Boat Loan APR?

[ssullivan]

Here's a question that goes along with others threads I have going:

What is your current APR on your boat loan, if you have one?

By contributing to this poll, we can all see what the "right" APR should be and if some of us got great deals or have been ripped off and need to refinance.

[Sandero]

I got mine in 85 and it is paid off... shall I look up what the APR was for reference?

jef
sv shiva

[rtbates]

The same as with ALL my cars, trucks, and boats. 0, nada. IF I can't pay cash I either do without OR wait and save as much as I can till I can afford to pay cash.
It's FREEDOM. Freedom from interest payments, freedom from having to carry collision insurance and having some dumb ass insurance agent telling me I can't singlehand across the gulf or sail in the Bahamas during hurricane season because they won't cover me. Freedom to tell the boss to shove it and take off sailing. I really do enjoy owning a sailboat, and would rather not have the sailboat own me.

[ssullivan]

Originally Posted by rtbates

The same as with ALL my cars, trucks, and boats. 0, nada. IF I can't pay cash I either do without OR wait and save as much as I can till I can afford to pay cash.
It's FREEDOM. Freedom from interest payments, freedom from having to carry collision insurance and having some dumb ass insurance agent telling me I can't singlehand across the gulf or sail in the Bahamas during hurricane season because they won't cover me. Freedom to tell the boss to shove it and take off sailing. I really do enjoy owning a sailboat, and would rather not have the sailboat own me.

HERE HERE!! You are my inspiration. I'm trying desperately to get to that point right now - hence my other long winded thread on how to dump this boat (really how to dump the loan - the boat is great!) and just buy something cheap that serves the same purpose.

[Sandero]

You might still want insurance if there is no lien on the boat.... no?

Of course they do dictate terms of use.. but for the use which applies it could be worthwhile no?

jef
sv shiva

[ssullivan]

Originally Posted by defjef

I got mine in 85 and it is paid off... shall I look up what the APR was for reference?

jef
sv shiva

It's ok, Jef... don't look too deep. I'm sure the other posters will fill in rates that make a statistically significant group.

[Sandero]

Mine loan agreement said not to exceed 9.25% per yr. The note was for $40K and by the time I paid it off I had sent them $72,000. OUCH

jef
sv shiva

The bank went belly up
The next bank went belly up
The third bank was absorbed by Bank of America
hahahaha

[Weyalan]

I was lucky enough to be able to, essentially, buy my boat by refinancing my house loan. My house had appreciated rapidly since I bought it, and I had been paying off the loan aggressively as well, so I basically refinanced for the cost of the boat, which still left the mortgage at less than 50% of the market value of the house. So, I was, basically getting home loan rates (then about 6%) to buy the boat. I know that won't help you Sean, sorry, but that is how I did it.

[colemj]

Originally Posted by rtbates

The same as with ALL my cars, trucks, and boats. 0, nada. IF I can't pay cash I either do without OR wait and save as much as I can till I can afford to pay cash.
It's FREEDOM. Freedom from interest payments...

I understand the sentiment and principle behind your approach, but not the financial logic. I agree that it is best to not buy non-critical goods (I don't know how to put that best, but I mean things not related to basic living or income production) without assets to cover their cost. In other words, if you have to go in net debt, don't buy it.

However, loans can and should be used to make best use of your assets. For instance, you may have enough money to buy a car in a money market account paying a 6% dividend. If the car loan is 5%, you make money by taking out the loan compared to removing the money to pay with cash.

This effect becomes magnified when you can write off the loan interest on your taxes, which many boats qualify for in the US.

I consider loans an equal player in financial planning, along with income, investments, cash and fixed assets.

But like you, I don't use loans to go into actual debt (I'm explicitly excluding primary housing, vehicles and capital items needed for producing income, etc).

Mark

[Weyalan]

I went through a similar thought process with my partner when we bought our house. I had savings of around $100k in a managed fund. She wanted to use those savings when buying the house in order to minimise the mortgage. I had to explain to her that this was not good financial sense because the home loan interest rate was 7% but the managed fund was earning 12-15%.

[Ex-Calif]

Leverage is critically important. Taking 10% of your cash to put down on buying a second, income generating home is leverage. Borrowing at 5% to earn at 6% is leverage. This is how the rich get richer.

However, in general over th long term poperty appreciates while boats, cars, airplanes and other "toys" depreciate and do not earn income. Commercial endeavors not included.

Pay cash for toys and leverage your cash to make money.

Sorry Sean - no boat loan here.

[Sandero]

My boat is holding its value because it is a European made boat purchase when the dollar was very strong. I don't know that I can recover the upgrades, but the basic boats are selling for up to 50% more than I paid.

Markets at work.

jef
sv shiva

[Charlie]

No boat loan here either. But the J105 that I sold 6 months ago had a 6.9% 20 year loan on it. You can't tell if you have a bad loan unless you compare the time that you got the loan as well. 2 years ago rates were at a forty year low where as in 1985 a 9.25% loan was pretty good.

I agree about leverage but feel alot better when the leverage is on something that is making money -- rather than the sinking feeling of a boat

[ssullivan]

We're at 7%, and got that 2 years ago. I think the timing was good with that, anyway.

Please do add info into the poll. It will be interesting and useful for all.

[Pblais]

Pay cash for toys and leverage your cash to make money.

Some things always ring true. This would be one of them.

The issue is would you be better off staying home or out there sailing. You might make more money sailing but it is not the better percentage from a making money point of view. If your goal is to maximize income you found just about the worst forum on the Internet.