I am looking for some suggestions on a boat loan. I am going to be selling my Carolina skiff and upgrading to flats/bay boat. I am looking around 10-12k for a boat and plan to have most or even all of the money saved up when I purchase in a few months. I am considering a loan as a credit building venture more than anything as I am 21 and just graduated college this past spring and don’t have much as far as credit goes. My main question is, would I be better to finance just a smaller amount, such as $5,000 or for the full amount? My thought was maybe that the larger amount being paid off would look better for my credit. Either way I will pay it off in 6 months to a year. Just looking for some advice from some of the people on here on this matter. I plan to have a consigner as well to help on the interest rate from being so high due to my lack of credit history. Thanks in advance for any help or advice on the matter
First let me say I am not in finance. Second I did not sleep at a holiday inn.
As I understand it, the longer you make steady payments the better. So maybe a 5-7.5 k for say 24 months would do better for building a credit base. Few things about the loan (and ANY account you use), no penalty for early pay off, no problem with paying directly against principal, and direct statements of the account sent straight to you. See these thing in writing before signing the line. Credit unions usually give the best deal for this type of thing.
I do know this, if doing this in any way causes you to be tight with the rest of your money DO NOT DO THIS. A missed payment somewhere can ding you hard on credit scores and be a pain to sort out. So think about if you get a couple days out of work, new crown on the teeth are these things going to set you back badly?
My advise would be to open an account put all the money (+5%over what you think it will take) in it. Set up the payment as a draft and let it go.
If you wanted to get fancy, set up the account, open a credit card with miles/points. Have the card pay the loan, the account pay the card. This will take some monitoring but you get the added benefit of the miles/points.
BTW: my credit scores bounce around the high 700’s. I have NEVER paid interest to a credit card or a late fee for missed payment in my life. There will be blood before I do.
I am sure that many will disagree but “Cash is King.” If you are 21, a college graduate, and can pay cash for a 12K boat you are doing (**() good. They want 12 offer them 9 in hundreds.
In my opinion, financing something that you can pay cash for is just simply giving money away. I bought a 1/2 acre of land and a car for the wife this year. Zero percent of that was financed.
I would also consider keeping your Carolina skiff and getting all of the nautical miles that you can out of it and saving that money for a large down payment on a house. But…I remember how bad I needed a nicer boat at 21!
In my opinion, financing something that you can pay cash for is just simply giving money away.
I couldn’t agree with this more. Pay the boat in cash if you can. It would be better for you to open a credit card that you ONLY use for gas and groceries, then pay it off at the end of every month. That is how I started building my credit when I was 18. You are obviously financially savvy if you already have this cash set aside as a recent graduate. As you pay bills for your phone, insurance, credit card, etc on time, your credit will build itself. But if you finance a boat over a few years period you will be upset when you realize how much extra you had to spend on the boat in the long run. It will be cheaper to pay cash and build your credit other ways. Just my opinion. Somebody in the finance world might be able to give you a better answer though.
^^^ what he said. The longer your good credit history, the better. Short loans will not do anything. Of course in the long run, lots of assets with titles, and a good paying job with no bad credit history will be fine to buy a house, car etc. on credit in the future. If your bent on getting a score built up, a credit card with cash back used just for gas and/or groceries paid off in full each month will build your score up. Pay cash for the boat.
My wife had no loans, no house payment, and a low paying job, but had a credit card she got her freshman year. Always paid on time, and carried a zero balance in here mid 20’s and had a score over 800. I always carried the loans, paid everything on time, but because I was carrying the house, but made 3 times her my score was mid 700. I also had a CC from the same time as her. Bottom line is, long history, and no debt is the best way to get a good score.
Thanks for all the replies and advice! I should have put in the original post that I already have a credit card used for gas and other small things and is paid off every month. I’m not going to get a loan that would stretch my finances thin. I have a savings account that takes about 1/3 straight from every check before I even see the rest of it that is being set aside for a house. I’m going to my grandparents this weekend for Christmas and my grandma worked at a bank for 40 years and retired as a Vice President so I am going to pick her brain on the matter as well and see what she feels is the best solution. I’m also going to check with the local credit union that my credit card is through and see what the rates would be and all the other information on it. I really appreciate all the helps do advice!
What is the interest rate on the loan? What could you be making on your money?
^^^^ This is the most important part right here.
I too am 21 years old while I didnt go to school I have been working since 16 saving every dollar i can. I recently went to go buy a new f150 and thought i was big man on the block for having 25k saved up for a truck and wanted to buy it cash. Doing some math and speaking with someone who had done it a time or two, I realized that the loan i was approved for (3 year 1.99%, definitley go through your bank or a credit union) I would be missing out on 5% gains or more on that 25k even after paying interest on my loan.
My investment portfolio has been averaging 7% or better (12%-18% recently) being diversified through bonds and stocks, so it was smarter for me to put my 25k into my bonds/stocks account and finance the truck for the full amount, while slightly building my credit at the same time. I put my portfolio account on auto draft for my truck payment, and with how good the last 4 months have been since i bought my truck, my truck has actually been free so far.
It kind of sucks, paying cash for things and saving your money and not owing anyone any money now a days is almost the wrong decision to make. You end up getting a better deal borrowing it. You just have to find out what works best for you, and what makes the most sense.
Look at where Jesus went to pick people. He didn’t go to the colleges; he got guys off the fishing docks.
What is the interest rate on the loan? What could you be making on your money?
^^^^ This is the most important part right here.
I too am 21 years old while I didnt go to school I have been working since 16 saving every dollar i can. I recently went to go buy a new f150 and thought i was big man on the block for having 25k saved up for a truck and wanted to buy it cash. Doing some math and speaking with someone who had done it a time or two, I realized that the loan i was approved for (3 year 1.99%, definitley go through your bank or a credit union) I would be missing out on 5% gains or more on that 25k even after paying interest on my loan.
My investment portfolio has been averaging 7% or better (12%-18% recently) being diversified through bonds and stocks, so it was smarter for me to put my 25k into my bonds/stocks account and finance the truck for the full amount, while slightly building my credit at the same time. I put my portfolio account on auto draft for my truck payment, and with how good the last 4 months have been since i bought my truck, my truck has actually been free so far.
It kind of sucks, paying cash for things and saving your money and not owing anyone any money now a days is almost the wrong decision to make. You end up getting a better deal borrowing it. You just have to find out what works best for you, and what makes the most sense.
Look at where Jesus went to pick people. He didn’t go to the colleges; he got guys off the fishing docks.
That is one of the things I am going to check on for sure is how I could use the money else where possibly and make more off of it. I’m actually not 21 yet, I’ll be 21 in April which will be around the time I will be looking to buy.
What is the interest rate on the loan? What could you be making on your money?
^^^^ This is the most important part right here.
I too am 21 years old while I didnt go to school I have been working since 16 saving every dollar i can. I recently went to go buy a new f150 and thought i was big man on the block for having 25k saved up for a truck and wanted to buy it cash. Doing some math and speaking with someone who had done it a time or two, I realized that the loan i was approved for (3 year 1.99%, definitley go through your bank or a credit union) I would be missing out on 5% gains or more on that 25k even after paying interest on my loan.
My investment portfolio has been averaging 7% or better (12%-18% recently) being diversified through bonds and stocks, so it was smarter for me to put my 25k into my bonds/stocks account and finance the truck for the full amount, while slightly building my credit at the same time. I put my portfolio account on auto draft for my truck payment, and with how good the last 4 months have been since i bought my truck, my truck has actually been free so far.
It kind of sucks, paying cash for things and saving your money and not owing anyone any money now a days is almost the wrong decision to make. You end up getting a better deal borrowing it. You just have to find out what works best for you, and what makes the most sense.
Look at where Jesus went to pick people. He didn’t go to the colleges; he got guys off the fishing docks.
That is one of the things I am going to check on for sure is how I could use t
That is one of the things I am going to check on for sure is how I could use the money else where possibly and make more off of it. I’m actually not 21 yet, I’ll be 21 in April which will be around the time I will be looking to buy.
17 Carolina Skiff
60 Johnson
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Also, one thing i did that sucks now but will pay off. Go ahead and take 100$ a week and start a Roth IRA next year if you can work it into your finances. I started mine a year ago, so if i retire at 65 (just using that as an example) if i put in 5500$ per year (about 100$ per week) my total contribution by the time i retire will be 245k (roughly), its worth will be 1.7million . Im not a genius by any means, but if by saving 100$ a week for 25 years means multiplying my retirement funds x10, im all in.
Just something to think about
Look at where Jesus went to pick people. He didn’t go to the colleges; he got guys off the fishing docks.
That is one of the things I am going to check on for sure is how I could use the money else where possibly and make more off of it. I’m actually not 21 yet, I’ll be 21 in April which will be around the time I will be looking to buy.
17 Carolina Skiff
60 Johnson
Also, one thing i did that sucks now but will pay off. Go ahead and take 100$ a week and start a Roth IRA next year if you can work it into your finances. I started mine a year ago, so if i retire at 65 (just using that as an example) if i put in 5500$ per year (about 100$ per week) my total contribution by the time i retire will be 245k (roughly), its worth will be 1.7million . Im not a genius by any means, but if by saving 100$ a week for 25 years means multiplying my retirement funds x10, im all in.
Just something to think about
Look at where Jesus went to pick people. He didn’t go to the colleges; he got guys off the fishing docks.
[/quote]
I’m already putting aside money for retirement as well. I have about 250-300 bi-weekly going into a 401k but planned on starting something like that soon as well.
How much debt to you have with respect to your income? (i.e. debt to income ratio)
Of the credit you do have, how much of it is used?
Do you have a good HISTORY of paying on time (i.e. longevity of credit, and NO deliquencies)?
Do you have any defaults\foreclosures\collections?
So, if you have NO credit whatsoever, it’s not a bad idea to get some sort of loan. That being said, the boat loan might not be the best place to start. Loans on boats will be higher rates, so that means your throwing more money away. If I were in your shoes, I would pay for the boat in cash, and consider finding something to finance that has lower rates (small home, small credit card, etc). If you do get a credit card and let’s say they give you $5000 credit limit, then don’t have a balance of $4999 on there or that is a “ding” on your credit. You would probably want your balance to be in the 100’s.
Put numbers on it.
$5000 loan @ 9% this might be a better rate than you would get with no credit
For a 36mo loan term you’ll pay $160/mo
$37.50 goes to interest the first month.
This will go down, but ask yourself how much do you want to pay the bank to loan you money.
A tip that may not work for you. But I did this with my wife.
I put her name on my CC to establish credit. Her beacon went from 620 to 700ish after the first time it hit her credit report.
Ask you dad/mom/granny etc if they’ll do that. It may not work if you’re not married.
But tell them you don’t want a card. And You will be on the hook if they default.
If you are dead set of financing something to establish some history with payoff, it looks like you already have a history with a credit union. You can purchase a CD with them. The amount is up to you, but you can then borrow from it. They only charge a small % because you are essentially borrowing from yourself, and you obviously lose the CD rate, but it will be a lot lower than just getting a straight loan on a boat. That is probably the only loan I would entertain, as anything else will be such a high rate.
Actually mortgage rates are great. They are about the same as inflation. Why not borrow today’s dollar and pay off with tomorrow’s dollar (worth less).
Do they even look at your income as far as FICO goes…? Mine has dipped afew times despiste a fairly strong income because I became slightly leveraged on a construction investment. I hate FICO and will soon pay everything off and won’t need many of these bastards. Can’t wait.