Hoffmaster’s Marina strives to provide our customers with competitive and tailor-made financing packages using a wide range of lending sources.
Paying cash is paying too much
Boat buyers have many choices when deciding how to best pay for their purchase—but do they always make the right decision?
Here are some tips to help you determine if paying in cash is the wisest decision or whether you should consider financing your boat instead.
The preceding information was prepared by Gary Boudreau, Deloitte & Touche, LLP, Newport Beach, CA.
Should I finance?
In the example below it's easy to see that investment earnings can far exceed the cost of marine financing.
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 regarding your own personal tax situation. Content courtesy of National Marine Bankers Association.
What would my monthly payment be?
In other words, a $100,000 boat loan costs roughly $900/month.
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