Exclusive Trading

What's Your Boat Really Worth?

No boater wants to be upside down at trade-up time. Bankers call it "negative equity" -- owing more on a loan than the financed item is worth at that point. But it's common in this industry, and that can make it tough to trade in your boat for something bigger. Here's how to test whether you're financially ready to trade up:

First, on graph paper, record with a dot the balance you owe at the beginning of each year. (Your lender can provide this information, as can many online planners.) The balance declines slowly at first, and then plummets as each payment pays more principal and less interest.

Next, use an X on the graph to estimate the boat's value at the end of each year. Where the X and dot cross each other is when the boat is worth more than you owe. You want to reach this point, at least, before trading.

How can you make that graphic intersection come together as quickly as possible? Here are the five most logical ways.

1. Make a bigger down payment.

2. Opt for a shorter loan term.

3. Use a no- or low-interest promotional plan to pay down principal more quickly. (But pay attention to the rate that kicks in when the promotion ends!)

4. Set up biweekly payments. You can painlessly make the equivalent of an extra month's pay-down on the principal each year.

5. Pay more than the monthly minimum.

They're the same tips for paying down the mortgage on your home. That means -- surprise -- you can treat your boat as an investment, and not just an investment in fun.

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