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Old 01-23-2014, 03:25 PM   #1
Randall B
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Join Date: May 2013
Posts: 33
Boat Buying Power!

Buy New or go Used? I had an interesting conversation with a 'seasoned boat broker' about boat financing and purchase power. So I thought I would pose the question, " how much boat can one really buy/afford when considering this purchase?"
Value or perceived value of a boat is another topic.

If you can buy a used 40' trawler for $144,000 that is 'Voyage Ready to Go' (that could use a few minor cosmetic upgrades) or buy a new boat for $400,000 and finance either one, what would be the deciding factors? (Assuming comparable characteristics in both boats' ability)

Used boat $144,000
40% down ($57,600 cash)
$86,400 @ 6% Is $937+/- per month
15 years

New boat $400,000
20% down ($80,000 cash)
$320,000 @ 4% is $2,367+/- per month
15 years

The new boat is apparently easier to finance from the banks perspective. Lower down payment % required and a better interest rate offered.

Difference in numbers is $22,400 in cash more for the new boat and $1,400/mo over 15 years.
Up front cash outlay is not much different but the monthly cost is about 1 1/2 times as much.

Let's say you buy used boat for $144,000 cash
And you finance the new boat with $144,000 cash

New boat $400,000
$256,000 @ 4%
$1,894/ mo
15 years

You are paying $500/mo less but invested $64,000 more cash up front. (larger down payment) for the same new boat above.

But, compared to the used boat purchase(all cash) the new boat costs you $1,894/mo more to own for 15 years.

I guess there are at least two questions here:

How much emotion factors into the equation on a purchase?

And

Is it really a question of practicality or just financial capability?

Thanks,

Randy
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