pay cash or finance
manix
sport fisherman and am ready to make the plunge into buying a boat. as i
will be posting questions here fairly often because i can think of no better
way of getting info on something than by hearing from the horse's mouths
as opposed to salespeople ), i would like to ask about paying cash for my
boat vs. financing. i was surprised when the salesman told me that many
people finance boats for upto 15 years. that astounded me. the boat i would
like to get is approx. $42000. i was thinking of paying cash or making a
substantial downpayment so as to not have to have lifetime payments. is this
reasonable? are there tax implications for financing a boat ( the one i am
considering has no cubby )? also if i do pay cash should i expect to get a
discount? should i attempt to haggle with the salesperson. is this like
buying a car? just to give you all some insight when i buy a big ticket
item, i sometimes make up my mind not to haggle because i just hate the
whole process - it is almost as if i resign myself to get ripped off.
any help will surely be appreciated. when i finally complete the transaction
i will repost here to tell of my experiences.
thanks for anyhelp anyone can provide.
John
manix wrote in message <#Ase3Yhh$GA.284@cpmsnbbsa04>...
>.....i would like to ask about paying cash for my
>boat vs. financing.
Generally speaking, if you have a berth, galley, and head, you can
consider it a second home for tax purposes, rendering the loan
interest deductible. JG
Capt Lou
You say the boat you want to buy has no "cubby" - just for the record you mean
no cuddy cabin. So if it has no cuddy, it has no sleeping quarters, no cooking
facilities, and maybe no head (bathroom), so it would not qualify with the IRS
as a second home. That means that interest on the loan is not deductible for
this boat.
As far as financing the boat, the only question you have to ask yourself is
"can you make more with your money than what it will cost you to borrow it." If
the answer is yes, than finance your purchase. If it is no or if you are not
sure, then pay cash for the boat! Many people feel you shouldn't finance your
toys, and a rule of thumb is that you shouldn't spend more than 10% of your net
worth for a boat! I think I blew those rules of thumb many boats ago!
As far as getting a better price from the dealer based on whether you finance
the purchase or pay cash.............think about it. The dealer gets the cash
whether it comes from you or the bank! Sometimes, the dealer will make more if
he or she arranges the financing.
If you have any more questions, please write each one of them down on a $20
bill and send them to PO Box 635, Cohasset, MA 02025.
Capt Lou of "Nautical Talk Radio" heard every Sunday morning 8 - 9 on WPRO
630AM serving Rhode Island and every Sunday afternoon from 4 - 5 on WATD
95.9FM serving Massachusetts.
fishwisher
tho I have done so in times past. I own my toys outright, and in this sixth
decade of my life, I wouldn't make payments. Some say invest the money and
get a loan and you'll be ahead. Yeah...and if anything unexpected (market
dive, poor health, etc) happens you are still in debt.
If your boat has "living" quarters, to make it as a second home, I think you
can still deduct interest. If not, a second on your home to pay for the boat
would probably do the trick for deductions, but I'm no tax expert.
Have fun, you are beginning the 2nd best part of boat ownership.....shopping
for one.
--
Dale Gillespie
Boating and fishing the Californiadelta(.org)
manix <FIT...@email.msn.com> wrote in message
news:#Ase3Yhh$GA.284@cpmsnbbsa04...
Larry W4CSC
That way you get to test out your new boat, HOLDING ALL THE CARDS,
until you know for sure it's not a mistake. If you just hand them
cash, THEY are holding all the cards and don't have to care if you
like it or not.
Larry....
On Sat, 4 Mar 2000 15:12:54 -0500, "manix" <FIT...@email.msn.com>
wrote:
Harry Krause
>
> hi guys. i am new to this ng. i am also new to sportboating. i am an avid
> sport fisherman and am ready to make the plunge into buying a boat. as i
> will be posting questions here fairly often because i can think of no better
> way of getting info on something than by hearing from the horse's mouths
> as opposed to salespeople ), i would like to ask about paying cash for my
> boat vs. financing. i was surprised when the salesman told me that many
> people finance boats for upto 15 years. that astounded me.
Many people do indeed do that, and a lot of them come to regret it, too.
Usually a boat depreciates, and fairly rapidly, too. If you finance a
boat for a long term, you probably will reach a point where what you owe
on the boat is a larger amount than what the boat would fetch on the
resale market. This is not a good position to be in, as you probably
know.
the boat i would
> like to get is approx. $42000. i was thinking of paying cash or making a
> substantial downpayment so as to not have to have lifetime payments. is this
> reasonable?
Pay cash if you can. You won't regret it.
are there tax implications for financing a boat ( the one i am
> considering has no cubby )?
If your boat has certain amenities, such as those you might find in a
condo (cooking facilities, bed, toilet, et cetera), you can write off
the interest.
also if i do pay cash should i expect to get a
> discount?
No. Just the opposite. Dealers get a kickback off of financing. But you
should get a discount off the "MSRP" no matter what. No one pays sticker
price for a boat. Or, I should say, no one should.
should i attempt to haggle with the salesperson. is this like
> buying a car?
Absolutely. If the dealer wants $42,000, and that isn't MSRP, offer
$35,000. Compromise at $38,000. If $42,000 is MSRP, offer $32,000 and
compromise at $35,000. Roughly. Your mileage may vary.
Play hard ball. The dealers do. If you don't, you are a sap.
--
Harry Krause
------------
If you didn't get caught, did you really do it?
John
<20000304172446...@ng-ba1.aol.com>...
>
>, and a rule of thumb is that you shouldn't spend more than 10% of
your net
>worth for a boat!
Holy Smoke!! I paid cash for my boat when I had the cash, and now my
boat IS my net worth!! JG
manix
> sport fisherman and am ready to make the plunge into buying a boat. as i
> will be posting questions here fairly often because i can think of no
better
> way of getting info on something than by hearing from the horse's mouths
> as opposed to salespeople ), i would like to ask about paying cash for my
> boat vs. financing. i was surprised when the salesman told me that many
would
> like to get is approx. $42000. i was thinking of paying cash or making a
> substantial downpayment so as to not have to have lifetime payments. is
this
> considering has no cubby )? also if i do pay cash should i expect to get
a
SJ
You can always haggle.............money talks & sh%t
walks..............start with knocking off about 15 to 20% & see
where it goes........can't hurt to try saving some cash.
as far a financing goes, get a conventional loan for as long or short
a term as you like.
42000 for your first boat...........wow, thats a big step. I purchased
a used boat for my first ride. I knew I liked the water, but wasn't
sure how much I would like boating. I paid 3,500 cash for the boat &
enjoyed the heck out of it. The following season I bit the bullet &
bought the new boat I had originally wanted. Not before making damn
sure I wanted to continue boating.
be careful, you know what they say.............there are only 2 happy
days in a boat owners life.............the day he buys it, and the day
he sells it.
good luck with your purchase :)
sj
On Sat, 4 Mar 2000 15:12:54 -0500, "manix" <FIT...@email.msn.com>
wrote:
>hi guys. i am new to this ng. i am also new to sportboating. i am an avid
Tyrus
else, pay cash. I personally wouldn't finance a boat unless it truly
was a second home and I was going to keep it for 10 or more years...
or maybe finance the extra amount needed if I wanted to get something
a bit larger than I could otherwise.
As for haggling, check into Marine Max... they have gone to a
pre-negociated price on their boats. Although, everything is
negotiable... always.
But even when you get the price settled, you can ALWAYS get the dealer
to throw in stuff to "close the deal" such as extra canvas, misc
equipment and accessories, maybe some skis or electronics, or at the
very least some cool hats, tshirts or jackets... just ask.
On Sat, 4 Mar 2000 22:22:39 -0500, "manix" <FIT...@email.msn.com>
wrote:
>thank you all. great advice.
>manix <FIT...@email.msn.com> wrote in message
>news:#Ase3Yhh$GA.284@cpmsnbbsa04...
JDavis1277
The key phrase in the question asked is "I am new to sportboating". That,
combined with his impulse to buy a 42 footer, should raise some flags.
The real question is not if he should pay cash or finance, but if he should
consider buying a 42 footer as his first "sportboat", whatever that may be.
If he has $42K sitting around for a discretionary purchase he should do a
couple of things before buying a 42 foot boat about which he seems to know
little.
The $42K should return ~$4K per year. For $8K he could charter several
sportfishing rigs over a couple of years and find out if he really wants to
buy, maintain, insure, moor, and sometimes use that size boat. IMO, if he is
hot to be an owner, he should consider a much smaller, USED, trailerable boat
to use for a couple of years. Then he should have a much better idea of what
getting into a 42 footer involves.
As to the base issue, he should take the question to an accountant. No one on
rec.boats knows his financial and tax liability situation to the degree
required to make a recommendation.
Butch
WPROcaptainLou
footer!
Rhode Island and Massachusetts listens to "Nautical Talk" with Captain Lou
heard every Sunday morning between 8 - 9 on radio station WPRO 630AM.
JDavis1277
Sorry. Engaged fingers before brain.
Butch
Capt Lou wrote: >Where did you read a 42 footer. I think $42,000 today will
Peggie Hall
for a boat. The size of the boat was never mentioned.
Peggie
Peggie Hall
>
> Where did you read a 42 footer. I think $42,000 today will buy a nice 22
> footer!
Oh...I dunno, Lou. Depends upon whether you gotta have a new boat or
would rather let somebody else take the first 2-5 years depreciation
hit. :-) 25-45% of $42k is a lot to pay for a new boat warranty.
Peggie
Ted Campanelli
3% return on my money against financing (ie. invested money returns 9%, loan is
11%), I will use someone else's money. I can always pay it off later if I want
to.
Joseph Tyson
Ted Campanelli <tc...@unidial.com> wrote in message
news:38F639D0...@unidial.com...
> Depends on the return you can get on your money. IMHO, if I can get
within 2 -
> 3% return on my money against financing (ie. invested money returns 9%,
loan is
> 11%), I will use someone else's money. I can always pay it off later if I
want
> to.
And make Uncle Sam your partner while you're at it.
--
Joseph Tyson
jty...@iname.com
Bellport, Long Island
Dudley Cornman
> Depends on the return you can get on your money. IMHO, if I can get within 2 -
> 3% return on my money against financing (ie. invested money returns 9%, loan is
> 11%), I will use someone else's money. I can always pay it off later if I want
> to.
If you can pay cash comfortably... I'd probably pay cash. Without any
payments your pile will build back up farily quickly. Just my opinion.
Many people prefer to finance it. I just hate another monthly payment,
expecially if it is large.
dsc - acssysdsc
Karl Denninger
Joseph Tyson <wwm...@banet.net> wrote:
>
>Ted Campanelli <tc...@unidial.com> wrote in message
>news:38F639D0...@unidial.com...
>within 2 -
>> 3% return on my money against financing (ie. invested money returns 9%,
>loan is
>> 11%), I will use someone else's money. I can always pay it off later if I
>want
>> to.
>
>
>--
>Joseph Tyson
>jty...@iname.com
>Bellport, Long Island
Yes.
If you're going to finance, then you absolutely want the boat to qualify
as a second residence. That cuts the effective interest rate by whatever
your marginal tax bracket is.
--
--
Karl Denninger (ka...@denninger.net) Internet Consultant & Kids Rights Activist
http://www.denninger.net Cost-effective solutions on the Internet
http://childrens-justice.org Working to protect children's rights
Karl Denninger
Dudley Cornman <acss...@acs.eku.edu> wrote:
>In article <38F639D0...@unidial.com>, Ted Campanelli <tc...@unidial.com> writes:
>> 3% return on my money against financing (ie. invested money returns 9%, loan is
>> 11%), I will use someone else's money. I can always pay it off later if I want
>> to.
>
>payments your pile will build back up farily quickly. Just my opinion.
>Many people prefer to finance it. I just hate another monthly payment,
>expecially if it is large.
>
>dsc - acssysdsc
You have to look at the opportunity cost of borrowing.
Let's say you have $500,000 and want to buy a $200,000 boat.
Let's further say you can make 10% in the market on that $500,000.
In the first year, if you finance, you will make $50,000. If you pay
cash, you will make $30,000 (since you took $200k off the table). Your
investment cost for depleting the cash is $20,000.
Now, if you finance, you have a $200,000 liability on your personal
balance sheet, and a nearly $200,000 asset (which depreciates, of course).
Let's ASSUME that there is no depreciation hit on the boat (which we of
course know is bullshit, but let's play that one for a minute). The
question thus becomes:
Will I pay more than $20,000 in INTEREST and COSTS over the year
on that $200,000 loan, INCLUDING the tax give-backs (assuming it
qualifies as a second residence, which that boat would)?
The bad news, however, is that its not that simple. Earnings compound.
That is, if you have the $500,000, and earn 10%, the first year you earn
$50,000. The SECOND year you earn $55,000, since your BASIS is now
$550,000.
That compounding loss is very, very hard to recover. When you add in the
depreciation on that $200,000 boat to the negative side of the equation
it makes even less sense to fork up the big check.
I prefer to pay cash for SOME big-ticket items. A boat is a tougher call
than a house, since a house almost always appreciates and as such you're
not *losing* your investment basis - you're just shifting assets from one
area to another.
With a boat, since most depreciate significantly, it gets much tougher
to call. I'd be inclined to finance a big boat purchase if I could get
a competitive interest rate far more than I am a house for the explicit
purpose of protecting the compound appreciation in my asset base as a
whole and attempting to offset the depreciation with that asset growth.
Jakdawak
Joseph Tyson <wwm...@banet.net> wrote:
>
>Ted Campanelli <tc...@unidial.com> wrote in message
>news:38F639D0...@unidial.com...
>within 2 -
>> 3% return on my money against financing (ie. invested money returns 9%,
>loan is
>> 11%), I will use someone else's money. I can always pay it off later if I
>want
>> to.
>
>
>--
>Joseph Tyson
>jty...@iname.com
>Bellport, Long Island
Yes.
If you're going to finance, then you absolutely want the boat to qualify
as a second residence. That cuts the effective interest rate by whatever
your marginal tax bracket is.
--
--
Karl Denninger (ka...@denninger.net) Internet Consultant & Kids Rights Activist
http://www.denninger.net Cost-effective solutions on the Internet
http://childrens-justice.org Working to protect children's rights
I agree with you Karl but don't you still have to pay taxes on the interest
income from the cash you invested? I thought that the two would cancel
eachother out. Say you are in the 28% tax bracket and had $2000 in write offs
for a second home on the boat. You'd get back 28 cents on the dollar. If you
made $2000 in interest you'd pay 28 cents on the dollar. Since you normally
would put the cash in something safe and fixed you could not get the same rates
and would hopefully have to pay only 1-3 % for keeping the cash. Good advise
incase anyhting ever happens. I know that I can now get a fixed rate for 5
years on a CD for 8.1% and just found out my rate for a new boat is going to be
8%. Good new for me. Jak
Rick and Lisa Marinelli
>n article <38f71...@news1.prserv.net>,
>Joseph Tyson <wwm...@banet.net> wrote:
>>
>>Ted Campanelli <tc...@unidial.com> wrote in message
>>news:38F639D0...@unidial.com...
>>> Depends on the return you can get on your money. IMHO, if I can get
>>within 2 -
>>> 3% return on my money against financing (ie. invested money returns 9%,
>>loan is
>>> 11%), I will use someone else's money. I can always pay it off later if I
>>want
>>> to.
>>
>>And make Uncle Sam your partner while you're at it.
>>
>>--
>>Joseph Tyson
>>jty...@iname.com
>>Bellport, Long Island
>
>Yes.
>
>If you're going to finance, then you absolutely want the boat to qualify
>as a second residence. That cuts the effective interest rate by whatever
>your marginal tax bracket is.
If your choice of boat doesn't qualify as a second residence, the same
tax advantages can be accomplished by using a home equity loan.
Rick Marinelli
rickandlisadel...@erols.com
'99 Cobalt 226
Joseph Tyson
> If your choice of boat doesn't qualify as a second residence, the same
> tax advantages can be accomplished by using a home equity loan.
It's tough to find a boat that can't be made to conform with IRS letter
ruling on second residence.
Rick and Lisa Marinelli
wrote:
>
>> If your choice of boat doesn't qualify as a second residence, the same
>> tax advantages can be accomplished by using a home equity loan.
>
>It's tough to find a boat that can't be made to conform with IRS letter
>ruling on second residence.
>
Seems to me it has to have cooking and sanitation facilities. Does a
portapotty, water bucket and hibachi fulfill the requirement?
Joseph Tyson
Rick and Lisa Marinelli <rickandlisadel...@erols.com> wrote in
message news:38f8bc21....@news.erols.com...
YES
Jakdawak
> wrote:
>
> >
> >> If your choice of boat doesn't qualify as a second residence, the same
> >> tax advantages can be accomplished by using a home equity loan
Problem with that though is boat loans are usually cheaper by a 1/4 to 1/2% or
sometimes more. But I guess if its a center console and you really need a write
off, a home equity is what you need to do. But usually the difference in rates
will offset the advantage of the write off. Jak
Dudley Cornman
>>as a second residence. That cuts the effective interest rate by whatever
>>your marginal tax bracket is.
>
I'm not too crazy about putting my house up to buy toys...
dsc - acssysdsc
Joseph Tyson
Jakdawak <jakd...@aol.com> wrote in message
news:20000417100851...@ng-ce1.aol.com...
> Joseph Tyson" <wwm...@banet.net>
> > wrote:
> >
> > >
> > >> If your choice of boat doesn't qualify as a second residence, the
same
>
> Problem with that though is boat loans are usually cheaper by a 1/4 to
1/2% or
> sometimes more. But I guess if its a center console and you really need a
write
> off, a home equity is what you need to do. But usually the difference in
rates
> will offset the advantage of the write off. Jak
Jak - Please be careful with thw quoting. I didn't write the lines that you
have attributed to me.
Thanks.
Michael J Porter
Joseph Tyson <wwm...@banet.net> wrote:
=>
=>Rick and Lisa Marinelli <rickandlisadel...@erols.com> wrote in
=>message news:38f8bc21....@news.erols.com...
=>> On Sat, 15 Apr 2000 08:19:18 -0400, "Joseph Tyson" <wwm...@banet.net>
=>> wrote:
=>>
=>> >
=>> >> If your choice of boat doesn't qualify as a second residence, the same
=>> >> tax advantages can be accomplished by using a home equity loan.
=>> >
=>> >It's tough to find a boat that can't be made to conform with IRS letter
=>> >ruling on second residence.
=>> >
=>>
=>> Seems to me it has to have cooking and sanitation facilities. Does a
=>> portapotty, water bucket and hibachi fulfill the requirement?
=>>
=>> Rick Marinelli
=>> rickandlisadel...@erols.com
=>> '99 Cobalt 226
=>
=>YES
If the boat is marginal in this regard, then the best bet is to
*use* it as a second home. Go out a number of weekends and stay
overnight. If you don't raft up with the same people most of the
time (who could provide a statement that you do use the boat as a
second home), then keep a log book. Obviously you could forge a
log book, but if you get caught, you've got real problems.
Mike
--
===
Mike Porter <mi...@udel.edu>
PGP Fingerprint: F4 AE E1 9F 67 F7 DA EA 2F D2 37 F3 99 ED D1 C2
Curtis CCR
"Joseph Tyson" <wwm...@banet.net> wrote:
>
> Jakdawak <jakd...@aol.com> wrote in message
> news:20000417100851...@ng-ce1.aol.com...
> > Joseph Tyson" <wwm...@banet.net>
> > > wrote:
> > >
> > > >
the
> same
> >
> > Problem with that though is boat loans are usually cheaper by a 1/4
to
> 1/2% or
> > sometimes more. But I guess if its a center console and you really
need a
> write
> > off, a home equity is what you need to do. But usually the
difference in
> rates
> > will offset the advantage of the write off. Jak
>
> Jak - Please be careful with thw quoting. I didn't write the lines
that you
> have attributed to me.
> Thanks.
I agree that the above was a bit sloppy, but the attribution marks shows
that he was quoting something you quoted.
Sent via Deja.com http://www.deja.com/
Before you buy.
Jakdawak
sit corrected. JakIn article <38fb3...@news1.prserv.net>,
Joseph Tyson
Curtis CCR <curt...@netscape.net> wrote in message
news:8dl6r0$ea8$1...@nnrp1.deja.com...
<snip>
> I agree that the above was a bit sloppy, but the attribution marks shows
> that he was quoting something you quoted.
The attribution marks were mine. They do not appear in the original post. In
fact, see Jak reply to your post.