they depreciate and invest cash. Pretty easy to get a return on cash of 2x the rate of equity loans.
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Old 03-04-2019, 01:00 PM
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Originally Posted by raptor660 View Post
I have had good luck with home equity lines and loans. In my situation lenders are aggressive, no closing costs, no prepayment penalties, very good rates, and interest is deductible. Paying cash for doesn't make sense to me. I pay for depreciating assets over time as they depreciate and invest cash. Pretty easy to get a return on cash of 2x the rate of equity loans.
why put your home at risk over a boat?

boat loans can be had for same/similar terms as home equity and be even easier to get with aggressive rates, terms, no closing costs, no prepayment penalties, interest is deductible, etc.
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Old 03-04-2019, 01:05 PM
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Originally Posted by mystery View Post
why put your home at risk over a boat?

boat loans can be had for same/similar terms as home equity and be even easier to get with aggressive rates, terms, no closing costs, no prepayment penalties, interest is deductible, etc.

I didn't think interest on a boat loan was deductible. Is that accurate?
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Old 03-04-2019, 01:48 PM
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With a home equity line of interest your home is not in any risk. The primary mortgage has all rights to the house the equity loan don't
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Old 03-04-2019, 01:52 PM
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Depends on the value of your home. 2nd mortgage may or may not be able to foreclose. If you've gotten to that point that you aren't able to make 2nd mortgage payments..how long would you be able to make the first mortgage payment--ie..you're on borrowed time regardless.


Originally Posted by mystery View Post
why put your home at risk over a boat?

boat loans can be had for same/similar terms as home equity and be even easier to get with aggressive rates, terms, no closing costs, no prepayment penalties, interest is deductible, etc.
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Old 03-04-2019, 02:52 PM
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Originally Posted by Lorne Greene View Post
So I did the math on my boat. I have an $80K note on it after putting down $15%
I pay an extra $100/payment which knocks 4 years off of my 20 year note
From there I have also thrown an extra $5K on it in a lump sum which I told myself I would do every other year which knocks a few more years off of the note

With that said if you are going to take out a long term high dollar boat loan the only way you are getting out of it is death or throwing $5k-$10K bombs on it.
P.M. Sent
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Old 03-04-2019, 03:40 PM
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I was under the impression, with the new tax laws, you cannot deduct a HELOC interest unless it was used to pay for whatever (insert upgrade of choice here) on your primary home
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Old 03-04-2019, 04:05 PM
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To clarify my topic - what vehicle do you guys use for a six figure loan on a new or newish boat, then sell it for zero loss (or gain).... basically turning it into a fun payment that never goes away.

I have a nice Boston Whaler, but always eyeing the next one.
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Old 03-04-2019, 04:10 PM
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Originally Posted by peninsula_jumper View Post
To clarify my topic - what vehicle do you guys use for a six figure loan on a new or newish boat, then sell it for zero loss (or gain).... basically turning it into a fun payment that never goes away.

I have a nice Boston Whaler, but always eyeing the next one.
I don’t think that’s possible. It cost me $17K to get out of my last boat.
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Old 03-05-2019, 01:22 AM
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Originally Posted by calicojim2 View Post
I didn't think interest on a boat loan was deductible. Is that accurate?
it is if it meets the requirements of a home (bathroom, kitchen facilities, bed), you can read more by googling/reading the IRS publication
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Old 03-05-2019, 01:23 AM
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Originally Posted by mouse4x4 View Post
With a home equity line of interest your home is not in any risk. The primary mortgage has all rights to the house the equity loan don't
i am pretty sure a home equity line of credit still has a lien position, it just wouldnt be first if there is a primary mortgage. and pretty sure you can get a home equity line of credit without having a primary mortgage.
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Old 03-05-2019, 05:21 AM
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Originally Posted by mystery View Post
i am pretty sure a home equity line of credit still has a lien position, it just wouldnt be first if there is a primary mortgage. and pretty sure you can get a home equity line of credit without having a primary mortgage.
Sure there is a lien. The "why risk your house" crap comes up every time HELOC is mentioned. When used RESPONSIBLY, HELOC is a great tool to use. HELOC's can be had at less than 4%. Why come off of other assets for that?
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