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Old 20-08-2015, 16:27   #46
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Re: Boat financing help

Well...math wise it does make sense. No argument there. But, then there is murphys law. What if something happens to your health or income? Or what if the economy turns back downward and the 5% is not a real number anymore? Sure you can cash out the investments but what if you need those to live on? For me paying cash for something that depreciates is worth the peace of mind not having to ever worry about another payment. Then if the economy turns down or something drastic happens, a boat or car or whatever can just sit there waiting, without a payment worry. Just food for thought.

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Old 20-08-2015, 16:33   #47
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Re: Boat financing help

Actually rain, math wise it makes no sense if you actually check the figures posted by the OP
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Old 21-08-2015, 01:43   #48
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Re: Boat financing help

Chris mac.....0% interest on a car really? if they paid cash the price would have been much lower. Its amazing to me how that sales pitch still works. There is no such thing as free financing it is in there somewhere.

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Old 21-08-2015, 12:47   #49
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Re: Boat financing help

Actually there was no discounted price for cash. I had the same deal in 05 for a truck. It's used as a incentive to get sales. And regardless the "cash" is still invested and earning money.
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Old 21-08-2015, 13:31   #50
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Re: Boat financing help

Quote:
Originally Posted by monte View Post
Actually rain, math wise it makes no sense if you actually check the figures posted by the OP
You may want to talk to someone who is good in financing, someone who knows how to really make their money work for them. or perhaps a rich person.
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Old 21-08-2015, 18:48   #51
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Re: Boat financing help

Quote:
Originally Posted by scarlet View Post
You may want to talk to someone who is good in financing, someone who knows how to really make their money work for them. or perhaps a rich person.
Sorry, there are no rich people on this thread. Please go to the "gold is the best anchor material, no its not, silver makes the best anchor" thread
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Old 21-08-2015, 20:35   #52
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Re: Boat financing help

Quote:
Originally Posted by scarlet View Post
You may want to talk to someone who is good in financing, someone who knows how to really make their money work for them. or perhaps a rich person.

Well gee, thanks for that advice. I was merely pointing out that your calculations were incorrect by a paltry $100000. I guess I need a financial advisor to help me with basic math most of us were taught in grade school.
From your original post

Quote:

scenario 2

$400,000 boat

$100,000 down payment

$300,000 finance at 4%

$300,000 of own cash stays in investments, and lets say you get 5% return

$200,000 resale after 10 years.



totals?

including $100,000 down, principal and interest, you would have a total of payments of $319,368 sell your boat after 10 years for $200,000 (consistent with the example above) and you would walk away with $21,662 in your pocket.



The $300,000 (of your own money) that you kept in investments with a 5% return over 10 years would now be worth $488,668. you MADE $188,668 on your investment over that 10 years!



So..

$400,000 (price of boat)

319,368 (total of payments)

- 21,622 (money in your pocket after you sell)

- 188,668 (money you made off of investments)

109,038 total cost of ownership NOT including tax credits...



No brainer...

:end quote

FYI. $100000 down, plus $300000 principle plus $65000 interest (@5%) does not equal $319000. It actually equals $465000
Selling the boat for $200000 will leave the total loss at $265000 after 10 years

The $300000 invested at 5% might be worth $488000 after 10 years. Subtract the loss of the boat and you will be left with $232000

So excuse me for pointing out the error of your basic math ( which I also pointed out in post 26 ) in an effort to assist you with a potentially expensive mistake for you and your husband. I'll go see if I can find some rich people to give me some investment advise while you sign up for that loan.
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Old 22-08-2015, 09:07   #53
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Re: Boat financing help

Quote:
Originally Posted by monte View Post
FYI. $100000 down, plus $300000 principle plus $65000 interest (@5%) does not equal $319000. It actually equals $465000
Selling the boat for $200000 will leave the total loss at $265000 after 10 years

The $300000 invested at 5% might be worth $488000 after 10 years. Subtract the loss of the boat and you will be left with $232000

I went back and reviewed my numbers... and I stand by them.

I think where you are misunderstanding, is that when I said, "including $100,000 down, principal and interest, you would have a total of payments of $319,368" I meant in actual accumulation of payments. Not the entire amount of the loan. I'm not going to PAY the whole loan. I'm calculating the accumulation of your monthly payments over a 10 year period..

I just thought of something else that may not have been clear.. I'm basing this off of a 20 year loan... but selling after 10 years. (which is our plan.. )
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Old 22-08-2015, 09:58   #54
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Re: Boat financing help

Quote:
Originally Posted by monte View Post
Well gee, thanks for that advice. I was merely pointing out that your calculations were incorrect by a paltry $100000. I guess I need a financial advisor to help me with basic math most of us were taught in grade school.
From your original post

Quote:

scenario 2

$400,000 boat

$100,000 down payment

$300,000 finance at 4%

$300,000 of own cash stays in investments, and lets say you get 5% return

$200,000 resale after 10 years.



totals?

including $100,000 down, principal and interest, you would have a total of payments of $319,368 sell your boat after 10 years for $200,000 (consistent with the example above) and you would walk away with $21,662 in your pocket.



The $300,000 (of your own money) that you kept in investments with a 5% return over 10 years would now be worth $488,668. you MADE $188,668 on your investment over that 10 years!



So..

$400,000 (price of boat)

319,368 (total of payments)

- 21,622 (money in your pocket after you sell)

- 188,668 (money you made off of investments)

109,038 total cost of ownership NOT including tax credits...



No brainer...

:end quote

FYI. $100000 down, plus $300000 principle plus $65000 interest (@5%) does not equal $319000. It actually equals $465000
Selling the boat for $200000 will leave the total loss at $265000 after 10 years

The $300000 invested at 5% might be worth $488000 after 10 years. Subtract the loss of the boat and you will be left with $232000

So excuse me for pointing out the error of your basic math ( which I also pointed out in post 26 ) in an effort to assist you with a potentially expensive mistake for you and your husband. I'll go see if I can find some rich people to give me some investment advise while you sign up for that loan.
The difference here is that the term of the loan wasn't specified: You assume that the "total of payments" is equal to the total remaining loan. That would be the case if it was a 10 year note, but if it were a 20 year note (very common), then the "Total of payments" is _not_ paying off the entire loan, and the original math is correct.
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Old 22-08-2015, 11:59   #55
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Re: Boat financing help

" I'm not going to PAY the whole loan..."

Ah, but you ARE going to pay the whole amount loaned. The bank lent you $300K, you WILL pay back the $300K (plus interest) once the sales transaction is completed.
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Old 26-08-2015, 14:38   #56
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Re: Boat financing help

okeys.... just a short feedback from a lurker.


My head is cooking, smoking, heated up after I read all the pages. - Not, that I am too stupid for simple math. Its just... I am a creative person (by profession), and I do not care a sh*** about money. I just know, what my work is worth. Thats it... but never though about financing, instead I was professional skipper in the 90th I had customers = potential owners whom I serviced to find the right boat. But financing was not part of my services.

Interesting to learn that you have lenders and brokers in USA for this kind of "business". We dont know this in Europe so far I am oriented about the financial market in "good old Europe".

The situation now is different compared to the 90th. I got my sailing virus back, after more than 10 years land based living (and probably suffering). I can't recharge my batteries, even standing "hours" under the shower to get the smoothing sound of water in my ears, symbolically spoken.

So its time to go back onto the water... to where I belong.

I never wanted an own boat, as I skippered many different boats of different sizes for (private) owners, charter agencies, sailing schools etc. ...

But... there is always a but. The reason behind my antipathy: I never wanted a boat, as I even did maintenance for owner's boats... lots of work and I have seen that a boat can be a huge empty barrel you endless can fill with money which always disappears, never comes back and this barrel keeps always hungry for more.

But as said... there is always a but to change one's mind. Meanwhile I get angry to see that the apartment owner I am paying a huge rent monthly, spends as pensionist 2-3 months summer holiday in France having a leasure time... and after a detailled analysis of the rent market I had to recognize last month that I pay heavily overprized (at least 26%). This has to stop and find an end soon. I am not that guy who likes to make others rich.

So actually I am searching for my boat... and it looks like that I found some different options.

With my old thinking before reading this thread I had in mind: Not a new one... as the prize loss is extremely. Nowadays the market is down and one can get excellent boats cheaply.

And I thought: Better to pay the boat "cash" out of own pocket... staying independently... as I hate banks (looking back to all the financial crisis since 2008 I call most of these employees "corruptive thiefs").

But there is always a but.... as I switched from marketing consulting 10 years ago into a new job (the creative one) I can work "as creative person" on my boat (mainly brain work). I just need a computer, small file server, printer and Internet connection (e.g. via LTE/Wifi). Times have chanced, and all the IT technology is available by miniaturization / digitalization. What lucky man I am. So these days it looks very different compared to 10 years ago.

My own boat shall not just be for leasure time... for recharging my own batteries. Living on my boat (which I know how it is as I did it as professional skipper) means: I need to work maximum 50% of the month to earn the income for living, to cover the running costs... and as I have analysed via Essex, it seems even possible with this investment of time to pay the monthly interest rates (incl. redemption) with 30% own contribution.... at the size of what I pay actually as rent. Not too bad this deal.

So tks to all the input, folks... was like a "brain wash" or at least.... knocking on my lazy brain cells to get a different perspective.

I suppose next days I will have some specific questions... if you dont mind, I come in again or send a PM to some of you guys who seem having a good living by managing money as a tool.

Last an important aspect: I am Non American... settled in Europe. We don't have financing of "living on boats". Not yachts... only I know it from Netherlands (where it is typical to live on a house boat / floating home / bark) and for this country it is very urgent to live on the water in closer future because of climate change. Otherwise Dutch people get drowned. The only bank there is ING lending credit programmes for floating home owners.

For today... enough writing ! Tks to all again...
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