Taking out a loan to buy an old boat defies all managerial common sense.
Loans are justifiable, and indeed the soundest financial policy, if their proceeds are used to buy tangible assets whose market value will APPRECIATE faster than the aggregate of the loan's interest rate and anticipated rate of inflation, OR if the proceeds are used to fund activities that generate a NET POSITIVE CASH CONTRIBUTION to the borrowers economic activities.
Boats are NEVER productive of NET positive cash contributions. Quite the contrary!
Any contribution to the owner's general economic activities made by a boat will ALWAYS be NEGATIVE. Boats are always DEPRECIATING assets.
Bank lending officers learn that in Finance 101. That is why they will not make loans for the purpose of buying
Furthermore, when a bank lending officer advances cash, ostensibly for the purpose of buying
an old boat, secured by the buyer's equity in real estate, whether the security
be called a "mortgage" or a Line of Credit, the officer does so in anticipation of being able to turn a profit for the bank by seizing and selling the borrower's real estate when the borrower goes up the financial flue. The real purpose of such loans, as opposed to the ostensible one, is to make the bank richer and the borrower poorer.
No man should ever spend more money
on a boat - whether buying it or maintaining it - than he can walk away from with a smile still on his face.
All the best