Finance advice!

Trainwreck · Soul Rider Joined: 17 Apr 2006 Posts: 375 City: Baytown

First off, I just started a new job and its going really slow right now. I'm trying to arrange my finances in order to lower the stress level while I'm getting the new "business" off the ground.

I got an offer to refinance the boat for a 2.5 year shorter term, with a .1 rate drop. The payments will increase by $35.00. The catch is that they are offering 90 days no payments. THIS IS THE REASON I'M CONSIDERING IT. Is $35 more per month worth 3 months of less stress?

The term change would save me over $7000 in intersted if the boat was kept for the entire term (we all know that won't happen).

Please help me decide...go with it or leave it like it is?

EDIT: I edited the post to remove some of the personal information. Should have worded it more wisely in the beginning.

Mikey27 · Posted: Aug 30, 2006 3:22 pm Post subject:

I am speechless.

Lcky275 · Posted: Aug 30, 2006 3:33 pm Post subject:

I know you don't want to hear this, but sell that boat and buy one when you can afford it. Winter is coming up anyway and hopefully you're not already upside down in it.

Erik · Posted: Aug 30, 2006 3:51 pm Post subject:

Lcky275, unfortunately I agree.

Trainwreck, sell the boat. I will personally work with you as your proxy buyer to help you find something more budget friendly for next season. I have a long-ish loan on my boat too, but I paid less than half you did for yours and I put 18% down; my payment is thus more palletable. Look, if you've ever read my site you know how I feel about brand-spanking new boats anyway. In selling that thing, you won't have to give up the sport, I promise. I will give you my cell number and work for you to make an affordable boat happen. No joke. No charge. Lets just work through this.

I am not a salesperson and despite everyone in my family telling me thst I should be a boat salesperson, I am not even close to being polished enough. I do however know my stuff, I know what makes a goods wake platform and I can help you find something more appropriate for your situation. You are not even 6 months into this thing and you have financial, mechanical and cosmetic problems with the thing. Time to bail.

What do you do for a living? How old are you? I think it was you that posted a message saying you had recently changed jobs and got a salary bump. Did you put anything down on the boat, for purposes of equity?

smokedog2 · Outlaw Joined: 02 Dec 2004 Posts: 210 City: Cincinnati

I interpreted Trainwreck as a description, not a profile name. It is descriptive. The problem is that you will not be able to amortize your bath over 18 years and you are looking at a 5-10k bath IMHO.

This looks like about a $51,000 loan for about 18 years. Who financed you? What moron wants to refinance you? I ask because I am suspicious. No one refinances a depreciating asset in less than six months (on a guy going broke) unless they pealed so much money off you on the last loan they cannot resist doing it again. The 90 day game has a catch - of that I have no doubt.

$51,000 at 7.99% for 18 years has a total interest payment of $45,319.

$51,000 at 7.98% for 18 years has a total interest payment of $45,252.

A difference of $67. You can pay the current loan off early on your own, without being “forced” into higher payments and achieve the same result. The savings are BS!!!!!!!!

The savings is in early payment, not the interest change, you can do that on any loan yourself. I round all my loan payments up and they all end early. A nice surprise.

This refi is just unfriendly. I hope it is not being pitched by the boat dealer.

Get a loan amortization spreadsheet – Excel has them free on line if you look.

Erik · Posted: Aug 30, 2006 5:33 pm Post subject:

Everyone who finances stuff has to deal with those uncomfortable figures at some point. I just about vomited when I saw the equvalent interest number on my home. I hate when financing boats comes up and the party pooper patrol stops by to remind them that everyone should pay cash for their 50k boat, because they managed to, or not buy the boat at all. I am sure that is nice but it dosent work for everyone. My modified version of that rule is that I believe people who are buying brand new boats should not finance the entire thing. Because people then wind up in situations like Trainwrecks and it just kills me. Wakeboarding and boats are supposed to be FUN. Not financial sinkholes. And they shouldnt cost 60k. We need to stop accepting that as the basic price for a boat. 60k! Ooof.

Anyway, fact is, Trainwreck is having issues with the financial situation and the boat itsellf. It would be one thing if it was one or the other. It is both - semi seriously too. And it isn't like that boat has been a joy so far. Sell it. Use the glut of mechanical issues you've had to force a buyback and if you have to, drop names. Then get on your feet and try to put some cash away. Then lets find you something more affordable next spring.

Trainwreck · Soul Rider Joined: 17 Apr 2006 Posts: 375 City: Baytown

Wow, wow, and holy sh*t.

The name Trainwreck came from a Big Red bubble gum commercial. Has nothing to do with me or my financial situation, or my personality for that matter. Something a bathroom attendant said that I thought was funny.

I posted this for advice, although I wasn't expecting this kind. I had a good job and left it for a "better opportunity" which has not panned out as planned. I sell boats for MarineMax now, was in motorcycle sales and had made alot of money. I moved into a sales manager position before I left and life was good.

What could one get for a 2006 Supra 21V? I'm in for selling if someone wants the thing.

I didnt enter into this for criticism. I see your points on the refinance thing and thats why I asked, because I wanted some other points of view. Thanks for those points of view, they have more than helped.

I don't understand how anyone can blow thier eyebrows off their face or be surprised that people finance boats long term. I have witnessed the sale of boats which cost over a million dollars. These guys dont put over 10% down even on a purchase like that. Sure, they may have $100,000 down but they also aren't buying $50K wakeboard boats. The people who buy wakeboard boats vs those who have cruiser yachts are very different. If the people who wakeboarded were 55 + we'd all have paid for boats and there wouldn't be a wakeboarder.com. Kids push this sport.

How many of the boat owners in our crowd do you really believe paid cash or put more than 10% down on their boats? I'm sure the numbers are more skewed by liars than we could get from real national statistics.

Also, I own a home, and yes the interest figures are scary. I guess maybe thats what the eyebrows were raised for. I have absolutely no plans of owning this boat for 15 or 10 or even 5 years. It was just a total overall number. These aren't realistic numbers. Do you realize what can happen to a person over 15 years? I may be a millionaire by then! LOL

I'm not trying to look like a hero or a rich boy. I work my ass off for what I have, and have come to a point in my life/career where I could use a little help. Unfortunately it has come only a short time after my purchase. No one can tell the future. A hurricane could take everything we have next weekend.

Ease up.

Wakebrad · Ladies Man Joined: 11 Dec 2003 Posts: 12257 City: Dallas

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

Trainwreck,

Don't take the criticism to heart. Way too many assumptions were made--zero salvage value, your income potential, etc. You made a decision to buy a boat and enjoy it based on certain circumstances. In sales those circumstances change constantly.

Go out and enjoy your boat and when the sales go up and the commissions come in apply the extra amount to the boat payment. The loan will only cost you the big $$,$$$ if finance for the entire period.

The other thing people around here never discuss is the opportunity cost of money. Perhaps they don't know about that concept or it's too scary for them but I understand your 1 million dollar yacht comparison.

And if you decide to sell the boat next spring, it'll cost you what? A little bit of depreciation (if you bought right) and the same interest someone with a 5 year note would have paid in interest.

Lcky275 · Posted: Aug 30, 2006 8:02 pm Post subject:

I hope you didnt take my post as trying to bag on you. That was not my intent. If you inadvertanly took a decrease income, there's no reason you should have to be in over your head. Speaking from experience you don't want that burden... it's extremely stressful. Once sales pick up and you get that buffer back, walk back in and pick up an '07 or '08.

Depending on the deal you got on the boat, you might be able to sell it for close to what you paid for it. From '06 to '07 I think the avg new boat went up 8%.

Trainwreck · Soul Rider Joined: 17 Apr 2006 Posts: 375 City: Baytown

lcap,

Thanks for reading further into my post. It is appreciated. I bought the boat right, and yeah, while freaking out and selling may solve some problems, whats going to happen when next year I want another boat and pay the same for a used one?

So back to my question...refinance and know that I can make the payment, but if something happens I'm cool, or keep it like it is and drag through it?

The way I'm looking at it is I can make the payments, but if I need a little extra for something else then I'll have it. In the end, I financed the boat 2.5 years less and saved a little interest.

In any sales job you could be broke one week and have enough to pay 3 months bills the next. Thats when you look like this Shocked

. Who knows, I could go in tomorrow and make enough to pay for the boat because someone comes in and pokes me in the eye with a check. Another Shocked

.

marcg · Addict Joined: 16 Jan 2003 Posts: 944 City: Salt Lake City

Sorry I got to get on the bandwagon here....
I go to these Boat shows and see ALL the loans setup like this.

These loans are so horrible its not even funny.

These type of loans make sense for a home....for a depreciable item this is pure financial madness.

You will be upside down on this loan very quick.

Sell that thing ASAP.

You indicated you own a house....I would say borrow against your equity (get a heloc or something) from that and buy a boat that is a few years old.
The bulk of the heavy depreciation has been taken already and you can at least write off the interest on your taxes.

Trainwreck · Soul Rider Joined: 17 Apr 2006 Posts: 375 City: Baytown

If there was no such thing as long term loans do you think we'd sell boats? Do you think there would be as many boats in the water? If PWC companies didnt offer $50 payments do you think we'd have all the jet skiers to bitch about? Sounds like a perfect world to me! Just imagine...no jet skis or tubers to annoy all of the wakeboarders out there who put down large amounts and swallow $1000 payments each month on their 4 year loans.... Come on!

Money doesnt grow on trees for everyone, and even if I could put a mint down, I'd rather get a good deal, put a minimal amount down, and put my cash to use somewhere more useful. Boats, cars, homes, appliances, everything for that matter will depreciate eventually. Its what makes the world go around. You can't buy ANYTHING and realistically expect to make money on it a few years down the road.

Whether I put $1.00 or $20,000 down, the boat is going to be worth X amount of dollars in 3 years when I get ready to sell it. Would you rather blow the money now and have nothing or keep it in your pocket, invest, and then in 3 years use a PORTION of your returns to pay the difference if you are upside down? I'd like to take the latter.

To those of you responding negatively, are you riding behind your friends boats, or have you followed your advice and put a chunk down on your own??

I'm NOT talking sh*t here, I just want you all to hear what you're preaching. I'm the guy who has to be the "friend with the boat".

Budman · Outlaw Joined: 13 Jan 2003 Posts: 137 City: Tifton

You want advice- here ya go: YOU DON"T FINANCE TOYS.

And you think guys are financing $1M yatchs- you crazy.

WakeBoarder44 · Wakeboarder.Commie Joined: 21 Apr 2004 Posts: 1107

Erik · Posted: Aug 31, 2006 4:05 am Post subject:

Well clearly the party pooper patrol has stopped by for a visit. I knew that was coming.

I am somwehere in the middle here. My boat is financed; I had to do it that way, and for the people who say not to finance toys - fair enough, but go pound sand. That just dosent work for everyone. It may be a great idea in theory - but in practice it is not. I have one thing financed besides my home... my boat. I sold my Land Rover and bought an econobox to facilitate the purchase too. My philosophy was that I would only be making payments on one thing at a time. It became the boat and I have undershirts that I regret having purchased more. I bought a 4 year old boat though, and the depreciation punch in the balls had alredy been absorbed by the original owner.

But Trainwreck you've shot yourself in the foot on this topic again. You said you dont plan to keep the boat for 15 years - or 5 even. Then why in bloody hell did you buy a boat at dead-nuts retail (I know what you paid) and take the longest possible loan to pay for it? Craziness. You are doing nothing but taking a depreciation hit and paying interest every time you write the payment check. To be frank, you are in my nightmare scenario. Sell the boat.

Sell it. Bail. Get on your feet and like I said I will personally help you find something else.

Broccoli B · Posted: Aug 31, 2006 5:27 am Post subject:

WakeBoarder44, You must be crazy I bet less the 5 percent of >$1,000,000 boats are paid for in full. Financing is the better option.

joedirt00 · Posted: Aug 31, 2006 5:28 am Post subject:

Erik's, right. You need to get out of that boat. If you did pay close to retail the value vs. loan amount is going to widen over the next 5 years or so before the value levels off and and probably wont start catching back up for 8 years or more. You really need to look at an amortization schedule to see some actual figures, but the bottom line is the sooner you can get out the less of a bath you are going to take.

Seriously, ride winter out and look for one in the spring. Erik has laid out a very good offer to help find one and he knows his boats. I wouldn't bother refinancing at those figures, it is peanuts in the long run. As said before, the real savings in paying off early which is evident in the 210 vs 180 month terms.

Rhawn · Posted: Aug 31, 2006 5:34 am Post subject:

I financed my boat, and it wasn't even that expensive. I don't have 20k plus to throw towards a boat., but for $200 a month I am riding weekly.

Dont finance toys? What kind of fun is that? I assume alot of people here are well off, but I'm sure there are plenty that aren't. I can afford what I've gotten myself into, but if it came down to it, I'd sell a car, kidney, or whatever to keep my boat or a boat.

Since this thread has an expert, I do want to 'change' boats. I've got a 98 Maxum 23 foot I/O that is in real good shape, had it for 1 year. I want an older Mastercraft Prostar 205 or Maristar 225. I want to pay about the same amount. Am I going to get screwed if I try to trade my boat in on the MC for about the same price?

I'm guessing the best bet is to outright sell and then finance the MC.

trx-1noob · Newbie Joined: 24 Aug 2006 Posts: 13 City: Cardston

I agree with wakeboardreport. Not everyone has the luxory of being able to lay down cash for toys. thus the reason for financial institutions putting the long term loans out there.

trainwreck, you want some advice? Personally, I would take the refinance deal. you have cheaper payments, cheaper end payment, and cheaper loan if i read your post right. take the 90 no day payment, and try to sell the boat. the only reason i say sell the boat is you said you were not planning on keeping the boat for 5 years, and your depreciation is going to be the least right now(being the boat is pretty much new) If you feel you can keep the payments up, great! hope that helps.

I'm looking to buy a new boat, and keep looking at 1 or 2 year old boats. i want to be in the 40-50000 range with 10000 down and a years worth of payments saved i feel i'm in a good position. looking at 60-80000 boats just bout makes me gag.lol good luck.

Trainwreck · Soul Rider Joined: 17 Apr 2006 Posts: 375 City: Baytown

Thanks for the realistic advice guys. I won't waste anymore time breathing life into the argument of whether or not to finance. I'm not one upping anyone...I think its funny that you threw a large chunk at something that you could finance and probably make more money with investments than you would have paid in finance charges. Smile

I still haven't decided which route I'm going to take. Thanks for the thoughts either way.

PimpinD2 · Posted: Aug 31, 2006 6:16 am Post subject:

Trainwreck - im gonna say that people who pay for everything in cash arent willing to take risks investing money. That, or they are just filthy rich.

Erik · Posted: Aug 31, 2006 6:25 am Post subject:

Trainwreck, don't get down about it. There are several ways to get through this. To me it is a no brainer. Get out of the boat. Either sell it, or (I prefer this one ->)Pursue the buyback. Make them very uncomfortable with you every time you enter the dealership. Involve a laywer if you have to.

Brit Rider · Posted: Aug 31, 2006 6:31 am Post subject:

Hmm.. some really interesting points being raised.

Seems like everyone needs to find a good balance for themselves...

everyone has different circumstances:

Some folks are guaranteed a high income for many years so can finance a brand new boat. They may not have a big lump of cash laying around but if they have surplus income why not spend a little on finance and have their toy now? maybe a 4-6 year loans ideal for them?

Some are older and have built up a little wealth and can buy outright. or can bolt the borrowing onto a company or property etc... at an affordable rate

These are examples of a good balance...

But some buy brand new and don't have the guaranteed income or surplus cash.

That is a bad balance.

This is in no way a dig at you Trainwreck (especially as i have hit a little hard on you before). But it sounds like you haven't quite found the ideal balance for your needs.

Sounds like you really needed to lay down more $$$ at the beginning OR go with a cheaper craft OR simply make sacrifices elsewhere.

I would certainly ponder the advise of selling or sacrifices. For now it seems that your interest rate is through the roof and someome is getting very rich off your ass... they are literally doubling their money on you.

Just my 2 cents.

Wakebrad · Ladies Man Joined: 11 Dec 2003 Posts: 12257 City: Dallas

Thug Hunter · Outlaw Joined: 08 Jun 2005 Posts: 134 City: Austin

Brit Rider · Posted: Aug 31, 2006 6:50 am Post subject:

Thug Hunter, Totally. Once you have good credit there's nothing wrong with it. Often you get incentives to finance such as free servicing or payment breaks etc.. even on 0% so it can be advantageous to pay over a period rather than right away.. even if you can afford to.

Rhawn · Posted: Aug 31, 2006 6:53 am Post subject:

WakeboardReport, not to derail the thread, but can you give any advice to the situation I posted above?

bmartin · Addict Joined: 05 Feb 2003 Posts: 794

Erik · Posted: Aug 31, 2006 7:02 am Post subject:

Rhawn, with cars and boats, if you can handle a slower pace, if you can handle the fuss and somewhat annoying process, it is almost always better to sell it yourself than to trade it. For several reasons. By far #1 is that you train yourself to not get too attached to any one boat and not approach the situation like "this is a once in a lifetime deal... I must move on this NOW and trade my boat for THIS EXACT ONE". Keep the philosophy that there are TONS of boats out there. Because there are. Always remember that.

So, pace it. Slow. Sell the Maxim at the end of this summer. Put that money aside for your down payment on somthing better. I never trade stuff in. I always keep the 2 transactions seperate... even months apart. It is better for you the consumer that way.

Road Head · Criminal Joined: 03 Jul 2006 Posts: 70 City: Nashville

The real question to be asked is "does your family need that money more than they need that boat?" If you can afford to spend $445 a month for the next 17.5 YEARS on a depreciating asset and you have already put money in your retirement, in your house, in your kids college fund, kids medical care and clothing and other kid stuff, etc, then so what, you would probably spend that much on something else, whether it be a boat, or guns, or sports cars, or baseball cards, etc.

Plenty of people finance things. If you have EXTRA money that is not needed to support yourself and your family, then you can pretty much spend it on whatever you want. The problem comes when you have that big payment, and are worried about putting food on the table and paying the electric and water bills. I also think its problematic if you spend all your money, and do not try to save/invest for retirement.

For my family, there is no way I could justify having that set of payments. We paid $10k cash for a nice I/O boat. It gets us out on the water, plenty of power for wakeboarding and skiing, smooth enough for cruising and has an anchor so we can go swimming and eat our picnic lunch. I could not afford to have that payment hanging over my head.

Trainwreck · Soul Rider Joined: 17 Apr 2006 Posts: 375 City: Baytown

This post has gotten so far off track!

I dont have a family, I don't go out partying around town, I am basically married. I just got finished putting her through school. She's about to double our income. We have a house to live in and I've had a bad ass job. I still have a good job. Any sales job takes a few months to get started.

So yeah, I guess I'm crazy and financed the stuff out of my boat.

My question was purely about a refinance. If I needed someone to tell me how stupid I am I'm sure I could find someone who knows me much better than you all to take care of that. LOL

Swass · Guest

In short, .01% savings doesn't seem worth it to me.

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

Wakebrad

I honestly didn't know you could finance a boat for more than 5 years.

I am a firm believer in financial responibilty and working your ass off. However, working your ass off without some form of recreation to blow off steam will only led to an early grave.

As far as boats and financial responsibility. Which situation is better?

Guy A shells $25,000 for a new Bayliner runabout. He puts down 20% and finance it for 5 years. After year 3 he decides to sell it. The salvage value is $12,500.

Guy B shells $50,000 for a new WB boat. He puts down 10% and finances it for 10 years and sells it after year three. The salvage value is $48k (new boat has a messed up hull and cost $60k.)

What situation is better in terms of $$?

bmartin · Addict Joined: 05 Feb 2003 Posts: 794

Trainwreck, There really isn't a big difference between the loans. Assuming your loan is a simple interest one, you can turn your current loan into 180 month one by paying more than the min. payments as has been pointed out. I am guessing you are leaning toward the second loan because you can take 3 months off without any penalty and if you can not make those 3 payments and you are determined to keep the boat, then take that loan offer. Much bettter than missing the paymens. The new loan really isn't any better or any worse than what you have now over the long term.

Good luck with your new job and I think you have gotten some well intentioned advice with this post.