Impact of economy on CC and the industry?

[GoBig]

There is no doubt that the boating industry will be heavily impacted by the current credit crunch. I believe that the economy will recover within 18 months once we return to some sort of historical equilibrium. The boating industry will likely take much longer. Boat prices have almost doubled in the past 8 years. This was fueled by the same easy credit that fueled the housing bubble. Now that credit has tightened, lending standards have increased, and rates have gone through the roof, there is no way that manufacturers or dealers will see the volumes they have realized over the past decade. In order to survive, they will either have to scale operations way back and operate as niche players or retool and offer lower cost alternatives.

So what have I done? I went and bought a 2003 SANTE! I was tired of watching my investments wither away and my money market rates going through the floor. So I told my wife I was going to invest in material commodities and bought a new(er) Nautique. Sure, it will depreciate, but certainly not as fast as most of my other investments have over the past 2 months. At least I will be having fun while I'm at it and curing some of the anxiety that all of this economical nonsense has caused. If you have been holding off buying a boat, especially a used one, and have the means to do it, now is the time. Winter, bad economy, no available credit, a ton of inventory, and no buyers pretty much create the perfect buying opportunity. I got a screaming deal. Oh, and gas is below $3/gallon?

Cheers!

[CD]

Look at the car manufactures and you can see the consolidation that is going to take place no matter what, I dont know what kind of financial shape MC and Malibu are in but there are way to many boats being made for one consumer, just like the the Big 3. You are not going to have a lineup of people to buy 60-100K plus boats, this is just unrealistic. Americans really seem to be retrenching and I think spending is going way down, cars boats etc. are all really being affected. Even the mighty Toyota's sales were down 4%. I think if you are looking for a boat and can afford it be patient because you will find an amazing deal in the next yr. Alot of dealers think that this is going to pass in 6 months but it wont. MC & BU love to shove product onto the dealers showrooms and some of these guys are loaded down with boats right now, there are going to be deals and the CC dealers are going to have to compete period. I am looking for a boat and want a CC but if a deal of a life time comes from MC or BU then CC dealer will have to step up to the plate or else maybe lose a deal.

[srock]

I saw a poll which I believe stated almost 50% of people finance their ski boat. It's gonna hurt.

[crowland]

I am suprised more people do not finance boats than 50% it is basic finance 101 - it does not make sense to pay cash for this sort of purchase, especially if you are able to place that amount of cash in a non-depreciating asset that is earning more in interest/dividends then you are paying in interest for the boat loan.

[mf01]

I am suprised more people do not finance boats than 50% it is basic finance 101 - it does not make sense to pay cash for this sort of purchase, especially if you are able to place that amount of cash in a non-depreciating asset that is earning more in interest/dividends then you are paying in interest for the boat loan.

It really depends on your loan rate. Say you get 8% APR on your boat loan, but can only make 5% on investments (probably less right now), then it would be smarter to pay in cash.

[crowland]

I am suprised more people do not finance boats than 50% it is basic finance 101 - it does not make sense to pay cash for this sort of purchase, especially if you are able to place that amount of cash in a non-depreciating asset that is earning more in interest/dividends then you are paying in interest for the boat loan.

It really depends on your loan rate. Say you get 8% APR on your boat loan, but can only make 5% on investments (probably less right now), then it would be smarter to pay in cash.

I should have said historically

[chuckc983]

It blows my mind that so many people still believe you can make a safe return of 7% or more (don't forget you pay tax on this return reducing your after tax net). I suspect this mindset is responsible for some of the economic problems we are seeing, finance everything, invest all you money in property, stocks, bonds, gold, hedge funds, oil, or whatever - everyone of these asset classes has tanked over the last 3 months. If you bought a boat this summer, financed it, and invested the money in just about anything - you lost money and you are paying interest on your boat that is now likely worth less then you owe. I saved money for a couple of years to purchase a new boat - when you own it, you know it won't ever get repossessed.

[CD]

Financing a boat is not the smartest thing to do and with all the blood on the street these days you would think this isnt rocket science, cash is king! If you own it no one takes it away, you also then are not squeezed if your income changes because you OWN IT...this mentality has got so many Americans in trouble and thats why there will be deals on used boats. When the crap hits the fan guess what is first to go to reduce monthly payments, the boat payment. People are making monthly payments on something thats drops like a rock the minute you take off the lot. Its a toy...pay for it with cash.

[AuMDLST]

$67,000 cash for a new 2009 210 - no thanks - I'll put some down and play the market with the rest. Anyone can make money in the market even under the conditions that present themselves today. As long as the markets are moving (up or down) you can make money! Just have to do your homework and never trust a managed fund!

[2gofaster]

Historically, boat loans have the lowest rate of default of any loan made at banks. That goes back through every recession and economic downturn we've had in the last 30 years.

[CD]

I heard today that 20% of American homeowners have a mortgage that exceeds the value of their home. that is staggering.

[etwman]

I agree 100% with CD, I live and breathe by the notion don't ever finance a play toy. Every play toy I have ever owned I paid for with cash. If you can't buy a play toy with cash, you simply don't buy it. I don't care what happens to the value of my nautique. It can sit in the garage for all I care, its paid for, we enjoy it, and when or if the time comes when I want to part with it someone is giving me a check and I'm giving them a title. Simple as that. I can't imagine making a payment on something that sits in my garage over a winter when it can't be used.

Face it, financing everything under the sun is what got this economy in the state it is now.

[AirTool]

There is merit in all the comments. The more important point...If you can't afford it, don't buy it.

It is really NOT an issue of whether you pay cash or finance. Just because you pay cash for something, doesn't mean you can afford it.

Let's say I could pay cash for a new Ferrari. It would be an abosoluty STUPID decision for me to buy one.

[gride300]

i agree with airtool, especially with interest rates being low right now financing is not a bad idea. you're supposed to be spending to stimulate the economy, not saving which is why low interest rates are "supposed" to get people to want to get their money out there be it investment or purchase. i mean if you have 60000$ under the mattress it doesnt mean you can just go blow it on something and not be broke because of it. what got us into this mess is lack of any regulation, banks lending people money who couldnt even afford to finance a used hundai, and 0 money down mortgages. depending on if you need money to do business or what have you financing might be the best choice even if you are a millinaire

[Teleman]

Some very smart economists say the market will bottom at 7200 and then be back to 11k by the end of spring.

I love to hear the optimism in this. But I wouldn't bet the farm on it.....No one predicted the crash we are in, or if they did, we all wouldn't be talking about how much money we lost. The market is like driving forward, (FAST), and looking backwards for navigation. I guess I would have to say, pick your stratigy wisely.