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What's the depreciation vs. boat loan on a 20 year loan


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I'm seeing more people pick up nice 125k boats on a 20+ loan.  Let's say your payment is 800 a year for 20 years.  In 10 years, how much will you owe and what will a 125K boat be worth?   It seems like the depreciation will pass the amount owed on 20 year loans.

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No one plans to keep them 20 years typically and probably not even 10.  So if you are purely looking at finances, look at interest paid vs resale value in 2-5 years.   

 

To answer you loan value question, just use any available amortization table available online.   May factors - amount put down and interest rate      .

 

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I don’t really know what the interest rates are on boats right now, but assuming you don’t put any money down on it and a 5.9% interest rate you’d owe around $80,000. Put any money down, and that amount will be less. Hard to say what depreciation will be. If the last 10 years are any indication of the next 10 years with the cost of new boats rising so much you’d probably still be ok. It doesn’t seem like the trend can continue at the same rate it has, but I have no factual data to back that up. 

Edited by cptotr
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12 minutes ago, rsutton1223 said:

best resale values

Wanna see resale value in a ski boat?  Check out the prices of older Ski Nautiques.  They are literally double the original price now. 

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1 hour ago, Eagleboy99 said:

Wanna see resale value in a ski boat?  Check out the prices of older Ski Nautiques.  They are literally double the original price now. 

Those have hit classic car status.

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When I bought my last boat dad said," why'd ya buy a boat... Wast of money" Dad, sometimes you have to "waste a little money"... 

Depreciation was less than 1k per year  100% happiness , I loose way more on car and trucks we buy and give ZERO!

Whitecap is right, make more money... Just don't do it when you should be on your boat🙂

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20 hours ago, Whitecap said:

For me........I can make more money - I can’t make more time.

Helluva comment for only 2 posts. You're like Jordan Peterson. No wasted words. :biggrin:
I love it. 

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Personally, I think you can spend 1/2 as much and have just as much fun.  Having a 100k+ boat is a want, not a need.  This is 100k, 5%, 20 yrs.  The real challenge is when the market takes a poop and you are stuck with a luxury item that's value will take an immediate hit.  Today the market is strong but try to sell that used boat when the market tanks.  I'd say you will be stuck with it initially (a bigger depreciation hit at first) but you might have a shot of catching up in the 5-10 year range ... IF we stay on the current trajectory.  I would say that we can't continue this trajectory but I've said that before and ....  ;) 

image.png.f03fa9acc493edf2055c21548a2afa3f.png

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So for those who are interested... On the theoretical 100K loan above, after 5 years, you still owe 83K, and you have paid almost 40K.  

The only places this makes any sense is the boat and home world.  And boats are probably subject to even more swings in value than homes.  

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It makes sense for a boat??  I home, I understand as it generally appreciates over time.  I highly doubt a 80K VTX will be selling for $150K in 20 years.  Also, I notice that loan uses  amortization.  That is not common here except for houses IME.

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This thread runs the risk of devolving into the annual "how'd you pay for your boat?" thread.  That always goes well!  :)

It is pretty bonkers how cheap money is right now.

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27 minutes ago, UWSkier said:

It is pretty bonkers how cheap money is right now.

This causes people to think "Maybe I should take a 100k/5%/20 year loan out on a boat":rofl: 

If you can't afford it, don't buy it. The only asset that anyone should finance is their house or something that will create a positive return like a rental property, a business etc. I think more boat consumers need to stop looking at the other fancy new boats at the lake/dealership and the trucks parked at the launch and only consider buying what they can with their own $$$.

Edited by jaciche
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1 hour ago, UWSkier said:

It is pretty bonkers how cheap money is right now.

Like Yogi Berra used to say "It's deja vu all over again".  Anyone remember the last crash?

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46 minutes ago, jaciche said:

This causes people to think "Maybe I should take a 100k/5%/20 year loan out on a boat":rofl: 

If you can't afford it, don't buy it. The only asset that anyone should finance is their house or something that will create a positive return like a rental property, a business etc. I think more boat consumers need to stop looking at the other fancy new boats at the lake/dealership and the trucks parked at the launch and only consider buying what they can with their own $$$.

 

Could not agree with this more.

I get boat envy at the ramp, just like everyone else.  We bought our LSV 3 years ago when it was 9 years old.  Paid cash.  Could I afford a payment on a new one?  Sure.  Will my family enjoy boating more in a new boat than in a used one?  Not one bit.

I've thought sometimes that having that cash tied up in the boat is dumb - should have put that capital into another rental property and make a boat payment instead.  Thought about that really hard.  But i went back to my financial fundamentals: don't make payments on things that are not essential, or that do not make money for me.   Plus, our boating season is 3 months long, so I'd be making a payment on something that is just taking up room in my shop 9 months out of the year, and that would make me crazy.  As it is, the boat costs us zero when it's not in use. 

I see the young guys at the lake with new trucks and new boats.  Easily $150k rolling down the road.  Probably $1500 in payments each month. If somebody wants to over extend themselves just to turn heads at the boat ramp, more power to them.  I was 25 years old (a few years ago...), my dad told me it was just like the arms race.  No matter what you get, there will always be somebody with something newer/bigger/shinier.  The key is to find something that YOU LIKE, does what you need, and you can afford. 

Dealers and salesmen are masters at blinding you to what you are actually spending.  They get you to think in the short term of 'cost per month' instead of looking at the longer term 'how much is this really costing me'.  They will tell you how the boats hold their value, how you can 'get your money back' after using it for a few years.  Yes, the boat will hold its value more than most other vehicles, but you are going to lose money, and a lot of it.  Factor in the interest paid on top of the depreciation, and it can be substantial.

Just my $0.02. 

 

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17 minutes ago, kylesullens said:

I get boat envy at the ramp

I still get a  kick out of people's reactions to my pristine 21 year old Response.   If nothing else, it gives my wife a chance to say I take better care of it than her! :)  (Not true of course!)  Would I like a new one?  Sure - two actually.  One pure slalom tug and a monster surf boat.  But there are more things in life than boats.

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On 6/30/2019 at 1:40 PM, Whitecap said:

No one plans to keep them 20 years typically and probably not even 10.”

Your view may not be true for all cases.  More than a few of us here, either live on the lake full time, or have a lake house that they use often.  Most likely that home will have a covered boat slip.  The boat that they buy will be an integral part of their children’s, grandchildren, and extended family’s development.  It will be one of the central focal points of the family.  “Family boat time!”

If you are going to buy and hold, a Malibu is a great boat for that.  Some members here will buy a five year old Malibu at a great discount, take great care of it, and help build their families memories around it.  They will also use it to teach safety, responsibility, accountability,  and to also teach those kids and grandkids how to take care of the family investment - another great life lesson to learn.  More than a few of us here, I’m guessing,  will buy a Malibu, treat her right, grow old with her, and hold on to her for a long time.

Buying a boat can be a horrible financial decision for a family.  Buying a boat can be a fantastic memory maker for a family.  (Everyone needs to find their own balance between family development and financial security. We are free to find that balance).

For me........I can make more money - I can’t make more time.

just my .02 cents.

It's the people that you are making memories with, not the boat.  So you could trade your boat in every year and still have all of the stuff that you described.

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4 hours ago, jaciche said:

This causes people to think "Maybe I should take a 100k/5%/20 year loan out on a boat":rofl: 

If you can't afford it, don't buy it. The only asset that anyone should finance is their house or something that will create a positive return like a rental property, a business etc. I think more boat consumers need to stop looking at the other fancy new boats at the lake/dealership and the trucks parked at the launch and only consider buying what they can with their own $$$.

Finance 101: foregone interest on cash, drives me crazy when people say "pay cash" like there is no cost associated with large cash purchases. Drop your purchase price with cash into a simple annual compounding calculator or excel and see the cost of "spending" cash. Even leaving your money in your banks saving account will result in some foregone return. Nothing is cost free.

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Finance 102 - compare forgone interest on cash sale to interest loan sale.  Add nonmonetary stuff like being able sleep at night when your income changes (baby, job, medical etc.)

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2 sides to the coin. First and foremost.. your money.. your decision. However... I have 4.5% financing on my boat for 12 years... My mutal funds have been paying out 10% annually... Leaving my money in market returns me 5.5% with the loss of the 4.5% interest. So I have growth in my money while I finance.

These are first world problems and different strategies by all. I had a friend by his boat on his credit card so he could get the points then payed it off... 

No matter what, if you enjoy it, use it, and keeps the family out of therapy... then probably a better form of money spent than giving to therapist.. that is my motto ;) 

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