Boat loan term

Larry, that's simply not true as a blanket statement. It's fine if that's your view, but it is not "poor financial planning" to finance a boat with a tax-deductible loan, any more than it is poor financial planning to carry a mortgage on real estate. They are both tax deductible. Whether the asset appreciates or not is completely irrelevant -- the only relevant question is whether your money does better elsewhere. Your argument might make sense if you are talking about borrowing money beyond one's means to pay, but in that case, the borrower is not "investing" any money elsewhere; they are living paycheck to paycheck which I agree is bad.

It is, however, poor financial planning to use your home (i.e., a home equity loan) as collateral for a toy, and to not insure a six-figure asset.
 
Everybody's situation is different and they make different decisions accordingly. It is very hard to make general statements about what is right or wrong financial planning for somebody else. It is however interesting to hear how others approach their decision on spending and borrowing for a boat. I actually switched camps back in 2003 when we purchased a new boat and borrowed money to do it. Up until then I avoided debt at all costs. But we really wanted to move up and I was not willing to divest what would have been a significant chunck of our investment portfolio to do it. We had no other debt. The boat loan interest rate was 5% fixed (same as I could have got for a home mortgage to finance the boat). We pulled the trigger and have been very happy with our decision ever since. We love the boat. Our intact portfolio has grown at an annualized rate of 18% since then (of course past results are no indication of future results). And amazingly it doesn't appear that the depreciation on my boat (2003 Regal 3860) has been very significant as I see used ones listed for more than I paid in 2003. Probably because new boat prices have risen dramatically over those years. At the end of the day I don't really know of any financial planning justification for buying a boat but we're having fun!
 
I figure if I died tomorrow my wife and/or kids could simply ask the bank to pickup the boat, if they didn't want it, which they probably won't. It's in my name only anyway. But if I had paid cash, which I couldn't, they'd have to go through the hassle of selling it to recoup money, and probably get ripped off.

I have a friend at work who has been trying to sell his boat for 2 years because he can't afford to run it anymore. Now the broker is threatening to charge him for storage.
 
Speaking for myself, I live like there is no tomorrow because there may not be a tomorrow. I may be working at walmart when I retire but I can always think about the good boating times I had. ;-)
 
I dont understand how a home equity loan would make more sense than the 5.7% interest 15 year preferred ship mortgage I have (the interest is tax deductable). I need that tax deduction too and I love to see it listed on my 1040 right under my home mortgage interest!
Greg
 
Geeeeez! Get off your high horses guys! Some of us want to enjoy life w/o being preached about whether its "ok" or "not" to finance a "toy". You deal with your decision, we deal with ours. I have no issues having financed our boat, since we didn't have $100,000 in cash just lying around (edit: and if we had them, we wouldn't have spent it on a boat LOL). And we're making the payments just fine too, including additional monthly principal to offset depreciation. We also adjust our lifestyle (make some "sacrifices") to support our boating. That's our decision. And yes, we're putting money away for retirement, which MAY or MAY NOT come someday (you never know how much longer you have). So go and enjoy life and stop worrying about everyone else's finances!
 
If you're close to 60 get a 30 year loan & make sure you check out before it's paid. Better yet, get a 30 year balloon payment & take all the deprecation now. Better yet, form a company to be a dealer/broker by/sell & charter boats. As a dealer no tax, deduct all expenses as a business cost. Take out clients in the hope of getting new charter business. If all goes badly (you hope) you lost a ton on a bad business. What's better or more profitable then abig loss at the end of the year? I guess you'll hope to do better or maybe trade in on a bigger boat? Another bad business decision but keep trying...
 
quote:
Originally posted by Capt. Art

If you're close to 60 get a 30 year loan & make sure you check out before it's paid. Better yet, get a 30 year balloon payment & take all the deprecation now. Better yet, form a company to be a dealer/broker by/sell & charter boats. As a dealer no tax, deduct all expenses as a business cost. Take out clients in the hope of getting new charter business. If all goes badly (you hope) you lost a ton on a bad business. What's better or more profitable then abig loss at the end of the year? I guess you'll hope to do better or maybe trade in on a bigger boat? Another bad business decision but keep trying...

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"Go directly to Jail; Do not pass Go"
 
I carry as little debt as possible. House is paid for and new cars get bought through a credit union paid off ASAP or by cash. I bought and refurbished the boat for cash, but since it was purchased at scrap value that's a different kind of deal.
 
quote:
Originally posted by sugilbert

quote:
Originally posted by Capt. Art

If you're close to 60 get a 30 year loan & make sure you check out before it's paid. Better yet, get a 30 year balloon payment & take all the deprecation now. Better yet, form a company to be a dealer/broker by/sell & charter boats. As a dealer no tax, deduct all expenses as a business cost. Take out clients in the hope of getting new charter business. If all goes badly (you hope) you lost a ton on a bad business. What's better or more profitable then abig loss at the end of the year? I guess you'll hope to do better or maybe trade in on a bigger boat? Another bad business decision but keep trying...

Click to expand...


"Go directly to Jail; Do not pass Go"

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Of course, but first collect your $200.00
 
The object is to die with absolutely $0.00 in the bank and have the last check bounce.
 
quote:
Originally posted by KiDa

The object is to die with absolutely $0.00 in the bank and have the last check bounce.

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If you don't have kids, that's great.
 
[/quote]
If you don't have kids, that's great.
[/quote]
HA! Just leave enough to bury yourself; you wouldn't want to be a burden.
 
Captain Art, that will eventually be disallowed under the "hobby loss" provisions. They closed that one a long time ago.

I find it interesting that people are telling us it is none of anybody's business about how boats are financed. I wonder if they feel the same about houses...after Dubai just bought 7% of CitiBank, the Chinese just took 5 billion from the Chinese, the EC and FED are pumping money into wobbly banks. People are now complaining THEIR borrowing costs are going up because of sub prime mortgage lending, yet we are not supposed to comment on boat lending? Sub prime...it is not just houses. Just ask Ford Motor Credit. Maybe if your neighbors house is on fire, speaking up just might be the right thing to do.
 
now if you were the US gov't, and you were looking at the fact that consumers overspend rampantly with cheap money and create unsustainable debt levels that imperil the overall economy at this point, you might ask yourself whether, once the current crisis passes, it really makes sense to encourage this kind of behaviour or whether you should remove that tax deductibility and encourage people not to spend money that they don't have, on wildly depreciating assets...

just my 2 cents, I know I will be roundly abused for this, but borrowing for 20 years to buy a boat? come on. Of course, I'm coming from the perspective of never having even borrowed to buy a car. I hate debt.

Cheers,

Orcbait
 
Boat (S) are paid for .... house is paid for ... all automobiles but 1 are paid for ... retired at 60 ... with no debt I do not need a lot of retirement money. If you are comfortable carrying a huge bunch of payments for boats, cars, huge houses .. be my guest.
 
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