Effect of Interest Rate Rises on the New and Second Hand Boat Market?

If I am really honest, I think i sort of lucked into it by being in the right place at the right time. But I know what we can do on a big cost BMw, so I reckon boat finance worked the same!

I started at 1% over, which I knew I would never get, but it was a start.

When I told BoS why I wasn't refinancing with them there was much spluttering, running around and scratching of head on their part.
 
Need to Keep with Bank Of Scotland as I have some penalties if I redeem current mortgage before Jan and we know each other well.

Does anyone know a sales guy/agent of BOS marine Finance who will negotiate on my behalf as they seem to be able to get better deals than going direct (Bizarr I know)

Cheers

Paul /forums/images/graemlins/laugh.gif
 
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Dunno. Would not dream of buying a boat, else with spare cash, I mean after pensions, investments and savings. Then enough to run the thing, without stopping investing and saving.

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Wise words.
 
I often wonder how/why people get into debt, scares the skin off me to think that if i had HP/Mortgage/finance etc that i would be tied up for years paying off the interest etc.

I prefer it my way, everything paid for outright. Own property and no Mortgage/ New car every 3 years paid for outright. No tick, No debt, that's the freedom i enjoy. I don't owe a penny to anyone and plenty of cash in my pocket to spend however i want to spend it.
I don't even own a credit card.

OK, so i could go into debt, bigger house, bigger car, bigger boat, but what's the point, i can do everything anyone else can do, in what i own.

Sorry, but I'm a firm believer in, Never spend more then you earn. If i cant pay for it, i wont buy it, just save a little harder or buy something a little cheaper. Why give all that interest, that lovely money away to some loan shark or HP company, beats me.
 
Not always true Micky, it makes sense to think about the dynamics of a market before you decide whether to buy or not, however much cash you have.

Suppose you want a BMW 7 series and you can afford it.

New high-spec 7 series, how much would it drop over a year or two? Cost say £60k. Would it drop £10k, £20k, £30k? It costs £7k a year to lease it. You don't buy it, you have someone put up the money in return for a monthly repayment. 2 year repayment = £14k, depreciation over 2 years could be double that. Would you really buy it? Remember you want one and you can afford it. You'd owe someone the next 24mths repayments and have a debt. I think you would lease it. /forums/images/graemlins/smile.gif
 
Hell, I'm not in any very special position, well maybe I was, untill the divorce after 35 years. /forums/images/graemlins/crazy.gif

My boat is 17 years old and was ten when I bought it. Still love it just as much. It's each to there own, but I just would not feel happy with a boat that I could not easily afford.

Running a businness for 40 years, taught me that you never ever know whats round the corner. Except, the time you need to sell something, will be exactly the same time as everyone else does too.
 
Re interest rises

25 basis points here or there on the best finace deal is largely irrelevant unless you are borrowing mega bucks, what's more important is what BOE changes in interest rate policy do to how confident you (and others) feel about the years ahead. If you feel confident, then probably many like minded boat people feel the same way. As was said earlier, the purchase you are about to make should be ruled in part by the heart, as I haven't found a way to make it stack up any way financialy yet.
 
I like your style,

So I only need enough to get me through my period of retirement.

So how much is a new Princess V45 HT?

Thanks to all your thoughts, SWMBO is now in charge of decision as to what we buy (I have given her short list..and she gave me a thump!)

Cheers

Paul /forums/images/graemlins/laugh.gif
 
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New high-spec 7 series, how much would it drop over a year or two? Cost say £60k. Would it drop £10k, £20k, £30k? It costs £7k a year to lease it. You don't buy it, you have someone put up the money in return for a monthly repayment. 2 year repayment = £14k, depreciation over 2 years could be double that. Would you really buy it?

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Sorry, let me get this straight. You're saying there are companies out there that will buy a car outright and then lease it to you for a total cost of half the amount that the car will actually depriciate in that time?

What are these companies, special charities or something?

I'd be very interested to hear how a company can lease out a car for 2 years for all up cost of 50% of the amount that car will depriciate in that time, and make money from doing so. /forums/images/graemlins/confused.gif
 
I too am not convinced that he's got his figures right. Wouldn't bother with a 7 series myself, but a new M5, ugly as it is, for £7k a year??? I think not. The small amount of leasing I get involved in normally comes in at about £30 per month per thousand borrowed over a three year term. Therefore in this case £1800 per month. But cars have deposits & balloon payments etc etc, and don't know anything about that sort of stuff.
 
BMW 730d SE (leather, Sat Nave etc)

£50,875.00 if you wrote a cheque out for it today.

Or take it on a lease for 23 payments of £785.31. The rental is plus VAT, as LTD companies and such can reclaim anything from 50% - 100% of the VAT.

So for you and me, it's going to cost £922/month, or £21206.00 to run for 2 years.

Except it isn't, cost your wedge of 50k you havent spent on a car is earning decent interest in a bank account for 2 years. Let's say you don't negotiate well and you get 3% nett from your savings (pa though). This means your money will earn (£50,875 x 3%) x 3% or £3098.29.

So actually your car has now cost you £21206 - £3098 = £18108.

So if you had bought for cash, would your 2 year old 730d SE be worth £32767? Doubt it.

edit and that original cost doesnt consider the £3k you loose on the money in interest terms, so actually the cash cost is even higher. More like £53,875!!!!
 
Okay Jez

You (as BMW leasing division) own the new £50k car. I lease it from you for 2 years and shell out £21k. (But I won't 'cos I've claimed the vat & offset the payments in full against my tax).Since the car is probably only going to be worth around £25k ish by the time you want to move it on, you would appear to be in a loss situation, to the tune of around £4k. But I know you wouldn't do this, as BMW aren't a charity. So tell me, where am I going wrong? Or do you as the owner make it up by claiming the capital allowances on the vehicle, and get the taxman to fill in the void?
 
But the REAL effect

I take the point others make about another 25 being only another 20 quid a month.

But IMHO people don't just think of boat cost when buying boat, house when buying house and so on. They think of their whole economic position.

At a time now when interest rates have moved up a bit and are due to move up a bit more (say in nov) and then perhaps in feb too...it might not be just be a issue of 20 quid a month. It's "only another 20 quid a month" if the price of this boat i want to buy has gone up -and nothing else. But there's lots else.

Cos of course with interest rate increase the mortgage goes up too or if not much mortgage then house value stops going up, and if this no problem to me then well it might be to others...so there'll be a dampening of consumer demand and hence perhaps less work and that might threaten job or business, and so on.

This all creates a more exaggerated "feel-bad" effect, and greater than just the feeling of shelling out another few more quid.

There's a further issue too. If you could afford another 20 quid a month and say heyho i will still buy it ...then why on earth hasn't the boat builer increased the price of the boat to have that 20 quid off you already? Well, they probably have: prices of boats in past 5-10 years have increased a fair bit more than inflation for exactly that reason - cos thos who could afford it could easily afford a bit more too, since money was cheap.

Finally, quarter percent or half percent might sound like naff all, but in terms of percentage increase it is a fair old leap. House prics etc ripped along precisely cos people could afford larger mortgage payments. But increase of .5% is a ten percent hike. So the very full house prices etc (and other stuff too) might have to be reduced in price. I spct frinstance that the second hand boat and car market is already feeling harder than a year ago.

Taken all together, current potential buyers right this minute may well be thinking "'Hang on a minute - if i leave this a few months the price will likely come down - not go up, hm?" Thus likely bumpy ride for sales big-ticket stuff over next say 6-12 months.

Best for eg boatsellers would be to praps get their discount heads on and price-cut their way out, espcially if competitors are parking themsevs on undiscounted prices as i think the uk did in the early 80's recession when the consumer was less savvy in negotiating price. Yanks are good at this - they'll hack the price in half or more to keep sales ticking along, and perhaps brits will have to learn even more of those lessons.

In other words, you can sell boats and houses and anything at the moment - but only at the right price. It's just that the "right price" has definitely dropped with the threat of at least two interest rate increases inthe next 6 months.

all imho.

Oh, and despite the economics sermonzing, sorry, i wd probably just buy it. Tho praps get a better price, maybe.
 
Re: But the REAL effect

Cheers TCM,

Got to say my thoughts echo yours. Might just hold off till spring and see how Int rates bite into the market. I am lucky to have a boat which is not a fashion item, so will be relatively free from worries at the moment. Also it is cheap as chips to run!

Cheers

Paul /forums/images/graemlins/laugh.gif
 
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Okay Jez

You (as BMW leasing division) own the new £50k car. I lease it from you for 2 years and shell out £21k. (But I won't 'cos I've claimed the vat & offset the payments in full against my tax).Since the car is probably only going to be worth around £25k ish by the time you want to move it on, you would appear to be in a loss situation, to the tune of around £4k. But I know you wouldn't do this, as BMW aren't a charity. So tell me, where am I going wrong? Or do you as the owner make it up by claiming the capital allowances on the vehicle, and get the taxman to fill in the void?

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Yes, it's complicated. BMW are gambling on the their ability to dispose of he returned vehicle though the UK network, the fact that on Contract Hire they own the car and can claim all of the costs of running the car (including any loss) against tax.
Don't forget, BMW GB (cars), BMW Finanacial Services (Money) and BMW Alphabet (leaseing) are all owned together. It may cost you £51k, but it doesn't cost them that - unless you are the Tax Man of course. Add in to the mix that 90% of their money comes from the eurozone (germany) and beleive me, you can make it work.

There are some customers buying 7's who don't beleive me and assume that I am pulling the wool over their eyes, but they are just the ones who wil pay more for their cars in the long run.
 
Re: Effect of Interest Rate Rises on the New and Second Hand Boat Mark

Paul - I'm not in the market to give you guarentees but my money is on low interest rates (+-1%) for many years to come. The days of the government using the interest rates to A) control the value of the £ and B) a movable tax point are long over. Low inflation and low rates are here to stay - IMHO.

A good friend of mine died at the helm of his boat in July, not having fulfilled the dreams that we both shared - nuff said?

Go on....
 
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