Financing your Parker?

[theolog]

Any general advice from the experienced?

The used 2120 SC that I wanted was sold today before I got to the store. I figured it wouldn't last long, as it was priced under $20k!

Financing will get me more boat in a shorter time frame. I anticipate being able to put down up to 25% which should keep any bank happy. The local dealers I've talked with said they can't do any better than 10% APR, but my bank does marine loans up to 120 months at 7.75%. Obviously I don't want a 12-year boat loan, affordable as that payment would be.

 

[BradV]

Most boat/marine loans are 12 to 15 to 20 years depending on actual loan. Its a luxury item so they make it so people can have affordable payments. 7% is a decent rate for a boat loan.

 

[theolog]

So 12 years at 7.75% on a roundabout $45,000 boat would be normal or reasonable?

 

[BradV]

yes sir. i dont think youll find much better. I think i have a lower interest rate but not more than 1 point.

 

[TheOtherLine]

Just because they offer a 12 year loan, doesn't mean you can't pay it off earlier. Focus on the cost of money.

The question you have to ask yourself in any financing question is ; Can I earn more on the cash I DIDN't use to buy the boat. In this case, can you earn more than 7.75% over the anticipated term of the debt?

If not, don't finance.

That's why the bank will pay you 2% on savings and charge you 8% on loans. That math works

 

[dcunniff]

I did a loan in 1997 on a boat, about the same rate. I think got one for about 12 years. I paid it off early 4 years ago.

I would think it is even harder to find good rates now with all the turmoil and tighter lending rules.

Check that you can pay off early and check that you can make additional payments to write down principle.

Dana

 

[TheOtherLine]

Check that you can pay off early and check that you can make additional payments to write down principle.

Dana

Yep ! What he said !

 

[tara11]

Thats what we did, and we paid off ours 2 yrs ago, but it was much easier to get a loan when we bought our boat new !

 

[POGE]

If you have a home I would try a HELOC over any boat loan through an investment bank like Charles Schwab. If not HELOC check other loans at a bank like Schwab. Prime -1% is typical at these types of banks, so about 2.20% right now and the interest is tax deduction. If things look like you only need to borrow some, not all, this maybe a way to go.

 

[BradV]

except your house is the collateral and not the boat.

 

[MaxOut]

Financing will get me more boat in a shorter time frame. I anticipate being able to put down up to 25% which should keep any bank happy. The local dealers I've talked with said they can't do any better than 10% APR, but my bank does marine loans up to 120 months at 7.75%. Obviously I don't want a 12-year boat loan, affordable as that payment would be.

Loan rates are not as good as they should be based on the current costs of money but inevitably they will go up from here. I would get a loan that has a payment you can afford. Nobody here can tell you what is best for you. 7.75% is good for a (120 months is 10 years :wink: ) 10 year loan and you will have a hard time beating that. Boat loans vary from HELOC in that they are fixed rate and simple interest meaning every payment has the same amount of interest. Most HELOCS are variable rate/term and eventually after the draw period re-cast for a set time (generally up to 30 years) at a fixed rate. Another thing to consider is loans get cheaper as they get bigger to a certain point and if you are considering rigging and any extra money you may need check to see where the next rate break is. 50K could cost you less in the long run than 45K if the rate break is at 50K.
That been said if you have availability to a HELOC your rate should be lower and your terms will be flexible. You can also write interest off on your taxes. If you plan on paying your loan off soon you can borrow the money you need then have the bank lock the rate/term while rates are low and you will end up with a similar loan to a boat loan with a lower rate and tax savings. A HELOC could save you even more money if you pay it off quicker as the interest is amortized in the front but as Bradv said you are using your home as the security and if you default you will be wishing you bought a pilot house.
My advice is pick a number you want to spend and determine how fast you can come up with that money. Punch the numbers in various loan scenarios using available rates and terms and determine what you are comfortable with. No one can tell you what loan is right for you but I can say rates are going to go up at the first sign of the economy recovering and now is the time to borrow. Not to mention boats at the lowest prices in years.

 

[theolog]

Thanks to everyone who replied. For some reason I didn't receive notifications of posts so I just saw all the replies.

Obviously no one can tell me what's best for me, and I'm not asking you to financially plan for me. :lol: Just never have financed a boat before so this is a first and I wanted some input...which you gave me, and which I value!

By the way, my math isn't that bad...I was thinking 120 months but typed 12 years. 7.75% is actually available up to 15 years/180 months, but I can't see taking on that kind of debt long-term for a boat.

As you all know, there are so many deals on new boats right now that it actually might make sense to spend a little more (or even the same amount) and buy new rather than used.

Thanks again! :wink: