Real-life case – His fishing boat sinks his finances

As the warmer days approach, the temptation to acquire a recreational vehicle, an ATV, or a boat can be great. But before giving in to temptation, the story of these individuals’ misfortunes will make you think…

The summer is so short here that when it finally arrives, we want to fully enjoy it, especially with a pleasure boat, an off-road or recreational vehicle.

Because they are very expensive, resorting to credit is often the only solution to realize one’s purchase project. But every year, consumers put their finances at risk to fulfill their dream. Before it’s too late, they contacted an advisor from the authorized insolvency trustee Jean Fortin and Associates to help them regain financial balance. Here are the stories of some of them.

$28,000 for a Fishing Boat

Jean-Paul, 76 years old, has always wanted to have his own fishing boat. 10 years ago, he put his project into action by purchasing a new boat for $28,000 plus taxes. In addition, he has a life insurance premium that costs him a total of $2,165. He took out a loan spread over 20 years with an interest rate of 7.5%, resulting in monthly payments of $221.

Consequently, even with a down payment of $2,850 at the time of purchase, financing will cost him the hefty sum of $25,000 at the end of the loan, almost as much as the boat itself! With a retirement pension of $2,500 per month, Jean-Paul can no longer make ends meet and has to declare bankruptcy.

An Expensive RV

In 2016, Diane and Robert, a couple in their forties, decided to treat themselves to a trailer for more comfortable camping. The purchase price was $24,000 plus taxes, with a loan over 19 years at 6.75% interest. They also subscribed to the loan insurance offered to them, which amounted to $4,300, or 18% of the selling price.

If we add the interest costs to these amounts, the total comes to $50,000, which is nearly twice the initial price. After Diane’s job loss and the resulting financial problems, the couple was forced to make a consumer proposal.

A Costly Used ATV

An ATV enthusiast, Guillaume bought a used Polaris «side by side» in 2018 for $7,800 plus taxes. Having had financial problems in the past, his poor credit history led him to approach a private financing company that offered him a 36-month loan at 29% interest, with management fees of $600 and a $10 collection fee for each weekly payment.

Without Guillaume realizing it, an additional amount of $1,560 plus taxes was added to the initial bill, with a total monthly payment of $442.

6 months after the purchase, he lost his job and had to return his ATV to the dealer because he couldn’t continue making payments.

  • Be cautious if you are asked to take out insurance when taking out a loan. They can easily represent up to 15% of the purchase price. A merchant may require you to have insurance, but cannot require you to purchase the one they offer. Also, remember that financing fees are added to the cost of these insurances, which often doubles the initial amount.

  • Carefully read the contract before signing to be aware of the additional fees requested that unnecessarily increase the bill: preparation and delivery fees, file management, protection plans, etc.

  • Attention: a monthly or weekly payment that seems reasonable may hide a loan spread over a much too long period, sometimes even beyond the lifespan of the asset!

  • Are you being offered «second chance» financing because you are not eligible for conventional