Do many owners borrow to buy a boat?

[ProDave]

My philosophy in life has been when you do not earn very much, the very last thing you want to wast your hard earned on is paying interest. So apart from a mortgage I have always had a car and boat that I can afford for cash.

 

[sailorman]

Personally, I have always bought a boat with cash.

:encouragement:

 

[xyachtdave]

Once again you are way out of date. Virtually nobody uses hire purchase to buy new cars nowadays. The figures you see in advertisements are monthly payments on a personal purchase contract which is a very different animal and more like a long term rental agreement.

The figure is shown in adverts because this is the way the majority of new cars are sold.

This is true but unless you know the cash price of something how can you decide if the monthly payments are good value?

Although I think based on what I hear from people nobody really cares these days as long as it's less than £x per month.

Also to be fair to the sales people selling someone a car for cash doesn't make them any serious money, those ridiculous underbody sealers, upholstery protector sprays, service packs, tyre and gap insurances etc are where their profits lay.

 

[sailorman]

This is true but unless you know the cash price of something how can you decide if the monthly payments are good value?

Although I think based on what I hear from people nobody really cares these days as long as it's less than £x per month.

Also to be fair to the sales people selling someone a car for cash doesn't make them any serious money, those ridiculous underbody sealers, upholstery protector sprays, service packs, tyre and gap insurances etc are where their profits lay.

Not with me, just add a tank of fuel, jobs a goodun

 

[Tranona]

This is true but unless you know the cash price of something how can you decide if the monthly payments are good value?

Dealers are required to show the total cost of the contract including the interest charged. Whether the potential buyer understands this is another matter. How are you defining good value? Is it the cost of finance compared with another deal or the value you get from the car in relation to the monthly payments?

Suspect for most people it is the latter. My next door neighbour has just got a new Mercedes 220 estate on contract purchase as his company no longer runs its own fleet (having really lost on his last car an Audi A6 diesel estate £35k to 13k in 4 years never mind the high running costs). His sole criteria was monthly payments and MB was cheaper than all the competitors - even a Ford Mondeo. Presumably it is the high residuals on 3/4 year old MBs that drives it.

 

[GHA]

Remortgaged the house but then sold it as I never went back to it after buying the boat

 

[JumbleDuck]

An important guiding principle valid for life, taught by many parents to kids of my generation. The sole exception being a mortgage to buy a house.

I borrowed to buy mine. Morally I see no difference between paying interest and losing interest as a result of owning a boat, and the financial difference - a few percent - wasn't enough to keep me awake at night.

 

[JumbleDuck]

Once again you are way out of date. Virtually nobody uses hire purchase to buy new cars nowadays. The figures you see in advertisements are monthly payments on a personal purchase contract which is a very different animal and more like a long term rental agreement.

The figure is shown in adverts because this is the way the majority of new cars are sold.

And since these plans are just about the only way car manufacturers make money, it follows that for most people they are a rotten deal. About the best that can be said for them is that for mugs who don't mind paying the depreciation on a new car, they spread out - and hide - the pain a bit.

 

[Kukri]

Way back in 1984, as a young and recently married man, I borrowed to buy a fifty year old big wooden boat that I particularly wanted,on a marine mortgage.

The story does not end as you might think. I paid the mortgage off after three years and kept the boat for another twenty seven years. I was in love with that boat the whole time. Her present owner is in love with her now. I've had three boats since then and paid cash.

So if the boat really is exceptional, I'd say its worth it to start proper sailing in a bigger boat twenty years before you otherwise would.

 

[savageseadog]

I financed my first boat with a marine mortgage. It made sense at the time because I had a thriving and expanding business which needed cash so the reasonably cheap marine mortgage was a good idea. My time was better spent running the business and sailing the boat rather than spending time on a cheaper project boat. It was almost a business loan. I would never do it now as I don't borrow.

 

[lw395]

When I was a student I bought a couple of old dinghies financed by overdraft.
Since then all boats have been paid with cash, but it's cash that could have been used to pay a chunk off the mortgage.
If you have a proper job where yo uare confident you will be employed for the next 'n' years, I see nothing wrong in borrowing for (fairly) durable assets. My career wasn't like that, I worked freelance a lot so I, personally am reluctant to take on finance. I'd rather have a smaller boat and a tatty car and know I've got enough savings to enjoy myself if I don't work for a year.

 

[geem]

On our third boat. All have been bought for cash. Never boat a car other than for cash. Paid mortgage of on house as soon as we could. I wonder how much interest I have saved over the years? Maybe enough to buy a boat?

 

[Tranona]

And since these plans are just about the only way car manufacturers make money, it follows that for most people they are a rotten deal. About the best that can be said for them is that for mugs who don't mind paying the depreciation on a new car, they spread out - and hide - the pain a bit.

If there were no "mugs" prepared to buy new cars then you would never get the chance to own a 2cheap2 fully depreciated car.

Cars are not a long term asset but a short term consumer item. Some choose to pay for the first 3 year's life of the car and forget about all the problems of reliability and disposing of the car. You may consider them mugs but they are getting the value they seek out of the deal.

If you are really seeking the overall lowest cost of motoring then do what I do. Buy a new or nearly new car and run it until falls apart or has little monetary value. If you buy wisely and maintain it properly the only downside is being seen driving an old car for most of its life which should not bother you.

The monthly cost in terms of capital erosion is much the same as the dealer plan over the first 3 or 4 years (how could it be any different given you are consuming the same value) but once you get to around 10 years the monthly average is less than half even if you include the opportunity cost of the capital you invested up front.

Of course neither of these two strategies suit everybody, nor do the others that you can construct but you can't call them a "rotten deal" just because they don't suit you.

 

[duncan99210]

I’ve borrowed to buy boats twice now, both times by adding to the mortgage on the house (interest only mortgages, pre 2008) as it made sense to me to do so. It got me the boat I wanted when I wanted it at a reasonable cost. The first boat was paid off with an expected inheritance a couple of years later whilst the second (much larger) one was cleared with my end of service gratuity from the forces.
In both instances, the costs involved were small; as xyachtdave said, I spent more buying drinks for my team than I did servicing the loans on either of the boats. Well worth the cost.

 

[pvb]

I love the way so many people say they'll never borrow money to buy stuff, but they're all happy to have a mortgage!

 

[Tranona]

I love the way so many people say they'll never borrow money to buy stuff, but they're all happy to have a mortgage!

Why do you think that is odd? The 2 fundamental differences are first you need to live somewhere so you have to pay for the capital asset of a house and second you are buying an appreciating (so far!) asset where the debt is falling in relation to the value of the asset.

Very different from depreciating non essential assets like a boat or even to an extent a car.

 

[pvb]

Why do you think that is odd?

Simply for the reason I stated; many people claim they won't ever borrow money to buy things, they'll only buy them when they have the cash. Yet they're happy to have a mortgage, so that's hypocritical. People don't have to buy houses, they could rent instead.

 

[Birdseye]

I bought myself a Ferrari for my 70th - daft idea but I did. I got into just this conversation with the staff at Maranello who confirmed, to my amazement, that 90% of the cars they sold ( even up to the million £ ones) were on credit.

xyachtdave seems to sum up the logic well.

 

[rotrax]

I bought myself a Ferrari for my 70th - daft idea but I did. I got into just this conversation with the staff at Maranello who confirmed, to my amazement, that 90% of the cars they sold ( even up to the million £ ones) were on credit.

xyachtdave seems to sum up the logic well.

I sold a very nice restored 1938 Triumph Tiger 80 motorbike to buy a share in our first yacht.

First mate got a REALLY good redundancy payout which bought our second one.

Then the senior moment-bought an expensive-for us-ten year old Island Packet with the money from a low interest family loan. We paid MIL the same as it would have earned in a fixed 3 year bond.

That vessel was sold after six very good and pretty trouble free years and another Island Packet purchased with a top up from a small mortgage secured on our house, unencumbered up to then.

The theory being, as we came to sailing late, more enjoyment came with a suitable fairly new boat. So we borrowed some to get it now, rather than wait.

Horses for courses.

 

[Yellow Ballad]

I drive a £200 car, spent the 10k we had saved for a house deposit on a 40 year old plastic boat 8 weeks after our first son was born which costs me £200 a year to moor after house prices kept on going up just enough to keep us from buying. I/we don't regret it, there's more to life then owning a house and we decided having a family and a bit of enjoyment was more important than putting it off to own our own house. Much to our landlords retirement plan happiness.

If bringing our son up with the enjoyment, freedom and sense sailing gives you rather then worrying about owning a new car, the latest smartphone or designer clothes is the price we have to pay for not owning a house (providing we can pay the rent) then so be it. He'll do alright for himself without the inheritance, we have.