Friday, July 24, 2009

Boat Yacht Finance Best Rates


In a recent interview with Grant Smalling (Pictured to the left) of Lending Associates, the conversation was based around the effective cost of waiting vs. buying relative to boats and yachts.

I asked:
“Grant, recently we discussed the potential impacts to a consumer relative to waiting for "the market" to return versus proceeding with a boat purchase. Could you detail that thought a bit further?”

Grant returned:
“Sure John.
My thoughts start from the position that the sailboat manufacturers have done a good job decreasing production to meet current demand. It also appears that the new sailboat inventory seems to be clearing from dealer stock better than expected. While this is great news for the dealers, the consumer that is waiting to see their portfolios rebound before buying are going to miss out on an opportunity on the current dealer inventory.

Many customers pull cash from the sale of their current stock positions to pay for a boat. Selling stocks now to pay for a boat and taking a loss is a decent argument to waiting to purchase. However consider the other side of the coin. If they buy at today's inventory clearing prices and finance for the next two years while the market continues to regain momentum, they can pay off a loan in a few years and not have to take the current loss on the portfolio sale. The
carrying cost over the two years would be the mortgage interest from the yacht
loan minus the 2nd home deduction tax credit.

Here's a hypothetical scenario.

Regular Sale Price: 250,000
Clearance Price: 212,500
Savings By Buying Now: $37,500
Loan Amount: 170,000 (20% Down)
Monthly Payment: $1,318
Estimated Interest Over 24 Months: $23,251

That means the net difference between the savings by buying now and the interest carrying cost is $14,249, not counting the 2nd home mortgage interest tax deduction nor the value of boating now and for the next two years. This is a pretty compelling argument to me and I have had many customers tell me that this is a main reason they decided to take advantage of these economic times.”

I returned:
“Grant, well worth the consideration by those who want to go sailing! Your example reflects as much as a 15% reduction in price, unprecedented in the industry. I imagine by acting now one might be able to even better that percentage.

You can probably complicate the issue by waiting in that with the reduced production by the builders it will create in the short run a lack of supply once sales begin to improve. We are seeing the impacts at the builders level. They are further impacted by their suppliers where OEM suppliers have reduced their production, gone out of production or have discontinued select product.. This all adds up to increased cost of the next model year production and that
means increased prices when you can and if you get a hull slot.”

Grant furthered:
“Well put John. I can tell you that I am working a few deals now that are boats on order where there is no dealer inventory. Those transactions are not discounted at all due to simple supply demand as the manufacturer is building to order only. This does not take into account the new model year pricing increase as you have noted as well.

I feel like the bottom line is that consumers have an unprecedented opportunity in our business to get a great deal and go sailing now. That window of opportunity is closing and all of the people considering buying are going to say "I'm glad I did, or I wish I had." What may sound like a sales pitch, is actually stating the current reality of this opportunity.”

In summary, for those who have postponed a buying decision based on the anticipation
that they are waiting for the "market to get better" you might just find that by financing today's great deals you will be far more ahead of the game by buying today and having the opportunity to be sailing today!

I thank Grant Smalling of Lending Associates for his input, if you would like to review a specific purchase interest with Grant as to the merits of financing your purchase please feel free to contact Grant at: For personalized and confidential service contact Grant Smalling Phone: (866) 723-3991 Email: grant@lending-associates.com Member of National Marine Bankers Association


As for me!? I can always be found most anytime by phone 954.821.6450 or via email janderson.sesy@yahoo.com

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