MDL berthing fees anomaly

[strakeryrius]

For the benefit of JFM et al I would point out that 18.95% is about the average APR on credit cards in the UK at the moment. Some cards are charging as much as 28% so from that perspective 18% doesn't seem too bad. I appreciate that from the rarified financial stratosphere that you look down at us lesser mortals from then 18% probably looks like usury, and I agree - it is. Unfortunately credit cards are with us to stay and its hard to do business over the internet or by phone without them.

Like Daka I always pay my berthing fees by credit card for the protection that it gives, and then pay the card off quickly to avoid the interest charges. In the current financial climate and with the relatively unknown impact that the building of the new Twin Sails bridge will have on Cobb's Quay this can only make sense. If a lot of people vote with their feet and disappear the marina could begin to struggle very quickly.

My Point in the OP was that there seems to be some confused thinking at MDL in that the options they have given are not attractive, and that there could be a third way that would be more attractive to retain their customers. Don't quite see why someone posting that I should be told to FRO is appropriate (bad day at the office maybe?) as I'm only trying to get myself the best deal for my berthing in the current economic climate. Isn't everyone?

 

[Deleted User YDKXO]

As others have said your numbers are just the result of your choosing to borrow at 19%. I can't believe anyone actually does that; you must know that base rates are 0.5%, right? So you're paying a margin of over 18%. Sheesh! Can I lend you some money please?

The problem with your 3rd option is that the production of the invoice pre 4 Jan might nicely trigger 17.5% rate VAT for you but it also triggers an obligation for MDL to pay that VAT to HMRC (the exact date they must pay the VAT depends on their VAT quarter). If you haven't paid your bill that stuffs them with a cashflow cost. So its no wonder they insist you actually pay the bill, as a quid pro quo for them invoicing early. I would if I were them, I mean if you asked me to invoice you around 31 Dec but you'd pay 15 March I'd politely tell you to FRO .

Under standard VAT arrangements, MDL would be obliged to pay the VAT to HMRC at the end of the quarter in which the invoice is raised, irrespective of whether or not the invoice is paid, unless they're on a cash accounting arrangement which they almost definitely are not because thats for very small co's. So, yes I cant imagine that MDL would raise an invoice to a customer and not seek immediate payment otherwise as you say, there are cashflow issues and potentially, reclaiming VAT issues if the customer doesn't actually pay the invoice.
I think your comment re credit card payment is uncalled for. Some people are lucky enough to be in a position to pay annual marina fees in cash without worrying about it whereas other less lucky people have to borrow money for a period to do it. Yes, on the face of it, borrowing money on a credit card at 19%, even for a month or two, is stupid but what's the alternative? Increasing your mortgage temporarily is difficult and potentially expensive because of all the costs it may trigger and negotiating an overdraft may be impossible or expensive also. If you need to spread your payments, then a credit card may be the most convenient way, even if it is expensive

 

[Croak]

dosn't anyone save up for thier mooring fees?

After all it is a predictable lump at a predictable time.

Strangely we also save up for house and car insurance too, so there is enough in the bank to pay for them.

 

[gjgm]

For the benefit of JFM et al I would point out that 18.95% is about the average APR on credit cards in the UK at the moment. Some cards are charging as much as 28% so from that perspective 18% doesn't seem too bad. I appreciate that from the rarified financial stratosphere that you look down at us lesser mortals from then 18% probably looks like usury, and I agree - it is. Unfortunately credit cards are with us to stay and its hard to do business over the internet or by phone without them.

Like Daka I always pay my berthing fees by credit card for the protection that it gives, and then pay the card off quickly to avoid the interest charges. In the current financial climate and with the relatively unknown impact that the building of the new Twin Sails bridge will have on Cobb's Quay this can only make sense. If a lot of people vote with their feet and disappear the marina could begin to struggle very quickly.

My Point in the OP was that there seems to be some confused thinking at MDL in that the options they have given are not attractive, and that there could be a third way that would be more attractive to retain their customers. Don't quite see why someone posting that I should be told to FRO is appropriate (bad day at the office maybe?) as I'm only trying to get myself the best deal for my berthing in the current economic climate. Isn't everyone?

Cobbs is part of the MDL group, though, not independently owned. Mind you, MDL isnt a public company, is it?
I'm not sure why MDL would be offering wonderful discount schemes; given that they are the largest marina operator, its not as though we can all decide to go to Premier, for example. And should they have little or no debt, then there is little advantage for them to get the cashflow in early. I would guess 3 pct gives them some small advantage, whereas, say, 10pct would be unproductive for them. I assume thats why they promote the value added extras such as free nights etc instead.
I didnt think the two year offer was very enticing myself, but enabling members to pay early to avoid the VAT increase, and offering a small discount doesnt seem unreasonable behaviour. They are after all, running a business.

 

[PaulGooch]

dosn't anyone save up for thier mooring fees?

After all it is a predictable lump at a predictable time.

Strangely we also save up for house and car insurance too, so there is enough in the bank to pay for them.

Yes, we do. Mooring = £2440 annually. Each month we put £200 in a savings account, end of year the money is there. Paid our in full on Saturday, no extra fees and VAT at 17.5%.

Sorry, but i totally disagree with the credit card theories. My mooring cost me £200 a month for the last year, saved in advance. Doing it by credit card still means a monthly payment, but it's a much bigger payment, due to the interest. What would it cost to borrow £2440 on a credit card and pay it off over one year ?

There is no need whatsoever for a credit card for any type of purchases, a debit card will do nicely.

 

[enterprise]

As sudgested in my previous post, it is possible to save around £60 per £1000 off your annual berthing fee's by paying early, either card or cash, if you need to use a credit card you will pay 1.5% more than using cash but if using a card with 0% on purchases for 12months you can take advantage of the early payment discount of 3% therefore make a saving of 1.5% on the annual cost even if it takes the whole 12 months to pay it off.

Fortunately for us as many of you the money is already saved for next seasons berthing, just wondering if it's possible to do the 2 year deal by paying half cash, half 0% Credit card and still come out ontop?

 

[jfm]

Yes, on the face of it, borrowing money on a credit card at 19%, even for a month or two, is stupid but what's the alternative?

Negotiate cheaper borrowings. Banks are perfectly happy to lend to good credits at much smaller margins than 18%. 18% margin is just absurd, except for very bad credits

 

[mjf]

Under standard VAT arrangements, MDL would be obliged to pay the VAT to HMRC at the end of the quarter in which the invoice is raised, irrespective of whether or not the invoice is paid, unless they're on a cash accounting arrangement which they almost definitely are not because thats for very small co's. So, yes I cant imagine that MDL would raise an invoice to a customer and not seek immediate payment otherwise as you say, there are cashflow issues and potentially, reclaiming VAT issues if the customer doesn't actually pay the invoice.
I think your comment re credit card payment is uncalled for. Some people are lucky enough to be in a position to pay annual marina fees in cash without worrying about it whereas other less lucky people have to borrow money for a period to do it. Yes, on the face of it, borrowing money on a credit card at 19%, even for a month or two, is stupid but what's the alternative? Increasing your mortgage temporarily is difficult and potentially expensive because of all the costs it may trigger and negotiating an overdraft may be impossible or expensive also. If you need to spread your payments, then a credit card may be the most convenient way, even if it is expensive

If cash flow is the issue then Direct Debit for the mooring - ok you loose the up front discount but you 'miss' the 18% interest for outstanding sum on the card - unless as I say you have a 0% jobbie

 

[gjgm]

As sudgested in my previous post, it is possible to save around £60 per £1000 off your annual berthing fee's by paying early, either card or cash, if you need to use a credit card you will pay 1.5% more than using cash but if using a card with 0% on purchases for 12months you can take advantage of the early payment discount of 3% therefore make a saving of 1.5% on the annual cost even if it takes the whole 12 months to pay it off.

Fortunately for us as many of you the money is already saved for next seasons berthing, just wondering if it's possible to do the 2 year deal by paying half cash, half 0% Credit card and still come out ontop?

You need to be a bit more specific. When are you paying off the 0 pct CC? The offers dont normally last 2 years (do they?)

 

[Deleted User YDKXO]

Negotiate cheaper borrowings. Banks are perfectly happy to lend to good credits at much smaller margins than 18%. 18% margin is just absurd, except for very bad credits

Firstly, I dont use credit cards myself, only charge cards, and I pay cash for all boaty expenses so I have no particular axe to grind here on credit cards. Yes the interest rates that credit cards charge are outrageous but it is the convenience of using them that gives them value. I imagine that to borrow say £12k from a bank via a personal loan involves going into a bank, filling out endless stupid forms, providing loads of spurious ID documents and paying up front charges and you end up with a fixed term loan which you can't pay back early. At least a credit card transaction is completed in seconds and you have the convenience of being able to settle it as quickly or as slowly as you want. Personally, I think I might be willing to pay £220 extra or whatever the figure was just to avoid the hassle of arranging another type of loan

 

[gjgm]

There is no need whatsoever for a credit card for any type of purchases, a debit card will do nicely.

Absolutely wrong. Credit card normally have distinct security advantages over debit cards when, for example, buying over the internet.

 

[DAKA]

Absolutely wrong. Credit card normally have distinct security advantages over debit cards when, for example, buying over the internet.

agreed
or paying £4 000 -£10 000 for something not tangible that you cant take home, like berthing fees, if the marina goes bust you loose it.
Same as time share, buy with your credit card, company goes bust and claim most of it back.

 

[PaulGooch]

Absolutely wrong. Credit card normally have distinct security advantages over debit cards when, for example, buying over the internet.

I've used my debit card extensively since the early days of the internet, without a single problem. I was to be worried about security, i would consider using one to pay for stuff, then settle in full at the end of the month. Never felt the need yet though.

 

[jimmy_the_builder]

I've used my debit card extensively since the early days of the internet, without a single problem. I was to be worried about security, i would consider using one to pay for stuff, then settle in full at the end of the month. Never felt the need yet though.

I think gjgm's point is about the consumer credit act, which makes card providers jointly liable for purchases over £100 - so if the vendor fails for some reason, you have recourse to your credit card company. This protection does not exist for purchases made by debit card, so there's a very clear benefit to be gained by using a credit card for larger purchases.

The consumer credit act is not limited to internet purchases, which are generally and separately protected by the distance selling regulations (although there are some exceptions to these, and they offer no protection in the event of the failure of the vendor).

Cheers
Jimmy

 

[gjgm]

I think gjgm's point is about the consumer credit act, which makes card providers jointly liable for purchases over £100 - so if the vendor fails for some reason, you have recourse to your credit card company. This protection does not exist for purchases made by debit card, so there's a very clear benefit to be gained by using a credit card for larger purchases.

The consumer credit act is not limited to internet purchases, which are generally and separately protected by the distance selling regulations (although there are some exceptions to these, and they offer no protection in the event of the failure of the vendor).

Cheers
Jimmy

If you have a very long boat though,Jimmy, I think there is an upper limit of £30k, too !
Bizarre aspect is that you are covered full the transaction amount, even if only £1 of the transaction was paid for by c/card.
I'd like to know which marina fails the lower limit of £100 , hee hee .

 

[enterprise]

Confused

You need to be a bit more specific. When are you paying off the 0 pct CC? The offers dont normally last 2 years (do they?)

Sorry GJGM, I mean, we have the berthing fee's saved for next year (year 1), but should we take the 2 year deal on a 0% credit card then immediately pay off half (which is what we have saved for berthing 2011-2012) and take the rest of the 12months interest free period to pay off the other half (2012-2013 berthing).

Problems are, taking the 2 year deal attracts an early payment reduction of 5% but a 1.5% surcharge for paying the whole 2 year amount by 0% credit card, so in effect only reduction of 3.5%.
Where by paying for next year only we get a 3% discount paying early with no surcharge because we have saved the berthing fee's.

I'm undecided, I suppose by taking the 2 year deal we know we will have the second year at no increase and VAT at 17.5 instead of 20%.

Sum's look like this;

Cash example,
Early payment per £1000 (1 season inc Vat@17.5% - 3% discount £1139.75) so for a £4k berth = £4559inc vat & discount
Early payment per £1000 (2 seasons inc Vat@17.5% -5% discount £1116.25) so for a £4k berth = £8930inc Vat & discount

Credit card (0%)
Early payment per £1000 (1 season, inc Vat@17.5% - 3% discount + 1.5% surcharge £1156.08) so for a £4k berth = £4624.32inc vat & discount
Early payment per £1000 (2 seasons inc Vat@17.5% - 5% discount + 1.5% surcharge £1132.99) so for a £4k berth = £9063.92inc Vat & discount

So for two year deal on credit card you will pay £4531.96 per year (using the example above) so get year 2 at the same price as year 1, paying off the saved year 1 amount immediately would leave year 2's cost spread across 12 months at 0% and be payed off by this time next year, just as you would need to pay for year 2 berthing anyway.

Benefit would be year 1 and 2 payment would be covered by the credit card should things go wrong for the same annual cost as paying outright for year 1 in cash, as a bonus save year 2's fee in a high interest account before paying it off next December as a lump sum, I think there's actually a proper name for this but cant think of it at the moment.

"Stoozing"

see here;
http://www.moneysavingexpert.com/cards/stooze-cash-credit-cards

Hope this makes sense or am I missing something?

 

[DAKA]

Good post, well presented .

What happens if you leave your berth after 11 months ?

Will the marina credit you back with the second years unused berth fees ?

I can think of several reasons why I may need to move within two years and for such a small saving it hardly seems sensible to risk a full years fees.

The marina could put a big steel single engined boat at the side of you who keeps hitting you.
They could put the neighbours from hell at the side of you.....drunken swearing until 0300 every morning.
Family health issues
change to larger boat the lsit is endless.......

I think I will just pay for a year in advance with my card and pay it off before any interest is due.

 

[Bassplayer]

Negotiate cheaper borrowings. Banks are perfectly happy to lend to good credits at much smaller margins than 18%. 18% margin is just absurd, except for very bad credits

Errr..... 19% is APR - that equates to approx 9% flat rate, so "only" 8 1/2% margin.
Anyway, smug "debit card / no credit card" people - not everyone can afford to pay upfront mooring fees or save over the year etc etc. Some people have mortgages to pay, houses that need repair, kids at school / university or need driving lessons / cars / weddings. Be a little less smug and a little more tolerant of others' situations.
Running any boat is expensive - who cares if it costs some interest to provide such a good pastime? We all do this for enjoyment. Pay for your mooring fees / repairs how you will and enjoy your boat,eh?

 

[gjgm]

Errr..... 19% is APR - that equates to approx 9% flat rate, so "only" 8 1/2% margin.

Not sure what you are saying? 19pct APR equals a flat rate of 9pct. Can you clarify that please?

 

[gjgm]

Good post, well presented .

What happens if you leave your berth after 11 months ?

Will the marina credit you back with the second years unused berth fees ?

I can think of several reasons why I may need to move within two years and for such a small saving it hardly seems sensible to risk a full years fees.

The marina could put a big steel single engined boat at the side of you who keeps hitting you.
They could put the neighbours from hell at the side of you.....drunken swearing until 0300 every morning.
Family health issues
change to larger boat the lsit is endless.......

I think I will just pay for a year in advance with my card and pay it off before any interest is due.

Yes, I think this is a key point. In a simpler example, its like paying for a year berth and then cancelling after 6 months and expecting a rebate, when in fact you have changed your contract to 6 times a 1 month contract.