How do cruisers pay for boats?

[Wander4Wonder]

It would be interesting to survey the forum as to % financers vs cash buyers on their present boat.

[WoodenKetch]

If you go cruising with an unpaid mortgage on the boat you won't be cruising for long. Maybe okay for those who can fly home to work for half the year every year, but if you want to go over the horizon and not come back for a long time you had better buy a boat that you can afford without a loan.

Nobody needs a $1M boat, you can do the same thing on a boat 20% the price, and almost the same thing on a boat 5% of that cost.

Nothing wrong with spending $1M if you have it, but if not, adjust the goalposts a bit and have the same amount of fun.

[Statistical]

Keep in mind the other costs of a $1M boat. The big five are marina slip, insurance, service/maintenance, fuel and repairs.

Those costs on a $1M boat are quite extensive. They are all over the map depending on where you are and what you will be doing with the boat but $50K would be a ballpark. Most people will also want to make upgrades and improvements to their boat and that can be significant as well.

So now throw a $1M note into your budget. $1M at 7% for 20 years is about $80K a year in payments. For most people having $130K in pretty fixed costs to be quite a burden.

Can't speak to every situation but you are needing to finance $1M boat there is at least a chance that is a warning sign that you might be getting too much boat.

[Paulihno]

Originally Posted by Tayana42

In 2000 I had a job and an income and equity in a house. I financed with 20 percent down a boat that cost about the same as my annual income. I paid it off in about 7 years. I didn’t encumber my house. I didn’t borrow from retirement savings. I bought a boat I loved then that is capable of cruising anywhere and I still love it. After retirement my wife and I lived aboard and cruised for three years then came back to our house due to family and health reasons. We still enjoy the boat and cruising locally.

Super helpful illustration. Thank you!

[Paulihno]

Originally Posted by WoodenKetch

If you go cruising with an unpaid mortgage on the boat you won't be cruising for long. Maybe okay for those who can fly home to work for half the year every year, but if you want to go over the horizon and not come back for a long time you had better buy a boat that you can afford without a loan.

Nobody needs a $1M boat, you can do the same thing on a boat 20% the price, and almost the same thing on a boat 5% of that cost.

Nothing wrong with spending $1M if you have it, but if not, adjust the goalposts a bit and have the same amount of fun.

"If you go cruising with an unpaid mortgage on the boat you won't be cruising for long." -- extremely quotable. Thank you!

[BillKny]

Step One: Work hard. Save every penny you can. Always remember, there are people who are living and surviving on 20% less money than you make, so you KNOW you can save 20% of your income. No new cars, no fancy house. No eating out. etc, etc. Standard financial planning stuff. No magic, no rocket science. Slow, and hard work. Kind of boring, but effective.

Step One Alternative 1: Have a rich uncle, who likes you, die.
Step One Alternative 2: Win the stock option lottery.

Step Two: Go cruising. Spend all the money from Step 1.

Those two steps are how 90% of the cruisers out there do it.

Most other approaches involve a lot of magical thinking.

[Paulihno]

Originally Posted by Statistical

Keep in mind the other costs of a $1M boat. The big five are marina slip, insurance, service/maintenance, fuel and repairs.

Those costs on a $1M boat are quite extensive. They are all over the map depending on where you are and what you will be doing with the boat but $50K would be a ballpark. Most people will also want to make upgrades and improvements to their boat and that can be significant as well.

So now throw a $1M note into your budget. $1M at 7% for 20 years is about $80K a year in payments. For most people having $130K in pretty fixed costs to be quite a burden.

Can't speak to every situation but you are needing to finance $1M boat there is at least a chance that is a warning sign that you might be getting too much boat.

Appreciate this walk through. I would love to understand what multiple of a boat's value people have in net worth before buying outright. E.g. if your target boat is $300k new do you have $1.2M (4x), $1.5M (5x), $3M (10x) in the bank to comfortably buy outright?

[boatman61]

Originally Posted by Paulihno

Appreciate this walk through. I would love to understand what multiple of a boat's value people have in net worth before buying outright. E.g. if your target boat is $300k new do you have $1.2M (4x), $1.5M (5x), $3M (10x) in the bank to comfortably buy outright?

Never buy a boat you can't afford to lose..

[Chotu]

First boat: cash $2700
Second boat: loan (10% down)
Third boat: loan (10% down)
Fourth boat: loan (10% down)
Fifth boat: blood, sweat, tears, anaphylactic reactions, health issues caused by it, thousands of hours of my time, and cash.

[mglonnro]

Europe and Finland here. Bought our boat for 30% down, 70% financed over 10 years. I've heard 25-40% down is quite normal, with up to (at least) 15 years monthly payments for the rest + interest. Our interest is currently about 2%.

[more]

Originally Posted by Paulihno

I see a lot of conflicting info online about insurance costs, and need to explore this further. 3% of a 1M vessel is $30k/yr or $2500/mo -- seems.. ahem.. a bit steep.

in Croatia insurance for a charter boat, damage, sink,burn, lose profit, seized yacht from government agency
cost with customer deposit 1000-3000€ for small damage.
yacht 100000 € 600-1000€ depends on the owner of the company and an insurance company.

[Wander4Wonder]

Originally Posted by Chotu

First boat: cash $2700
Second boat: loan (10% down)
Third boat: loan (10% down)
Fourth boat: loan (10% down)
Fifth boat: blood, sweat, tears, anaphylactic reactions, health issues caused by it, thousands of hours of my time, and cash.

is that where the epoxy quote in your profile came from? the reaction?

[thomm225]

Originally Posted by Paulihno

Thank you! I should have mentioned my plan is for full-time liveaboard cruising, so I'm not really factoring full time marina fees. (been down this path before and it gets scary in places like NYC!) I appreciate your perspective!

That's nice, but how many boats have you done full time liveaboard cruising on?

1, 2, - 5?

If you have never done that before, then you might only last 6 months on your $1M Boat then not want it anymore.

The question then will be how much can you sell it for?

[Paulihno]

Originally Posted by thomm225

That's nice, but how many boats have you done full time liveaboard cruising on?

1, 2, - 5?

If you have never done that before, then you might only last 6 months on your $1M Boat then not want it anymore.

The question then will be how much can you sell it for?

Yes, good call and sort of sad to see new boats on the 2nd hand market in <1 yr. For me, I've done enough time on land to know that I don't want *it* anymore

[Stu Jackson]

1983 - lightly used 1981 Catalina 22 maybe $7,500 cash


1987 - used well conditioned Catalina 25, maybe $10,000 cash; kept this boat til 1998


1998 - 12 year old superb condition Catalina 34, $54,000 ($102,000 for a new one at that time!), 10% cash down, rest in boat loan eventually folded into house refinance so we got the title instead of the loaner/bank; still have the boat


Was working full time at all those purchase dates.


WADR, if you're looking to spend $1M on a boat and you have to ask that question, I believe you're in the wrong place.


Good luck.