Boat Loans for The Red Faced
Add comment January 1st, 2009
Lately I’ve been writing about individuals and their experience with trying to get approved for financing. And I mean the kind of financing this is for needs only and not for purely entertainment purposes. Sometimes people will borrow money for holiday which a highly disagree with, because if you can afford to go holiday with what you have saved a very likely can afford a goal a holiday at all. Here on Auto Loan 4u we discuss only boat loans, car loans, recreational vehicle loans, motorcycle loans, and sometimes we may mention all-terrain vehicle loans.
A friend of mine just go to raise the other day and he decided that it was time for him to get a new toy. This new toy was a brand new high-speed boat with the trailer, and even a hitch. His wife was not amused by the whole deal and she felt they could not afford such a luxury. In my opinion the truth is that she was right. Not only did my friend need to borrow the money for a boat, he needed to borrow money for a trailer and a truck that had the power to pull his boat. But no matter what anybody said he was bound and determined to go to the bank asking for a loan. Unfortunately he was really interested in what his interest rates were going to look like, the term of his financing and how much he would pay in total interest by the end of the term.
He went to the bank with high hopes licking his lips thinking about his shiny new boat and when he got into the loan officers office the fun seem to come to an end. Because of some past delinquency is credit rating had slipped to a FICO score of 660 and he had no idea that is credit was that bad. He was actually heartbroken and felt that he would not get what he really wanted for the next summer. This is one of the problems with falling in love with some particular product and going at it with a damn the torpedoes attitude. This is a sure way to spend a lot more money on your financing that if you were careful and pragmatic about your choices.
The loan officer insisted that if he expected to get a loan for this boat he would have to have a cosigner to sign-on to the loan with him, and this was extremely humiliating for him as he is a guy with a lot of pride. But nevertheless, he pushed forward and decided that no matter what he was going to buy that boat. The boat he wanted to buy was $75,000 and he gets saved up a $10,000 down payment. This would leave him with a principal owing of $65,000 with and an interest rate he was expecting to be between 6% and 7%. As it turned out that was not the percentage rate he was going to have for this loan and this also changed the dynamic of a whole situation. Now his wife was even more perturbed by the whole idea of spending $75,000 on a brand new boat which she considered to be decadent.
So if we do the math on my friend’s boat loan we can see how much he would be spending all totaled. With a $65,000 principal owing on his new boat, and the interest rate of 9% which the bank said they would give him if he came up with a cosigner making him eligible for funding approval. As it turned out the term of his boat loan would be 10 years so let us calculate the 9% interest rates into this.
The total amount of interest he would pay by the end of this loan would be $29,490.85, and the total paid at the end of the term would come to $94,490.85. So if you want to include insurance, repairs, and fuel, we are looking at a $100,000 cost. Is payments on this would be $776 which is a big chunk of change when you are trying to raise a family and make ends meet.
My friends wife suggested that he buy a smaller boat that was used for $15,000 from one of the local auctions. These auctions were IRS foreclosure auctions where he stood the chance to save over $50,000 on his boat. Although my friend’s heart was set on getting this particular brand new model he did finally make the right decision and listen to his wife.
In retrospect he looks back on this experience as a lucky experience because the listen to reason and save their family a serious amount of money – the kind of money that could but one of his children through college comfortably. Sometimes a life we have to understand the classic Rolling Stones song when they saying, ” you can’t always get what you want but if you try sometime you might just find you get what you need”.
Many consumers will take advantage of the financing offered by the various yacht dealers when they purchase their new or even a used boat.