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What type of loan for boat?

7/30/17 @ 3:57 PM
User since 3/22/10

I've been talking with the wife on the type of boat that we would like to eventually buy for the two of us and the kid on the way. We have decided on size/model/type - which was a lot easier than I thought. In this case I was the one looking at a more cost appropriate model - whereas my wife wanted the Lund Pro-V GL because it was sparkly.

Anyways, I do plan on taking out a loan for my boat purchase. It is going to be awhile before I purchase a boat, but I like doing as much research as possible before getting into a big purchase like this. My question to you on these forums is what type of loan do you have and would you recommend it? Are there special incentives worth pursuing at boat shows? I've glanced at a few options and just want to know opinions on them.

First option is a boat loan through anyone who offers it. I saw loans for generally about 10 years at a percentage that goes up to 8% in some cases. That's a good chunk of money to pay in interest alone - this was my least favorite.

Second option is a home equity loan. I have enough equity built up in my house to get a loan (if approved, of course) at a substantially lower rate of nearly 3-4%. Has anyone else gone with this path? If so, would you recommend it - if not, what deterred you? Would anyone highly advise against this?

Third option, which I'm not sure if it is the same as the fist, is a second mortgage. The same reasoning as the second option, lower rate. Same questions from second option. Has any done this? Advise this? Do not advise it?

I am 26, credit near 810-820 last time I checked, if that helps with guiding me on an option that I listed, or something that I didn't list.

I am not hurting for a boat. I don't need one. I want one. That being said, I can wait until the right opportunity comes. I just want to know what is out there. I looked at multiple options based on the interest rates because why wouldn't I try an save interest over the life of the loan if at all possible?

Thanks for any help on this. Like I said, I like to be as informed as possible before taking on something like this.

6/12/18 @ 5:06 PM
User since 2/19/05

One other choice if you are not pressured to purchase would be to save like crazy, pay cash and no mortgage at all. 

That being said home equity works best of your loan examples. Only pay interest on actual money being used.

Second mortgage requires you to pay interest on total loan amount until loan is paid off.


5/31/18 @ 11:14 AM
User since 3/18/11

I once had about 8 grand in fishing gear and boat accessories stolen during a musky tournament in park falls years back.  Home owners covered all the fishing gear.  Boat coverage covered all the the seats and trolling motor foot pedal and everything connected to the boat itself.  Two different deductibles.  One was 250 and the other 500. Dont remember which was which anymore.  So i lost 750 rather than 8 grand and my premiums never went up.  May have gotten lucky. lol

5/31/18 @ 10:41 AM
User since 4/9/03

Boat insured under your home is at ACV. 

Insured under your home you also don't get extras like

- Total loss replacement or agreed value

- Disappearing deductible. Go 5 years or less without a claim you could have a 0 deductible. Then you could raise your deductible and pay for a $2000 DED premium wise but still be at $0 for claims. 

-automatic coverage for electronics and fishing gear at a low deductible

- roadside assistance for your trailer

-If you have a claim it goes against your home. You have weather claim other claims you could get canceled. Then good luck finding Home coverage. If you do you will pay for it.  

- Premium is pretty much the same on it's own as it would be under a Home policy.

Only way I ever suggest putting a boat or atv under a home policy is if the owner has a horrible driving record. Yes, your driving record affects a boat and all rec vehicles. 

5/30/18 @ 6:49 AM
One shot one kill
MEMBER since 8/12/02

My agent told me years ago that the boat is under homeowners insurance while on your property  . Boat insurance once on the road or water .

5/30/18 @ 6:22 AM
MEMBER since 7/7/04

My boat is insured under my homeowners policy, what is wrong with that?

5/29/18 @ 3:15 PM
User since 4/9/03

I wouldn't worry about financing 100% at 0% if your worry is gap in the loan and boat value. Well unless you insure it under your home policy. (Which I would never ever do for many reasons) Companies like Progressive have a total loss replacement coverage option for very reasonable difference in premium for the first 5 years of the boat.

5/29/18 @ 2:42 PM
User since 12/19/11

There's really no scenario that going with a 0% APR loan isn't the best option, other than paying straight cash. It is the only situation where you aren't throwing out money on interest, closing costs or origination fees. You could always take out a HELOC to pay off the boat loan if you became tight for money and needed to sell it. While using collateral to finance toys and hobbies is never ideal, the OP is 26 years old with a credit score of 800+, he's proven he can manage his finances responsibly. There is also no benefit from putting money down on a 0% APR loan other than to lower your monthly payments. But you would be better off taking that down payment and investing it either in a retirement fund or a short term investment account to gain an annual return if you can afford the higher monthly payments. That's where having a financial planner is beneficial.

5/29/18 @ 1:57 PM
User since 5/19/06
I’d probably go 0% (if you could ever find that in the future) over HELOC but still would put the money down on a new boat. You’d be upside down 20% as soon as you hooked it to your truck even at 0% with nothing down. Everyone has their own acceptable level of risk, I just choose to limit myself more than most. 

5/29/18 @ 1:54 PM
User since 4/17/07
I would avoid borrowing any money against your house, but that is me.  Especially for a toy. I'd put as much cash down as possible and take out a low interest 3 year loan for the remaining balance. Ideally pay cash for it all but that is hard to do if you're buying a brand new boat.

It can turn into a mess if you finance a brand new boat through a HELOC. If after you buy it and something happens (lose job, accident, medical etc) that boat is probably going to be upside down unless you put a sizeable down payment. So if you need to sell it you are going to need to come up with the money to pay the difference first and then try to sell a slightly used boat, which usually sell slow because of the higher price. It's just a messy situation that I would avoid if it was me.  Keep the loans separate then if something happens your boat gets repo'd and you still have a place to live.  Everyone is different it all depends on your comfort level of borrowing money and the risks involved.

5/29/18 @ 1:38 PM
User since 12/22/04

I would never consider putting any money down if I had free financing available.   Are you worried boat is going to sink and you will be upside down on a $20k  balance of loan (remember insurance will cover part of it minimum)?  That is not exactly life ruining financial crisis.  

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