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jbacchi
RO# 18970
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 Posted - Feb 27 2008 : 13:52:39
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Ok so whats the catch? From what I can see, you pay 25% more for the boat but your payments are much lower due to the 0% interest during the first 48 months. Interest rate is then locked in at 5.5% which seems like a great deal. Everything looks really good on paper but I know nothing is for free so what is the real catch? Is formula financing still better than conventinal financing? Please explain in laymens terms as I am no financial genius. Thanks!
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Homeport: Lake Conroe,Texas
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Veg
RO# 20854
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Posted - Feb 27 2008 : 14:03:39
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The obvious catch is Formula is pricing their boats CRAZY nowadays. I know someone who bought a new leftover 2005 37PC a couple of years ago for about 230k. On top of that he got the special financing. Now Formula is asking how much for that boat, 500k or something like that?
My friend's been protected from depreciation, because the prices have gone up so dramatically (same thing for me when I sold my boat, after the dramatic price incrases in boats that have happened in the past five years, where the MSRP for my Doral DOUBLED!). However, I personally believe the prices are now out of hand, and they just won't be able to keep raising them at the same rate.
So the second problem becomes resale, if the MSRP doesn't keep going up dramatically year to year, when you go sell the boat, your potential buyer will realize that he can buy a new Formula for a smaller payment that he can buy your used Formula. Because I bet you can't transfer the loan to your buyer.
I'd say it can be a great deal if you know you're going to keep the boat a long time. Or, if you can get a good discount on the price AND get the great financing. I would just stay away from paying a crazy price for the boat just because of the payment, because I'd be concerned about getting upside down too quick.
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| 2001 Tiara 2900 Open - "O Sole Mio" - Stillwater, MN |
Edited by - Veg on Feb 27 2008 14:06:00 |
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Homeport: Stillwater, MN
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jbacchi
RO# 18970
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Posted - Feb 27 2008 : 14:19:34
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I am attracted to the fact I would be applying the first 48 payments towards principal and then locking in at a good rate thereafter. I guess I dont undertand how they make their money.
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Edited by - jbacchi on Feb 27 2008 14:19:58 |
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Homeport: Lake Conroe,Texas
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mannmade
RO# 12689
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Posted - Feb 27 2008 : 14:22:40
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The financing plan is offered to SELL boats. The plans allow you to get into a boat which in practical terms is beyond your reach. Or it makes your dream attainable NOW. When we bought there was no way I was going to get 3.3% long term, just as you will probably not be able to get your bank to give you 5.5% now, let alone 4 years no interest. If you can possibly get a discount AND the financing, get rid of the gun as soon as possible! And no, you won't be able to transfer the financing to another buyer if/when you sell. You may be upside down at the outset (depending on your down payment) but you can rectify that while in the no interest period. Amazing how quickly your balance goes down without interest being taken out. One of the basic premises is you are buying a very good boat which you plan to keep for a while. On the other hand, there are a ton of low hour Formula's available on yachtworld.
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| "Here's to those who played and never got paid. They played for the love of the game." |
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Homeport: White's Hudson River Marina, New Hamburg, NY
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Veg
RO# 20854
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Posted - Feb 27 2008 : 15:25:32
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How they make their money? By selling the boat for a LOT MORE money than they otherwise would...
Without the financing, people wouldn't even consider the crazy prices they are asking for the boats nowadays. Is their 31 over 300k by now? LOL Funny but it may even be true!
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| 2001 Tiara 2900 Open - "O Sole Mio" - Stillwater, MN |
Edited by - Veg on Feb 27 2008 15:31:22 |
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Homeport: Stillwater, MN
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jbacchi
RO# 18970
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Posted - Feb 27 2008 : 15:49:24
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The Formula dealer in my area has a 2007 31PC for $215k, ridiculous if you ask me but the payment is much lower than the cheaper 31ft Chap I bought at 6.25%. Right now I am looking at a brand new 2005 34PC left over for $216k but its out of state. Thanks for the input everyone!
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Edited by - jbacchi on Feb 27 2008 15:50:20 |
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Homeport: Lake Conroe,Texas
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Veg
RO# 20854
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Posted - Feb 27 2008 : 15:56:38
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3 model years old leftover? Wow, I hardly ever hear of that!
Get blue book value and try to buy it for that, is what I would do! Sounds like it may be close to that already!
Good luck!
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| 2001 Tiara 2900 Open - "O Sole Mio" - Stillwater, MN |
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Homeport: Stillwater, MN
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jbacchi
RO# 18970
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Posted - Feb 27 2008 : 16:08:27
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Well, its actually a demo boat but its still nice and never titled. The only problem is my trade value is not looking too good. Ugh, I need to just keep what I have for now and be happy. Damn that tufootitus! hey ernesto, when you moving down south? I have been on my boat every weekened this winter!
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Homeport: Lake Conroe,Texas
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mannmade
RO# 12689
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Posted - Feb 27 2008 : 21:07:43
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Joe, the fact the boat you are considering is out of state shouldn't be a problem. My boat was actually at the factory in Decatur but they loaded it on a trailer and brought it to my marina, picked up my trade in and dropped it off in Cleveland on the way back. There are plenty of "leftover" cruisers scattered around the country so depending on how much twofootitus you have you can be a little selective. When figuring your present boats value ask if they are using the ABOS number? You may find you are not as far behind the 8 ball as you thought.
When we were considering the 41 I also looked at a "new" 04 37PC which was priced the same. After a lot of hemming & hawing I kept thinking once in the water I would have a low hour 3 year old boat or a 5 year old boat I really really wanted. As you look at this '05 34PC remember once you launch you have a low hour 3 year old boat. But 10 years down the road you will have put all the hours on the boat you own.
Most of all enjoy the search, it can be a ton of fun. BTW, nice picture of your 31 underway 
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| "Here's to those who played and never got paid. They played for the love of the game." |
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Homeport: White's Hudson River Marina, New Hamburg, NY
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Kastlercreative
RO# 15969
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Posted - Feb 27 2008 : 21:54:01
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a good dose of reality can be found by looking at prices on used 1-3 year old formulas on Yachtworld...
a great boat, (love the new 45 SY) but they start the msrp way too high IMO...
a few years down the road you'll be upside down like you never imagined...
If you're already upside down, and you plan on keeping it for the long haul, then perhaps not too bad of a deal...
Personally, I'd wait till late summer and see what they offer this fall, we're re-fi'ing ours and dropping a point of interest, currently, and that's on a 10 yr old boat.
The feds are already talking about dropping again, though the effect of that will be months down the road for consumer loans...
good luck!
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Lou
SeaRay 420 Aft
"FrequentSeas"
Trophy 1903 CC
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Homeport: Omaha NE/Yankton SD
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jbacchi
RO# 18970
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Posted - Feb 28 2008 : 11:38:31
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I think I will try to hold off for now even though it kills me to pass up great deals. Thanks again
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Homeport: Lake Conroe,Texas
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Formula Financing