Reward for lost Kraken!
Join Date: Apr 2006
Thanked 138 Times in 135 Posts
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Scott, I'm not sure why you are looking at those factors since there are things like the residual value of the boat that frankly MAKE NO DIFFERENCE with regard to how you are going to PAY FOR IT.
And you are totally missing the fact that if you finance the boat and the lender gives you a proper mortgage on it, you may be able to take an income tax deduction for the interest on the HOME MORTGAGE on the boat. How much that is worth to you depends on your tax bracket and whether the IRS will allow you to deduct that home. (Boat or house doesn't matter.)
The only other things that matter are:
1-With a boat loan you will be REQUIRED to carry insurance and meet survey standards
2- What does it cost you every month? The principal will be the same either way, so it is strictly how much you pay in interest, versus how much you lose by not putting the cash to work elsewhere, at whatever rate of return you'd normally get. Some folks are getting 4% after taxes, others 20% or higher. If the loan is 7% and the IRS effectively reduces that to 5%...the only question is whether you can make more than that by not buying the boat outright, and investing in something else.
It really is that simple.