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Old 03-26-2009
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Pros & Cons of financing

I was wondering if anyone could give some input on financing apposed to paying outright. I plan on purchasing a boat in the $40-50 grand range.
Ditch
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Old 03-26-2009
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Paying outright means that all of the money that you would be spending on interest can go into your cruise kitty or into upgrades, refits, whatever.

Others may have different opinions but I think debt is just a really bad idea, especially for something that is essentially a luxury and a depreciating one at that.
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Old 03-26-2009
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I just got a $10,000 RRSP loan from my bank and am repaying it over one year. I was planning on dropping my tax refund ($5000) on the loan to pay it off quicker but the interest rate for loans is so cheap right now I am only paying $161.xx in interest for the whole loan!!! That's insanely low! If you can get good terms there is no reason not to finance.

It is all personal preference though. Run your budget and see if you can carry a monthly payment along with your current bills or if you just want to pay outright.
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Old 03-26-2009
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PRO: You can get a much bigger boat than cash outright
CON: You have to carry insurance
PRO: Contrary to the first note, you will have *MORE* money for upfront upgrades as you will preserve your capital rather than spending it on the cash outlay itself
CON: Over 20 years on a typical boat note, you'll pay a ton more for the boat than cash up front.
PRO: For some people, this tax deduction on the interest paid on the note can knock them into a lower tax bracket...saving mucho bucks.
CON: If you have to sell in the future, you may be under-water and have to bring money to the table
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Old 03-26-2009
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One point about insurance—Most marinas require you to carry some insurance, regardless of the boat being paid for or being financed. The difference in cost between liability only and the agreed-value insurance that the bank's usually require isn't all that much.
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Old 03-27-2009
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Financing a boat or anything else preserves your capitol short term and increases your expenses and overall cost full-term.

Unless you get the right papers and the boat qualifies as your HOME, in which case you can take the usual IRS home mortgage (mortgage, not loan) deductions for it as a first home. That may change the balance of whether you are actually paying interest, or coming out ahead.
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Old 03-27-2009
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Your words hit the spot. My next question is what are the pros & cons of insurance and the prices. Again the boat would be in the $40-50 grand range and would be sailed for a year or so in New England (USA) and then on long term cruises.
Ditch
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Old 03-27-2009
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Con! No insurance and it sinks you are out 50 grand! Where's the question?
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Can you give me a basic idea of the yearly insurance cost on a 1985-1995 36ft mono?

Ditch
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Too many variables to give a good estimate. The variables include whether the policy is liability only or agreed value? Area of sailing coverage? Type of boat? Length of sailing season? etc....
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Originally Posted by ditch View Post
Can you give me a basic idea of the yearly insurance cost on a 1985-1995 36ft mono?

Ditch
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You know what the first rule of sailing is? ...Love. You can learn all the math in the 'verse, but you take
a boat to the sea you don't love, she'll shake you off just as sure as the turning of the worlds. Love keeps
her going when she oughta fall down, tells you she's hurting 'fore she keens. Makes her a home.

—Cpt. Mal Reynolds, Serenity (edited)

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