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"There's a big difference between how much a lender can qualify you for and how much you can actually afford."

This is one lesson I learned when I was young, thanks to my father and a neighbor. My father served on the board of a credit union. One day one of our neighbors started ranting to him about how the credit union had refused his application for a boat loan. My father explained to him that if they refused his loan, it was probably because he already had too much outstanding debt. Our neighbor told him he was wrong and that another bank had approved him for a loan from them. My father congratulated him on his new boat. I was listening to the whole conversation so my father later explained to me that the credit union tended to be more conservative about granting loans since they were more concerned about losing assets on a poor loan then they were about making a profit.

Less than a year later the boat was repossessed because our neighbor couldn't make the payments.

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