How do I finance a Cat?

[vientoman]

don't want to speak for the OP but I think he just wants to have a go at the idea of sailing. To many, the ultimate would be a nice big cat.

It makes it difficult to go to work if you can't keep a dream alive.

Unfortunately, big boats are very valuable.

The average global per capital income is around 5k per year ( factoring in impoverished folks in india as well as warren buffett ) so if the average person wants to buy a 1.5 mill cat, that represents 300 years of hard work.

[nimblemotors]

Originally Posted by daddle

Huh? That's your opinion. It is not even close to a fact or rule. Most of the loans in the world are for depreciating assets. That's how it works.

What is a fact is that most people are financially foolish,
the people that loan you money depend on it and encourage it and profit from it.

It may be my opinion, but it is shared by many.

Guiding Principles of Finance: Levisay Consulting » Never Borrow Money For A Depreciating Asset

Mosha Management - Creative, Different, Trusted: Never Borrow To Buy A Depreciating Asset

"It's good to fall back on the rule-of-thumb to pay cash for depreciating assets rather than borrowing money to buy them. "

[daddle]

Well ... Even better advice is not to take financial advice from the experts or the Internet. Four years ago I bought this boat. Not wanting to sell any AAPL stock to pay for her I borrowed the full amount. "Never" do that? WTF. I'd be a pauper.

It's a financial decision, not a rule.

But buying an expensive boat, especially a cat, that is way beyond your means is foolish, that's a rule. Maintenance will kill your finances.

The OP should get a nice US$25k boat. Spend $50k on maintenance, wine, and women. That's my Internet advice. borrow it if you can.

[nimblemotors]

Hope you sold AAPL at 750 and didn't buy any, because it is now at 450.
And A123 went from 12 to ZERO, GM from 30 to ZERO.
Maybe we can advise OP to buy lotto tickets to finance his million dollar 60ft cat? Pithy advice is appropriate for the question asked..

btw, i'm sure you've enjoyed your boat and it was worth every extra penny you spent on it.

Originally Posted by daddle

Well ... Even better advice is not to take financial advice from the experts or the Internet. Four years ago I bought this boat. Not wanting to sell any AAPL stock to pay for her I borrowed the full amount. "Never" do that? WTF. I'd be a pauper.

It's a financial decision, not a rule.

But buying an expensive boat, especially a cat, that is way beyond your means is foolish, that's a rule. Maintenance will kill your finances.

The OP should get a nice US$25k boat. Spend $50k on maintenance, wine, and women. That's my Internet advice. borrow it if you can.

[senormechanico]

GM got stolen by you know who for his union buddies, but that's a different thread for a different board...

[S/V Illusion]

There is no financially rational reason for financing a boat. There are, however, many rationalizations for doing so. We are all guilty of buying a depreciating asset but not for the double jeopardy of financing it as well. That mistake is simply an extension of how many people choose to live beyond their means.

The lenders of the world appreciate your ignorance.

[Matt Johnson]

With the cheap interest rates out there, I was able to use my cash for investments and make money instead of just writing a check for the boat. The income from investments, plus the tax deduction, made the financing a much better option for us. We could have paid the boat off at any point, but it was one more source of income before we left cruising last year. The amount we made did add about 4 months to our cruising budget and was worth the effort....We could have lost the kitty too, but that's the nature of the game.

[WantoSail]

That's what I'm thinking. With investments paying the way. If you win you win if not at least you tried and got some sailing in before having to go back to the rat race. Worst case you work a year sail till the money runs out and work some more. Not ideal but it beats one vacation a year for a week at a time.

[cheoah]

The interest on the loan is tax deductible if it qualifies as a second home. Financing is a good choice for many. If you're disciplined, no problem, and if you're not, well a boat loan is the least of your worries.

One thing to keep in mind is that the purchase price is just the start. Maintenance can be pricey, and cats often have twice as much to keep up with. Twice the hulls, engines, well that's about it, and I don't really know jack about cats, because for the most part they are out of my league as a regular joe. Except like a Gemini or something like that.

They are more expensive to keep marinas, too.

Marine lenders will want you to have really good credit, some generous liquidity, and the older the boat, the poorer the terms. Don't expect better than 10 years on a 20 year old boat. The 20 year terms are for newer boats.

Life is short. If you're smart and disciplined you can find a boat and finance it. However, that's the easy part. Keeping up with it yourself and finding an affordable place to keep it can be challenging, and the upkeep can bleed you. Price out the marinas in the area you want to keep it, and also haulout on a 40 something foot catamaran every other year, plus the mortgage and the insurance - which you'll have to have. And that won't be comprehensive cost - but a good start.

That's just full disclosure, plenty of us do it. There's no real logic to it, it's not some great investment, or an ultra responsible move to untie and go voyaging. Life is short, just get going on it and see where it takes you.

[JPA Cate]

Hi, again, Want to Sail,

Since you say you are new to this, I have a few questions you might want to answer for yourself.

To what extent is your good lady on board about this project?

Are you aware that some peoples' bodies don't like catamaran motion, the jerkiness gives them motion sickness? Others' don't like monohull motion.

Have you investigated pricing on the various 60' catamarans available?

Are you aware of costs relative to boat bits on 60+ foot boats? Have you checked the prices on good sails? haulouts? berthing expenses? We know a guy who was quoted $1200/wk for a end tie berth for his 65 ' catamaran in Sydney.

Here's something you may not have thought of: The guys with the big boats who have their work done for them figure on 10% cost of the new value of the boat per year in maintenance. Obviously, some of us smaller budget people spend less, and do most of our work ourselves, but nor are we looking at 60 ft. catamarans.

Suggestion: investigate berth availability and costs for 60 ft. cats; compare and contrast costs for line, blocks, engine services, haulouts

Finally, there are costs, other than financial, for sailing away into the sunset for years...you and your good lady might want to think about those potentials, as well. While the idea of freedom may appeal to you, it really isn't for everybody. Not everyone likes sailing. Do you know if you do? Would you be willing to drop a couple of million to find out? The joys of a Hobie 16 will be different from those of the putative 60 footer.

It can be a big job getting everything set up to leave *wherever* and cruise open-endedly. Would you and your good lady be okay with that???

[WantoSail]

Originally Posted by Ann T. Cate

Hi, again, Want to Sail,

Since you say you are new to this, I have a few questions you might want to answer for yourself.

To what extent is your good lady on board about this project?

Are you aware that some peoples' bodies don't like catamaran motion, the jerkiness gives them motion sickness? Others' don't like monohull motion.

Have you investigated pricing on the various 60' catamarans available?

Are you aware of costs relative to boat bits on 60+ foot boats? Have you checked the prices on good sails? haulouts? berthing expenses? We know a guy who was quoted $1200/wk for a end tie berth for his 65 ' catamaran in Sydney.

Here's something you may not have thought of: The guys with the big boats who have their work done for them figure on 10% cost of the new value of the boat per year in maintenance. Obviously, some of us smaller budget people spend less, and do most of our work ourselves, but nor are we looking at 60 ft. catamarans.

Suggestion: investigate berth availability and costs for 60 ft. cats; compare and contrast costs for line, blocks, engine services, haulouts

Finally, there are costs, other than financial, for sailing away into the sunset for years...you and your good lady might want to think about those potentials, as well. While the idea of freedom may appeal to you, it really isn't for everybody. Not everyone likes sailing. Do you know if you do? Would you be willing to drop a couple of million to find out? The joys of a Hobie 16 will be different from those of the putative 60 footer.

It can be a big job getting everything set up to leave *wherever* and cruise open-endedly. Would you and your good lady be okay with that???

We will have to see if we are as ready as we think we are. There will be plenty of time to figure it all out. We will probably settle one something more in the 45ft range. I just wanted to try and include all options realistic and those of pure fantasy. it all helps us learn what is out there. We will start out on a hobbie on lake erie then take a vacation/sailing lesson trip. There will be many boats to research and hidden costs to figure in and learn about. Skills to learn to stay alive both literally and financially. There is much to do and learn and I appreciate folks like you trying to point out the not so obvious. Reading responses like yours is our first bit of learning/training for this dream.

[Garrettw]

Originally Posted by nimblemotors

What is a fact is that most people are financially foolish,
the people that loan you money depend on it and encourage it and profit from it.

It may be my opinion, but it is shared by many.

Guiding Principles of Finance: Levisay Consulting » Never Borrow Money For A Depreciating Asset

Mosha Management - Creative, Different, Trusted: Never Borrow To Buy A Depreciating Asset

"It's good to fall back on the rule-of-thumb to pay cash for depreciating assets rather than borrowing money to buy them. "

Not true in the unprecedented times we are currently in. Boat loans can be had for sub 4% presently. One stands to do significantly better than 4%, even with a moderate risk investment, by investing the cash that you would have otherwise used to purchase. While you have effectively increased the purchase price of the boat by financing it, in the end, assuming you take it to term, you will have more money than had you not financed it (assuming average, long term market performance).