Do many owners borrow to buy a boat?

[RichardS]

In all fairness that is better than first having to find £90K then being told that his asset was only worth £60K after 2 years- (assuming he could sell it) & his garage/marina was not stinging him £4k PA for the pleasure of storing it whilst it went rusty/weedy

But much worse than simply keeping the car until it needed changing for another one .... which is what Yorkshire folk do.

Look at it this way ..... if that £14k PCP deal is so good, then if, at the end of the 2 years the Merc dealer offered you an exact repeat, you'd obviously grab it with both hands. And the same 2 years later etc etc. Let's fast forward 10 years .... you've now spent £70k on a car and been driving a very nice one for 10 years but you still have got nothing to show for your £70k. Thanks ..... but no thanks.

Richard

 

[pvb]

Look at it this way ..... if that £14k PCP deal is so good, then if, at the end of the 2 years the Merc dealer offered you an exact repeat, you'd obviously grab it with both hands. And the same 2 years later etc etc. Let's fast forward 10 years .... you've now spent £70k on a car and been driving a very nice one for 10 years but you still have got nothing to show for your £70k. Thanks ..... but no thanks.

But if you'd spent £70K up front on buying the car you'd still have almost nothing to show. 10 year old Mercs sell for very little.

 

[dom]

Leasing makes sense for companies wishing to keep stuff off balance sheet and minimise their admin costs. At 10 days old that explains the newest Merc currently on the drive.

Mine, a 2005 E estate bought in 2007 for £17,000 with 12,500 miles vs a list price of £45k+. Years of school runs, lending to friends for moves, wet sails, wet dogs, carting outboard engines, university runs, mountain bikes, etc., it's up to 130,000 miles and still going fine.

What's not to like

 

[Resolution]

Mine, a 2005 E estate bought in 2007 for £17,000 with 12,500 miles vs a list price of £45k+. Years of school runs, lending to friends for moves, wet sails, wet dogs, carting outboard engines, university runs, mountain bikes, etc., it's up to 130,000 miles and still going fine.

What's not to like

You have done well. My version of a similar strategy was to buy a new BMW estate in 2004 when I had some cash from a good property deal. This cost about £55,000. It also has done lots of commuting, load carrying and some touring. Now 240,000 miles and running very well most of the time, still really good handling and quite quick. Annual repairs and service average £2 to 3,000. Maybe worth a grand if I tried to sell? But why bother?
PS Resolution, my Sabre 426 also dates from the same time and has similar logic applied to it.
PPS I am not a Yorkshireman.......

 

[RichardS]

But if you'd spent £70K up front on buying the car you'd still have almost nothing to show.

At least I'd have a car.

Richard

 

[asteven221]

I'm always open to considering finance deals, but it solely depends upon exactly what the deal is.

so that amount is now sitting in a flexible account earning 6.9% pa, and the other is under a finance deal which has 5.9% interest

Richard

Any chance of a heads up on how I can get a flexible account earning 6.9% per annum please????

 

[pvb]

Any chance of a heads up on how I can get a flexible account earning 6.9% per annum please????

He revealed the secret in post 16. It's peer-to-peer lending, it isn't covered by the FSCS safety net, so your capital is at risk (although the chances of losing all of it are fairly remote).

 

[Houdqeen]

I used Mortgage Broker Leicester funding on mine, and they got it done, but mine was like 1/3 of the price. They told me equal credit would be another large recreational vehicle purchase, of which I had none. They want to see a good history on a smaller loan before a big one. They said I was problematic because I had no other similar recreational purchases, and they couldn't be confident in my payment opportunities. I'm probably going to try to refinance soon. Loan officers get discreet on the loan docs.

 

[Chiara’s slave]

He revealed the secret in post 16. It's peer-to-peer lending, it isn't covered by the FSCS safety net, so your capital is at risk (although the chances of losing all of it are fairly remote).

I dunno, Lendy went spectacularly tits up a few years ago, I wouldn’t do peer to peer with anything I couldn't afford to lose completely.

 

[Laser310]

I pay cash.

Some argue that with rates low, it makes sense to borrow the money and keep your own money invested.

Yes - I see this.., but it seems like it really only makes sense if the value of the boat is a significant portion of your worth. Otherwise it doesn't make that much difference...

and.., it's probably not a good idea to buy a boat with a cost equal to a significant part of your net worth.., so...

The OP mentioned the USA. In the USA, some count the boat as a second home. In this case, the interest payment is deducted from gross income before calculating income tax. It makes the finance cost a bit less. But this is harder now, as depending on where one lives, it is possible that you are taking the maximum deduction allowable on your actual house, and can not deduct all, or maybe any, of the boat financing.

I just prefer not to have a debt. the additional income i might make by investing at a higher return than the cost of financing is not a big deal to me - because the boat is not a significant asset.

 

[westernman]

You might be able deduct loan repayments for a liveaboard canal boat. You certainly dont have to pay VAT on a new build.

 

[baart]

That thread got me thinking how many boats should be named "Rishi" after they got financed with bounce back loans ?

 

[Tranona]

You might be able deduct loan repayments for a liveaboard canal boat. You certainly dont have to pay VAT on a new build.

Only in very limited circumstances for obvious reasons. Most boats that people live on board have had VAT paid on them because they are pleasure boats. Here gives the basics thefitoutpontoon.co.uk/finance-costs/vat-free-exempt/ and as you can see narrowboats (probably the most popular new build liveaboards) don't qualify and the number of wide beams that might is very small, partly because of cost/size and partly because there are so few places where you can find moorings to take them. It is only houseboats specifically designed for living on board and are not converted pleasure boats that are VAT zero rated. For similar reasons the number that can be built is tiny because of the lack of moorings. You cannot offset loan payments against tax for the same reasons you cannot do this on house finance.

 

[Robih]

You cannot offset loan payments against tax for the same reasons you cannot do this on house finance.

Ah, I fondly remember MIRAS, those were the days.....

 

[Tranona]

Ah, I fondly remember MIRAS, those were the days.....

Yes, but I also remember having my first mortgage reduced from £4400 to £4200 after survey leaving me to find the extra. Later interest rates of 15%+ were a laugh as well. Still it paid off in the long run as never having borrowed more than £60k at any one time (and much of that was to buy a boat) we end up with a £600k house and a boat!

 

[tyce]

I borrowed money to buy my lovely Beneteau, 4 years later im blooming glad I did, cancer at age of 48 and loan paid off via life insurance.
Just imagine what my family and I would have missed out on with the memories we have from the last 4 year loving our time on the boat.
If you want it and you can afford repayments get it bought and enjoy it, its 2022 not the 70's.
Of course I could have not borrowed the money and just sailed round in a 30 year old boat that smelt and was far to small for a family of 4 and no one except me would have enjoyed it.
Live life as you want to live it...

 

[Robih]

I borrowed money to buy my lovely Beneteau, 4 years later im blooming glad I did, cancer at age of 48 and loan paid off via life insurance.
Just imagine what my family and I would have missed out on with the memories we have from the last 4 year loving our time on the boat.
If you want it and you can afford repayments get it bought and enjoy it, its 2022 not the 70's.
Of course I could have not borrowed the money and just sailed round in a 30 year old boat that smelt and was far to small for a family of 4 and no one except me would have enjoyed it.
Live life as you want to live it...

Wise words.

 

[Molteni]

As a lifetime principle I've never borrowed to buy anything which goes down in value.

 

[john_morris_uk]

As a lifetime principle I've never borrowed to buy anything which goes down in value.

Highly admirable I’m sure but not always practical for some situations.
Fortunately all our boats have been bought with an eye on their resale value. IIRC every one of them was sold for more than we bought it for. (We probably paid out more overall in upgrades and maintenance over its lifetime with us, but that’s the cost of all the family holidays and fun we’ve had…)

I can’t say that the same applies to cars. But we don’t normally buy new and transport (and servicing any car loan) goes down as a cost of living expense. I don’t see the logic of PCP finance preferring a one off car loan from our bank when we had to do such things. If you need a car(s) (and we’ve often lived in places and situations where there was no choice in the matter!) then you need to finance the purchase somehow.

 

[lustyd]

As a lifetime principle I've never borrowed to buy anything which goes down in value.

I shared that, but replaced it with a new principle once my finances improved. Never spend money you could invest for a better return than the interest would cost. People who pay off their 2% mortgage might well have stability but they're losing a fortune. I have a mortgage and as such I get all of the advantages of increased value whether I pay it off or not. A £100k boat will cost you £100k to buy, but if you pay cash will cost you £6k per year in lost earnings on that £100k. I'm sure most of the people who buy new boats understand this, and it's those earnings that cover any depreciation in the boat. The depreciation happens either way, on both the boat and the cash, so why tie the cash up?