With boat show season in high gear, it seems as though everyone in Harford County is looking for a new boat.

Hundreds of county boaters made the 35-mile trip to the Chesapeake Bay Boat Show hoping to find the boat they've always dreamed of and at a price they could afford. However, after recovering from sticker shock, many took the plunge and put a down payment on that new cruiser or fishing boat.

"No one really ever owns a boat anymore. They merely have a long-term lease arrangement with the bank," said Bill Peterson Jr., loan manager of an area banking services corporation.

"Let's face it, a person buys a boat, sets up a payment plan for the longest period of time he or she can get and usually ends up selling or trading the boat after three or four years to buy a larger model."

Peterson said bankers work with three price categories when financing boats. Larger craft, those costing more than $25,000, usually can be financed at fixed rates. Medium-sized craft costing from $15,000 to $25,000, however, will pay a slightly higher interest rate, and boats priced under $10,000 could be financed at rates of 12 percent or higher.

However, there is a variable rate available for the borrower with fixed payments, and it can be obtained at rates starting as low as 9 percent. There are advantages and disadvantages with each loan option.

As with any loan, fixed interest rates seem to be preferred by the borrower over variable. With fixed rates, you know exactly what your payment will be each month until the loan is paid off. However, the length of time the loan is taken for determines the amount you'll actually pay for the boat. In some instances, a boat with a price tag of $50,000 could cost the buyer more than $125,000 over the duration of the loan. Anyone intending to keep the boat for at least 10 years can save a lot of money by taking the shorter terms.

Comparing short-term vs. long-term rates can be helpful. Let's say you just purchased a new boat with an outstanding balance of $50,000.

At 11 percent fixed, a $50,000 loan for 20 years would come out to $516 per month with a total of $73,863 in interest. That same loan for 10 years would come out to $689 per month with a total of $32,650 in interest.

With the 20-year plan, the buyer ultimately pays out $123,863 for a $50,000 boat. However, the monthly payments are $173 per month less than under the 10-year plan. If the purchaser intended to keep the boat, he would save $41,213 by financing the craft over a 10-year period. That's almost enough money to buy a second boat of the same caliber.

A variable interest rate loan with a fixed payment is in reality an open-ended loan. That is, the loan may start with an interest rate of 9 percent. However, if the prime lending rate increases, your rate increases also. Because you're paying the same payment each month, the duration of the loan also increases.

In addition, some lending institutions require the borrower to pay points -- a penalty of sorts disguised as a fee for processing the paperwork. Each point is approximately 1 percent of the total amount borrowed and up to three points may be assessed. On a $50,000 loan, this amounts to $1,500.

You have two options on points. You can pay the $1,500 in cash directly to the lender or add the amount into the first three years of payments. If the money is added to the amount financed, you could be paying as much as 11 percent interest for the first three years of the mortgage.

If the interest rate increases during that time, you could pay substantially more. However, if the prime lending rate decreases, you'll save money over the payment period. Variable interest rate loans are a gamble at best and should be avoided if at all possible.

Nearly all lending institutions finance boats. However, interest rates vary substantially among the money vendors -- especially when you're in the market for a used craft.

One of the easiest methods of locating low interest rates is to look in the yellow pages of your phone book. Before deciding, be sure to compare both terms and interest rates and look for hidden costs such as penalty points, floating interest rates based on the New York Prime lending rate and closing cost.

In many instances you'll find good marine financing through the dealer who is selling the boat. However, it's not a good idea to rush into any venture that involves spending thousands of dollars without first checking out all available options.

Let's say you're the proud owner of a sleek 32-foot cruiser, but you're looking at a boat of the same size that costs $50,000 -- the same price you paid for your 3-year-old cruiser. If it was financed for 20 years at a fixed interest rate of 11 percent, you still would owe a balance $47,550.

However, the same boat financed at the same interest rate over a 10-year period would only have an outstanding balance of zTC $40,225. If the cruiser was purchased at a bargain price at one of the boat shows, you could possibly sell it for somewhere close to the original purchase price. Essentially, you would have saved more than $7,000 in additional interest, which could be applied to the new boat, thus decreasing monthly payments.

Peterson's statement about no one ever owning a boat may be true to a great extent. Lending institutions may very well be nothing more than a long-term leasing company for boats. However, the amount you pay for that lease depends on how wisely you shop for both the boat and the money to buy it.