used boat financing questions?

[Snake River King]

Hey guys just a couple quick questions on finacing a used boat. Ive looked at a lot of really nice used boats in the 15,000 to 23,000 range but i want to keep the payment low is there any place where a person can get a 10 year loan on a boat in that price range?

I understand a brand new boat can get this financing but there are a lot of nice boats that are less than 5 years old with all the goodies for a lot less than a new boat

[JohnMickish]

Your dealer or banking institution would be the places to start. Go in and ask them since there are way to many variables to give a definite yes or no answer. There are also a couple of boat lenders out there online that may be able to help.

I know 3 years ago a buddy of mine took a 10K loan out for 120 months, but I don't know if they would do that nowdays.

[Brian-Mn]

Roll it into your home mortgage.

[bkerschner]

I bank with Affinity Plus Federal Credit Union. They offer financing on used boats out to 15 years. I would assume there are other institutions that would also offer that.

[RebelSS]

The credit unions have the best rate on those...and mine will go 120 months or more, according to their HSOforum.

[wallyeye]

Dido on the credit union. I got a 10 year loan on my $10,500 boat.

[Chode2235]

Holy cow, do you know how much extra a boat financed over 10 years is going to cost you?

Theyre your finances and you only go around once, but I have to throw this out there: if you need to finance a boat for 10 years, perhaps you can't really afford it.

Not only this, but you will likely be underwater (no pun intended) on your boat loan the entire life of the loan. So if you run into financial duress, it's not like you will be able to sell the boat to get some cash.

I certainly wouldn't consider it.

[SkunkedAgain]

As long as you've got a option to payoff the loan early, AND PLAN TO DO SO, it's worth getting the 10-year. I got a 15 year on my new boat and will have it paid off in 4 years, but got a better rate.

[NEANGLER]

I have a 10 year loan as well and pay more than the actual loan every month so it will be paid off early. If you think it going to be a boat that you keep for a very long time than there should be no issue with 10 yrs.

[JohnMickish]

You guys with the 10 year loans on used boats, now long ago did you get them?

[Chode2235]

You guys with the 10 year loans on used boats, now long ago did you get them?

No kidding. Again it is your money, but please look at the amortization schedule. For a 10 year loan @ 6.00% you are going to pay over 33% of the principle again in interest.

Your $10,000 boat just became $13,500, and your $20,000 just became $27,000.

At 8.00% it is over 45%: 10,000=14,600, and 20,000 = 29,200.

Now if you just take the loan @ 6.00% for 5 years your talking about 15% of the principle again in interest. It's not linear, and it is not cheap to buy something with a loan length that long. Even if you "pay it off early", you are still paying the bulk of the interest via the amortization schedule.

Holy snikes, that is a lot of money to give the bankers. Personally, cash is king and I would have a big pile of it before I went out to buy a boat. I certainly wouldn't be taking out that kind of loan on it. Just me though, do what you want, and what the banks will let you...

[JohnMickish]

I was just asking that because since the financial meltdown I don't even know if they go out that far on used anymore?

[SkunkedAgain]

Even if you "pay it off early", you are still paying the bulk of the interest via the amortization schedule.

Well that's not true. If you have two loans at the same rate but one is a 5 year and one is a 10 year, you won't pay anymore interest by paying off the 10 year in 5 years. It's exactly the same. The only way that you would pay more with the 10 year loan is if you wait until the 5 year point to make a balloon payment. Otherwise, if you're paying the same monthly payment on the 10 year loan that you would've paid on the 5 year it works out exactly the same.

$10,000 loan

5 year term

5% rate

$188.71 monthly payment

$1,323 total interest paid

$10,000 loan

10 year term

5% rate

$106.07 monthly payment

$2,728 total interest paid

$10,000 loan

10 year term paid in 5 years

5% rate

$188.71 monthly payment

$1,322 total interest paid

It's simple amortization. The only trick is finding a bank that gives a better rate for the longer term than other banks' shorter terms.

[Kyhl]

My bank would only finance up to five years on a new or used boat. But they are rather tight with lending. Always have been.