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Boating on a Budget

BOAT BUYING MYTHS

Myth #1: The best two days of your life is the day you buy a boat and the day you sell it.

Fact:
The best two days of your life come every weekend when you take the boat out with family and friends! Admit it—you’ve watched people in boats enjoying themselves out on the water and thought "I wish I was out there." Well, it’s time to stop wishing and start boating, because NOW is a great time to buy a boat! Why, you ask?

Incredible deals. Dealers want to sell boats, and they’ll be happy to work with you with special offers and the best deals to get you the boat of your dreams. There’s no time like the present. Boating is the perfect way to spend quality time with family and friends—and that’s an investment that never loses its value.

Myth #2:I cannot afford a boat.

Fact:You can finance a boat, just like a car— in fact, you can own a new boat for as little as $250 month! !* In 2008, the average retail price of an outboard boat was $18,513. The average retail price of an outboard boast package (boat, engine and trailer) was $28,388.
*Loans under $25,000 are based on 7.5% for 12 years.

Boats provide tax deductible and cost effective second homes. Interest on a boat loan can be deducted if the boat has a galley, berth and head.*
*Source: NMBA

Myth #3:Banks have stopped lending.

Fact:While it is true that some banks are not underwriting boat loans this year, there are plenty of banks in the US that are making boat loans. For best rates, see your local boat dealer. They will likely have the banking relationships you need. A list of qualified marine lenders can also be found on the National Marine Bankers Association web site- http://www.marinebankers.org

Credit underwriting guidelines in the boat loan business have returned to what they were about 20 years ago. This means you need to be prepared to make a down payment (usually around 20% of the retail sales price). "Collateral value" is an important factor to marine lenders. They will review a boat’s value and future value against your finance amount.

Keep your monthly terms as short as possible. It will save you real money in terms of interest and will help prevent (along with the down payment) negative equity situations. Debt-to-income ratio requirements (your debts compared to your net income) have decreased in recent months. It will be much easier for your marine lending bank to approve your loan with a debt-to-income ratio that is below 40%. See also: Finance Tips

Source: Jim Coburn is the First Vice president of Flagstar Bank in Troy, Mich., and President of the National Marine Bankers Association in Chicago, Ill. Content shared courtesy of Michigan Boating Industries Association.

Myth #4:Boat Insurance is too expensive.

Fact:Boat insurance costs vary by boat length and type, cost of the boat and level of coverage.

Consult your insurance agent for quotes or compare rates online. Some smaller boats can be insured for a nominal sum as a rider on a homeowner’s policy.

You can reduce the cost of marine insurance premiums by taking a boater’s education course.

See also: Insurance Tips

Myth #5:I can’t afford to store my boat.

Fact:Storage options vary depending on the size of your boat. You won’t find a less-expensive way to keep a boat than storing it on a trailer in your driveway or backyard.

Myth #6:Maintenance & upkeep is expensive.

Fact:Boat, trailer, and motor maintenance can be as simple as a freshwater wash down after each use. Keeping everything covered between adventures will also help keep maintenance costs at bay.

Costs for routine maintenance vary by region, but for more involved services, such as oil changes and winterizing, expect to pay what you would for your car on an hourly basis.

See also: Maintenance Tips and Checklist

Myth #7:Boats use too much fuel.

Fact:Nearly 95 percent of boats on the water today are less than 26' in length. These crafts do not use exorbitant amounts of gas. 64 percent of boaters say they purchase less than fifty gallons of gas per season—roughly two trips to the gas station to fill up your SUV or Minivan. (NMMA/RMRC, July 2005)

You’re not likely to use gas the entire time you’re out on the water—Boating activities such as fishing or swimming do not use the motor at all. If you own a sailboat the motor is used even less.

Higher fuel prices present a marginal increase in the operating cost of your boat. For owners of $500,000 boats that use 100 gallons in a weekend, a 50 cent increase in gasoline means that a weekend of fun on the water will cost $50 more, while owners of smaller boats that use 20 gallons of gas will spend $10 more on gas.

See also: Fuel Tips

Myth #8:Boating is hard to learn.

Fact:Boating is not difficult, but driving a boat, like anything else, is a skill. You can learn the "rules of the road" by taking a boater’s education course.

Some dealers offer on-the-water training to help your learn how to use your boat.

Most marinas and dealerships have a network of captains or experienced boaters you can hire to show you the ropes on your own boat. The skills you’ll most likely need to practice will be docking, launching and retrieving your boat.

Myth #9:I don’t have access to water.

Fact:Did you know that nearly ninety percent of Americans live less than an hour from a navigable body of water? This means that water access is a lot closer and more convenient than you might think. To find place to boat near you, please visit our boat marinas and ramps page.

Tips for Boating on a Budget

Have a Plan
Know what you want and what you can afford. Do your financial homework and run a budget --- before you buy a boat. It’s the smart thing to do and will save you a lot of time. Be sure to allow for general maintenance, storage, insurance and other important add-on products you may require such as extended warranties.

Shop new first.
It might sound counter-intuitive, but as with a car, there are pros and cons to both new and pre-owned boats. When buying boats, we recommend shopping new first even if you’re on a tight budget, for a number of reasons:

  • You’ll see the most current technology, latest design and naval architecture
  • Electronics will be state of the art with the newest software
  • New mechanical, electrical and plumbing systems(MEP)

The benefits of buying pre-owed might also influence your decision:

  • Pre-owned boats cost less than new
  • Monthly payment will be less
  • Cost of insurance will be less
  • The depreciation curve has flattened out

Visit a Boat Show
Visit a local boat show. Take a look at all available options and board as many boats as you can. Discuss your wants and needs with dealers and experts at the boat show; they will answer any questions you may have about specific boat types and help you choose the one that will fit your needs and desires. For a list of boat and sport shows in your area, please visit our Boat Show Calendar.

Financing your Boat
Boat buyers have many choices when it comes to paying for their purchase. Here are a few of the advantages of financing your purchase through your dealer with a National Marine Bankers Association marine lending specialist (www.marinebankers.org):

  • Competitive rates - Interest rates for boat loans continue to trend near historic lows in the US.
  • Faster credit decisions—because you are working with lenders in the marine industry who lenders understand boats and their buyers. You can apply for a loan this morning and be boating this afternoon.
  • More electronics and extras—marine lending specialists will allow you to finance optional equipment, electronics, extended service plans and life/disability insurance coverage with your purchase.
  • Financing your boat purchase usually means you can afford a newer, larger or more powerful boat, a better trailer and all the gear that it takes to make boating safer and more enjoyable!
  • Federal income tax deductions—If a boat qualifies as a residence for purposes of deducting interest expenses on a residence* a taxpayer can deduct any qualified interest for the tax year.
CONTACT US 50 Water Street Warren, RI 02885
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