Finance interest rates for boat loans

[Troll]

Anyone here got finance for their boat and if so are you delighted at the interest rate cuts,

 

or is it a joke as they are they not passing it on to you, as you pay what you signed up to?

[chris w]

Anyone here got finance for their boat and if so are you delighted at the interest rate cuts,

 

or is it a joke as they are they not passing it on to you, as you pay what you signed up to?

If you have a fixed rate loan, why would you expect it to reduce? If interest rates had gone up, you would be pretty p*ssed off if they tried to increase the rates. A fixed rate is just that - there's a risk for both sides. You win some, lose some.

 

Chris

[Lady Muck]

If you have a fixed rate loan, why would you expect it to reduce? If interest rates had gone up, you would be pretty p*ssed off if they tried to increase the rates. A fixed rate is just that - there's a risk for both sides. You win some, lose some.

 

Chris

 

I think what he means is that they are supposed to be pegged to the base rate, but they only actually move when it suits them, i.e when the rates go up. There is probably some small print somewhere. Yes I'm peed off too......

[Odana]

If they're supposed to be pegged and variable (and esp if they went up when rates did), customer letters are some of the few things that'll prompt any action. It worked with banks - though granted there are more customers to write in grumpily. And more options for them to move to.

[chris w]

It seems to me that most people don't read the small print in contracts they sign and then are surprised when they appear to get "stung". If you don't like the contract terms, don't sign them.

 

Chris

[Naughty Cal]

Our rate is based on the finance house base rate and is 3% above it. Since we took out our loan 3 months ago the rate has dropped 1.5%. It doesnt affect our monthly payments it means the term of the loan will shorten.

[Mr B]

Our rate is based on the finance house base rate and is 3% above it. Since we took out our loan 3 months ago the rate has dropped 1.5%. It doesnt affect our monthly payments it means the term of the loan will shorten.

 

 

Are you sure the Finance house base rate has gone down 1.5%? Look at this web site http://www.moneyfacts.co.uk/economic/Finan...seBaseRate.aspx

 

Taking info from that site and putting in the Bank base rate changes for the last 3 months

 

 

finance house 6.00% 6.50% 5.50%

bank base rate 4.50% 3.00% 2.00%

 

As you see the Finance house base rate has not as yet fallen as much as the Bank Base rate. Our boat loan is linked to the Finance house base rate. Let us hope it falls soon.

 

Barry

[Naughty Cal]

Are you sure the Finance house base rate has gone down 1.5%? Look at this web site http://www.moneyfacts.co.uk/economic/Finan...seBaseRate.aspx

 

Taking info from that site and putting in the Bank base rate changes for the last 3 months

 

 

finance house 6.00% 6.50% 5.50%

bank base rate 4.50% 3.00% 2.00%

 

As you see the Finance house base rate has not as yet fallen as much as the Bank Base rate. Our boat loan is linked to the Finance house base rate. Let us hope it falls soon.

 

Barry

 

So it says on our three monthly statement.

 

Its on its way down anyhow so not overly worried. We took out or loan when the rates were higher knowing they were due a fall which meant although our payment is higher than it could have been the term will be shortened.

[honey ryder]

I just got a statement telling me my interest has gone UP! thats with Lombard BTW, it has gone from 9.5 to 9.75, what a rip off. my payments stay the same, its the loan term that changes.

 

Im looking around for a replacement finance service in the new year.

[bottle]

Oh! dear

 

The 'finance rate' is not connected to the 'bank rate' according to an 'expert' on a recent TV program.

 

The small print does need to be read very carefully.

 

There maybe some good to come out of this crisis, it will hopefully make people realise that borrowing costs money and will not be so easy to come by for some time.

 

It will be difficult but perhaps, overall, debt will reduce in the future but give it a couple of years and the 'cheap' money will return, then the collapse again.

 

It is cyclical, we never really learn.

 

There will be someone out there that is actually profiting from all of this.

[Gibbo]

It will be difficult but perhaps, overall, debt will reduce in the future but give it a couple of years and the 'cheap' money will return, then the collapse again.

 

I'm not sure the "cheap money" will return.

 

The reason it was there in the first place was that the banks were (fraudulently IMHO, followed by "allegedly" etc) lending money that didn't actually exists. They were shuffling paper around amongst themselves that was nothing more than debts and IOUs with nothing to back it up apart from artifically inflated valuations on property, both their own and their customers. This in turn put the price of property up, thus perpetuating the myth that there was loads of money around. Because on paper there was, but only due to the artificially high property prices.

 

If a bank needed more money to lend to its customers it simply borrowed some from another bank (that didn't actually have it to lend) which in turn borrowed it from another bank, etc, going round in a big circle. If the total money that any particular bank had lent out was added up it came to more than the bank's nett worth. That's a situation that cannot continue indefinately (and didn't). It can apparently go on for ever until one little thing upsets it.

 

Take an example:-

 

Bank A lends money (which it doesn't have) to person B to buy property.

 

Person B pays the borrowed money to person C to buy property.

 

Person C pays money into his bank D to pay off the loan he originally used to buy it.

 

Bank A borrows the money from bank D to lend to person B. Go back to the beginning.

 

At no time did that money actually exist. But on paper it adds up.

 

I find it hard to believe that the various world governments weren't aware of what was happening. Of course, a government has a vested interest in this happening because they benefit in taxes.

 

(flack jacket on in preparation for those less cynical than me who will try to word it like they understand the banking system better)

 

Gibbo

[CHRI5 Blessed]

ok, well i need to get a loan for my boat and advice is alway great... but pushing doesn't help!!! i am only 21 and its not an easy descision for me to just go and get a loan!!!! certainly not at some of the interest rates i have seen!!! i will be going to see and get paperwork to read through from some banks in the next week!

 

lil chris

[mayalld]

I'm not sure the "cheap money" will return.

 

The reason it was there in the first place was that the banks were (fraudulently IMHO, followed by "allegedly" etc) lending money that didn't actually exists. They were shuffling paper around amongst themselves that was nothing more than debts and IOUs with nothing to back it up apart from artifically inflated valuations on property, both their own and their customers. This in turn put the price of property up, thus perpetuating the myth that there was loads of money around. Because on paper there was, but only due to the artificially high property prices.

 

If a bank needed more money to lend to its customers it simply borrowed some from another bank (that didn't actually have it to lend) which in turn borrowed it from another bank, etc, going round in a big circle. If the total money that any particular bank had lent out was added up it came to more than the bank's nett worth. That's a situation that cannot continue indefinately (and didn't). It can apparently go on for ever until one little thing upsets it.

 

Take an example:-

 

Bank A lends money (which it doesn't have) to person B to buy property.

 

Person B pays the borrowed money to person C to buy property.

 

Person C pays money into his bank D to pay off the loan he originally used to buy it.

 

Bank A borrows the money from bank D to lend to person B. Go back to the beginning.

 

At no time did that money actually exist. But on paper it adds up.

 

I find it hard to believe that the various world governments weren't aware of what was happening. Of course, a government has a vested interest in this happening because they benefit in taxes.

 

(flack jacket on in preparation for those less cynical than me who will try to word it like they understand the banking system better)

 

Gibbo

 

No, that is how the system works. It is called fractional reseve banking, and has been around since the early 1800s

[Gibbo]

No, that is how the system works. It is called fractional reseve banking, and has been around since the early 1800s

 

Correction...........

 

"that is how the system doesn't work"

 

Edit: I think you need to reread this bit........ "If the total money that any particular bank had lent out was added up it came to more than the bank's nett worth"

 

That isn't FRB. That is fraud.

 

Gibbo

Edited December 23, 2008 by Gibbo

[mayalld]

Correction...........

 

"that is how the system doesn't work"

 

Gibbo

 

 

The system works, provided the Reserve capital requirement is correctly set

 

The UK operates on a RCR of around 3%, which means that every pound of real money can (ultimately, as it goes round in circles) create a further 32 pounds of ficticious money.

 

Higher RCR reduces the amount of money that can be created.

[Gibbo]

 

The system works, provided the Reserve capital requirement is correctly set

 

The UK operates on a RCR of around 3%, which means that every pound of real money can (ultimately, as it goes round in circles) create a further 32 pounds of ficticious money.

 

Higher RCR reduces the amount of money that can be created.

 

See my edit.

 

Gibbo

[WJM]

There was a time long long ago when a piece of paper money (a bank note) actually represented a real piece of gold or similar asset held at a bank ('I promise to pay the bearer on demand'). The paper money came in to save people carrying around the actual gold. But that idea went out the window years ago. All developed economies work on 'non-existent' money. The thing the banks did wrong recently was to work to higher real:pretend ratios than they could juggle.

[stripey]

Money hardly exists now. Occasionally you might have a bit of cash in your pocket. But you never see what your employer pays you, and you see very little of what you think you are paying out - it's all just numbers on a bit of paper

[Liam]

Up until a few months ago, if I wanted to buy something, I actually went to the hole in the wall, drew out some money and paid cash for whatever it was I wanted to buy.

 

Since getting this "new" card, I join the thousands who hold people up at Petrol stations and the like, paying for a packet of chewing up on my card.

 

Jeeze, I'm getting lazy!

[Gibbo]

Money hardly exists now. Occasionally you might have a bit of cash in your pocket. But you never see what your employer pays you, and you see very little of what you think you are paying out - it's all just numbers on a bit of paper

 

It is indeed. But if you add up all the bits of paper it ends up as a positive number. Unless it's a bank in which case it ends up as a negative number. That is known, for any other business, as trading from a position of insolvency and is against the law. Unless (it would seem) you're a bank.

 

Gibbo

[chris w]

It is indeed. But if you add up all the bits of paper it ends up as a positive number. Unless it's a bank in which case it ends up as a negative number. That is known, for any other business, as trading from a position of insolvency and is against the law. Unless (it would seem) you're a bank.

 

Gibbo

Not strictly true..................... a business is insolvent if "it cannot meet its debts when they fall due". To carry on trading in those circumstances breaches the laws of, and nullifies the protection afforded by, the Laws of Limited Liability. To keep borrowing to pay your debts, whilst unwise, is not illegal.

 

Chris

[stripey]

Up until a few months ago, if I wanted to buy something, I actually went to the hole in the wall, drew out some money and paid cash for whatever it was I wanted to buy.

 

Since getting this "new" card, I join the thousands who hold people up at Petrol stations and the like, paying for a packet of chewing up on my card.

 

Jeeze, I'm getting lazy!

 

That's sensible, as at least with a credit card, the money you think you have can earn interest for you until the card gets paid off My plastic even gives me 0.5% as a reward for spending, so I use cash as little as possible.

[Gibbo]

Not strictly true..................... a business is insolvent if "it cannot meet its debts when they fall due".

 

That isn't entirely true.

 

A company is insolvent if "it cannot meet its debts when they fall due" (cash flow insolvency) OR if its nett liabilities exceed its nett assetts (Balance sheet insolvency).

 

A bank's depositors' money is repayable "on demand" (unless special arrangements have been made with the bank to lock the money up for a period of time - usually to gain extra interest). That is a small proportion of depositors' money and therefore the majority of depositors' money is repayable "on demand". If all the depositors demanded their money immediately (which they are entitled to do) the banks would be unable to meet their debts. Therefore they are trading from a position of "cash flow" insolvency.

 

They tried to cover this by having all their loans "repayable on demand" (it's in just about every form of borrowiing including overdrafts, personal loans and mortgages). But even then, if they pulled in all the loans, sold all their property and other assetts they still could not meet their debts. That is tradiing from a position of balance sheet insolvency.

 

(The Insolvency Act 1986 states (section 123) "(2) A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company's assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities")

 

The value of the banks' (certainly most of them) assetts is lower than their liabilities. Therefore they are trading from a position of insolvency under both forms of the term's of the definition.

 

To carry on trading in those circumstances breaches the laws of, and nullifies the protection afforded by, the Laws of Limited Liability. To keep borrowing to pay your debts, whilst unwise, is not illegal.

 

You are correct that a director of such a company could not hide behind the limited liability protection. But it actually is illegal to trade from such a position. Not only is it a civil problem leading to civil penalties (being sued personally by a creditor) with no prospect of a defence but it is actually also a criminal offence. The only time a LLC is permitted to continue to trade whilst insolvent is after a receiver has been appointed by the Courts or possibly (I'm not sure on this part) following a creditors' voluntary liquidation with the agreement of all creditors.

 

Gibbo

Edited December 24, 2008 by Gibbo

[thomasthetanker]

We got our boat loan by telling them it was for a car, they are quite happy as they figure if you can't repay then they get the car. If you say its for a boat then they'll just get that sinking feeling.