Financing your purchaseThe preceding information was prepared by Gary Boudreau, Deloitte & Touche, LLP, Newport Beach, CA.
Investment Earnings vs. The Cost of Marine Financing
In this particular case we are assuming a rate of 8.5% fixed for 20 years on a loan of $100,000, requiring a monthly principal and interest payment of $867.82. The interest cost of this loan over an anticipated life of 60 months is $40,196.30. If you are in the 30% tax bracket, this interest expense deduction will save you $12,058.91, effectively reducing the cost of the loan to $28,137.39.
This same $100,000, if invested earning 9%, would grow to $137,703.68 (after tax) in the same time period. Tax-free municipal bonds yielding 6% could earn $34,885.02 over 60 months. More aggressive investments could obviously make earnings even more attractive. It's easy to see how financing your yacht could cost you less.
NOTE: The above example was developed to help explain the advantages of marine financing and is not a guarantee of what is available in the market at any particular time. Please consult with your financial advisor about your own personal tax situation. Content courtesy of National Marine Bankers Association.