But there's a huge difference between a financial forum and a boat forum so it's logical there's a different reaction. People go there to talk finances, people come here to talk boats. Now, if you want to tell us your full finances, all you own, all you owe, your current income and anything else then perhaps we'll all jump in and advise you but generally people don't share that information and without it our advice wouldn't be worth much.
Financing vs cash for boat purchase?
- Thread starter Camasonian
- Start date
The friendliest place on the web for anyone who enjoys boating.
If you have answers, please help by responding to the unanswered posts.
If you have answers, please help by responding to the unanswered posts.
But there's a huge difference between a financial forum and a boat forum so it's logical there's a different reaction. People go there to talk finances, people come here to talk boats. Now, if you want to tell us your full finances, all you own, all you owe, your current income and anything else then perhaps we'll all jump in and advise you but generally people don't share that information and without it our advice wouldn't be worth much.
catalinajack
Guru
Whether to finance or pay cash, whether for a boat or a dirt home, is really a simple investment decision. Simple because one just needs to decide whether the interest rate on the loan is likely to exceed the rate of return that may be earned on investing the funds that would have been used to pay cash. At today's interest rates, at least for dirt homes, I would put up the minimum down payment and invest the left over cash. But, that is I. Each situation is different including, most importantly, risk tolerance.
Evergreen1111
Member
- Joined
- Jan 29, 2019
- Messages
- 7
- Location
- United States
- Vessel Name
- Evergreen
- Vessel Make
- Grand Banks 36 Classic
Cash
Sold the house and paid cash. The last two boats. With low financing rates there may have been a better way but I like to know that I own something outright if things go south oh, you know like a pandemic or something LOL. No kids to leave it to so I intend to spend every penny.
Sold the house and paid cash. The last two boats. With low financing rates there may have been a better way but I like to know that I own something outright if things go south oh, you know like a pandemic or something LOL. No kids to leave it to so I intend to spend every penny.
Capn James Brett
Veteran Member
- Joined
- May 22, 2012
- Messages
- 83
- Location
- U.S.
- Vessel Name
- Stella Maris
- Vessel Make
- 2004 Grand Alaskan 65
We just bought a 04 Grand Alaskan and financed for 20 years at 3.5%. Why would you pay cash with those wonderful rates? Also a tax break in most states depending on home situation.
Good luck.
Good luck.
Benthic2
Guru
Its a very personal decision based on current and future income, current assets, risk tolerance, investment options/style and opportunity costs, and level of desire to own a particular boat.
To answer your question on why would you pay cash....
Best fixed and guaranteed short term interest rates 2%. I expect stock market to decline over the next year. DJI down just under 3% over the last year. Expanding business during pandemic makes no sense (although we're doing that). Those are reasons I'd pay cash. Now, your situation or your forecast for the market may be different and I don't argue with you financing, but that it's not an obvious choice even with the rates.
AdkChris
Senior Member
I made payments on a motorcycle once. Loved the bike hated the payments. So now we very rarely borrow for anything and that seems to be working for us.
But I have to admit with interest rates so low I am wondering if I should rethink this. As my friend says time to get out the crystal ball. If you lock in low interest rates and inflation kicks in we are all screwed but at least the effective cost of the loan will be less!
Am I missing something?
But I have to admit with interest rates so low I am wondering if I should rethink this. As my friend says time to get out the crystal ball. If you lock in low interest rates and inflation kicks in we are all screwed but at least the effective cost of the loan will be less!
Am I missing something?
ProMaritime
Senior Member
I don't understand the purpose of your question. What do useless statistics have to do with you buying a boat? If you have the spare cash (and I emphasize "spare") pay cash. If not and you've got acceptable credit, yacht financing is readily available and rates are low right now.
Actually, for a retiree, it can be more complicated than that.
I have way more than I need to pay cash for a trawler, but most of it is currently in IRA and 401k accounts. I could take out all the money I need, but it would push me into a higher tax bracket, since those withdrawls are taxable.
As you mentioned, I have to take into consideration the interest rate on a loan versus the likely return on investments. Beyond that, though, I also have to take into consideration the tax rate that I would have to pay on the withdrawl. If I finance, and spread those withdrawls over several years, then I can avoid pushing myself into the next bracket.
This, in fact, I believe, is the scenario that the OP was talking about in the first post. The calculus is not extremely complicated, but it is not quite as simple as "interest vs rate of return."
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AdkChris
Senior Member
I would like to know what ProMaritime considers so useless about statistics and which statistics he is referring to.
It is pretty well accepted that paying back a loan with inflated, that is devalued, money decreases the real cost of the loan payments. If we are headed for a period of significant inflation then the smart folks would borrow money for a large purchase because the money you use to repay the load would be worth less but hopefully what you purchased would retain or increase its value or utility.
It is pretty well accepted that paying back a loan with inflated, that is devalued, money decreases the real cost of the loan payments. If we are headed for a period of significant inflation then the smart folks would borrow money for a large purchase because the money you use to repay the load would be worth less but hopefully what you purchased would retain or increase its value or utility.
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Fletcher500
Guru
One of the things I appreciate about boating is talking to others on the dock about their boat, the next trip, weather, etc. Most people don’t ask what others do, or did for a living, whether they financed or bought outright, and frankly don’t care. But this is a website, so I suppose it’s a reasonable question. My wife and I are in the don’t extend yourself for recreational things camp, including boats.
AdkChris
Senior Member
I wouldn't put a particular stranger on the spot by asking how they purchased their stuff.
I do think it is reasonable to ask if anyone in a large group wants to give their thoughts on the smarter way to do anything.
If you want to put forward your values, the things you think need to be considered or the methods you suggest using to calculate the pros and cons of most any subject I am certainly interested. Especially of you can use valid logic.
Isn't sharing wisdom one of the main purposes of this forum?
I do think it is reasonable to ask if anyone in a large group wants to give their thoughts on the smarter way to do anything.
If you want to put forward your values, the things you think need to be considered or the methods you suggest using to calculate the pros and cons of most any subject I am certainly interested. Especially of you can use valid logic.
Isn't sharing wisdom one of the main purposes of this forum?
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