Buying Motorboat on Finance?

[inception]

I am thinking of upgrading to a Sport Cruiser (S34 style) twin engine boat, priced at £90k

I have the money available in Cash (as sold the old boat) but not sure if this is how most people buy the boat, or like cars they are mostly financed?

Sorry if it's a daft question, just haven't been in the market for a boat at that price for a while..

 

[hlb]

I am thinking of upgrading to a Sport Cruiser (S34 style) twin engine boat, priced at £90k

I have the money available in Cash (as sold the old boat) but not sure if this is how most people buy the boat, or like cars they are mostly financed?

Sorry if it's a daft question, just haven't been in the market for a boat at that price for a while..

Buying boats, or posh cars, is a leisure activity. There for it should come out of a small portion of what you already have, leaving plenty for important stuff. Divorce or illness can happen without warning.

I'd use about 10% for a boat and maybe 5% for a car. But I would have to be confident that the money would be replaced very shortly.

 

[Greg2]

Interesting question and one that touches upon a very complex subject. At a basic level, reflecting upon previous threads on here, some will advocate that you should never borrow to buy a luxury product and should never spend more on a boat than you are prepared to lose. Others will take the view that as long as you can service the monthly payments why not enjoy life as you are a long time 'looking at the lid'.

I guess the bottom line is what you can afford. There are some who are well off and can afford to buy with cash but I think that there are many more who have to finance the purchase of their boat and it is then a choice of do we or do we not go boating.

In your circumstances I would have thought that in the absence of needing the capital for other purposes cash purchase would be better as finance will inevitably cost you more.

 

[Greg2]

Buying boats, or posh cars, is a leisure activity. There for it should come out of a small portion of what you already have, leaving plenty for important stuff. Divorce or illness can happen without warning.

I'd use about 10% for a boat and maybe 5% for a car. But I would have to be confident that the money would be replaced very shortly.

Depends on your outlook on life I guess Haydn, not to mention how your finances are structured. I think we have debated this previously and whilst I wouldn't dispute the need to be sensible and to plan for the unforeseen, if I had followed your thoughts I wouldn't have enjoyed the last 13 seasons boating with my family as they grew up nor would I have experienced the close bond that we share with our grown up children who enjoy being on water as much as we do. In fact it has influenced life choices for my son who has embarked upon a career as a broker.

I don't think there are any rights or wrongs and that people will make their own decisions based upon their personal circumstances and their outlook on life.

 

[hlb]

He asked for advice, I gave it as I see it.

I would not buy a boat, unless it was spare cash.

I have never bought a car, other than for cash. Ok some were dogs, one was painted with Dulux, with no passenger seat. That was my vehicle for visiting customers.

My view is that you would still have made it, but far easier and quicker. I don't understand the thing about giving money to others.

 

[[2068]]

It sounds mad, but depending on your mileage(i.e. 10k per year), buying some cars for cash doesn't make any sense, cos the leasing company gets the car for a much better price than you can.

With a boat, being able to buy it from spare change is great if you can, but not everyone ran a company producing plastic bits to generate enough cash in one pile to do that.
Employed people can pay back a loan, but personally, I wouldn't take out a loan for any more than 50% of the value of the boat.
If it all goes t*ts up, you can always turn a boat back into cash if you have bought something that others will also want.

 

[rwoofer]

It sounds mad, but depending on your mileage(i.e. 10k per year), buying some cars for cash doesn't make any sense, cos the leasing company gets the car for a much better price than you can.

I would love to know which leasing company as I've never seen a lease cheaper than cash, especially as you usually get a discount with cash anyway. Possibly I don't look hard cause I do have an aversion to debt, but if it really is cheaper....

 

[sailorman]

Interesting question and one that touches upon a very complex subject. At a basic level, reflecting upon previous threads on here, some will advocate that you should never borrow to buy a luxury product and should never spend more on a boat than you are prepared to lose. Others will take the view that as long as you can service the monthly payments why not enjoy life as you are a long time 'looking at the lid'.

I guess the bottom line is what you can afford. There are some who are well off and can afford to buy with cash but I think that there are many more who have to finance the purchase of their boat and it is then a choice of do we or do we not go boating.

In your circumstances I would have thought that in the absence of needing the capital for other purposes cash purchase would be better as finance will inevitably cost you more.

Be very careful who you insure with, if she sinks by slow ingress of water you might have to pay the finance Co the balance pdq without an Ins Co pay out.

 

[Nigelpickin]

Beyond having the ability of being able to afford the boat, all else is ideology and subjective.
If it were me, I'd use a 30% deposit and finance the rest, money has never really been cheaper and even if we see a 1 point jump in rates over the next 12 months, it won't matter as you will have the reserves to pay off the balance.

Keep the 60k in a separate investment and then you will have the boat to px and a pile of cash to put down when you upgrade in 2 years!

But what ever you do , get the boat!!

 

[Momac]

I am not against taking out a loan towards a boat. I had a modest unsecured loan for my present boat because I did not have sufficient funds.

Since you have the available funds in full why would you want to obtain a loan ?
If you can fund monthly loan payments you can put the same amount each month into a savings account .

.

 

[Elza_Skip]

We have had great times on our boat and it the place we go to escape even if we do not take her out.

So for us it is a bit more than luxury, it is part of our lifestyle. If we had not financed the boat with a mortgage we woukd never have got a boat or been able to upgrade.

We have no problem servicing the debt, the greater challenge seems to be the running costs and maintenance of an older boat

 

[Greg2]

He asked for advice, I gave it as I see it.

I would not buy a boat, unless it was spare cash.

I have never bought a car, other than for cash. Ok some were dogs, one was painted with Dulux, with no passenger seat. That was my vehicle for visiting customers.

My view is that you would still have made it, but far easier and quicker. I don't understand the thing about giving money to others.

Hope I didn't come across as argumentative, I was just contrasting our different approaches to illustrate the point that there are different ways if looking at things. No right or wrong and we all do what we feel comfortable with in our individual circumstances

 

[Nick_H]

Beyond having the ability of being able to afford the boat, all else is ideology and subjective.
If it were me, I'd use a 30% deposit and finance the rest, money has never really been cheaper and even if we see a 1 point jump in rates over the next 12 months, it won't matter as you will have the reserves to pay off the balance.

Keep the 60k in a separate investment and then you will have the boat to px and a pile of cash to put down when you upgrade in 2 years!

But what ever you do , get the boat!!

Dont forget the investment return has to cover both the interest on the boat loan + the tax you pay on the investment income, before you're quids in, so if the boat loan is at 5%, and you're a high rate tax payer, the investment has to return about 9% to stand still, and that's before you factor in investment risk.

I'm from the HLB school of boat buying, use cash if you can.

 

[Nigelpickin]

Dont forget the investment return has to cover both the interest on the boat loan + the tax you pay on the investment income, before you're quids in, so if the boat loan is at 5%, and you're a high rate tax payer, the investment has to return about 9% to stand still, and that's before you factor in investment risk.

I'm from the HLB school of boat buying, use cash if you can.

Absolutely, didnt mean to imply that I had the alchemy to finance the boat and cover the cost through an investment...
We use around 1 3rd of our disposable income on the boat, (in repayments and running), so a big hit...we could pay the boat off earlier but prefer to build up a cash/property asset in parallel. This gives us a growing capital investment alongside our depreciating, bank rolled, boat.

All in the mind but it makes us feel a little more responsible...
If the libor changes for the worse, we will escalate our payment schedule, or at least thats the plan.

Would I have bought the boat cash if I could have afforded to? probably not unless we had a huge wind fall.