Pros & Cons of financing??

[Ditch Leroi]

Thanks for your thoughts! Tonight I have been looking at 30-36 ft boats in the 1990’s so far slim pickings but I will continue to look and learn about the benefits of each boat and what designs suit me and most importantly fit my budget. If anyone’s knows any boats that they have sailed and liked or disliked I would thankful for the inside info.

[Cheechako]

If you are keeping a home and have equity, using a credit line tied to your home would allow tax deduction and allow you to go where you want regardless of insurance issues the finance company requires if you "boat finance". On insurance, consider just getting regular coastal insurance like every average joe gets the first year. Then if you decide to go to the bahamas the second or third year you might get an inexpensive rider. IF you are still intent on cruising the world after that, then decide at that point if insurance is worth it. FOr offshore cruisers the decision to insure or not is really a matter of your stomach for risk (can you afford to lose the boat if the worst case scenario happens?) and how careful a cruiser you are. Tied in to this is the cost of offshore insurance. You will end up asking yourself : Is the comfort worth $7000 per year on my $40000 boat? Huge differnce in Boat insurance by the way. FOr my boat in FLorida, and my particular situation, quotes varied by 10 to 1!

[Cheechako]

By the way, in the 90's I insured with the company that had my auto insurance. Their policy read that it was only good within 75 miles of the coast. Therefore I was insured all the way down the west coast from Washington to SO Cal as long as I stayed within 75 miles! They've probably corrected that now, dont know.

[Maren]

Originally Posted by Ditch Leroi

I was wondering if anyone could give some input on financing apposed to paying outright.

I'm not sure there is a cut and dried answer. For a new boat, you may be able to come out almost even with insurance. That is, you buy a boat paying the down payment and kit it out as you would for any other one. If your insurance is right and you lose the boat at some point in the near-ish future, you would be down to approximately what you would if you had sold it after a couple of years understanding the new chart plotter wouldn't be new in either case. As others have pointed out, the cash is still available to you. How you have it invested is up to you but let’s hope it wasn’t in property or the stock markets.

As for a used boat, I think it’s going to depend heavily on if you can get a loan on the boat at all. You may have superior credit but the boat may not be able to get the loan for underwriting purposes. The other factor is the value of the boat. If the boat is worth 60k and you buy it for 50k that might not justify what was outlined above. On the other hand, if the boat is legitimately worth say 90k, it might.

In either case, you are going to be paying for the use of other folks money. What is that worth to you and what would you do with the dollars between now and when you pay the boat off?

[theonecalledtom]

My initial thought was to not finance, get a smaller (<32 ft) boat and learn the ropes while saving. Looking at the cost of keeping it I realised that it would take a significantly longer time to get a bigger boat to do some real cruising.

So we shot big and financed. Reality works out a bit different to what we thought and we're going to end up paying the load off six months later than we had imagined - and have been living a poorer life in the meantime. This is because it turns out that boats are expensive to upkeep.....

Despite this I'm very glad we played it this way. Learning the boats systems takes time and learning on the boat we're really going to need to know is perfect.

Remember that whatever boat you buy the ticket price is not the end of it. There are fees for hauling it out, basic initial love, mechanics are expensive ($100 per hour) unless you know someone or how to do things yourself.

Seeing the amount of money we've given to the bank, even with our short term aggresive payments is depressing though.

[Ditch Leroi]

OK, thanks for your opinions. I have a better grasp of boating insurance now.