For all sailors and other sailing enthusiasts, sailing is one of the hobbies that are part of their lifestyle. For that reason, more and more people want to learn how to sail, but also to buy their own boat so that they can take matters into their own hands and sail on their own.
Buying a boat instantly with cash might be difficult, but no worries because you can apply for a loan to buy a new boat!
What is Boat Loan Calculator?
The boat loan calculator will help you to calculate how much money you will need to pay each month for your boat loan. It can show you all loans that match your query. You no longer need to visit banks and collect data that is difficult to compare. Also, it will save you a lot of money.
Validation of the application may take some time. But with this calculator, you will at least save 15 minutes when it comes to calculating everything you need and also organizing your finances.
What’s the Formula?
Boat Loan = ( Loan * Rate/12 * ( 1 + Rate/12) ^ (n * 12)) / ((1 + Rate)^(n*12) – 1)
With regard to the loan fee, the conditions will vary depending on the age and price of the boat. Some may create special conditions on how you need to pay and what the subscription will be. In any case, the loan requires a little research, but it can still help you when you need to buy the boat you have always wanted.
You need to determine the loan amount, choose the duration, and arrange the initial deposit with your lender. Be sure to find a bank that has the monetary flexibility to offer you good terms.
For your loan selection, enter the required loan amount for the boat, currency, desired term (n = number of years), as well as the interest rate, and with just one click you will get your monthly payment.
Here is an example of the boat loan formula:
Let’s say Mr. John wants to buy a boat and take out a loan of $1000. He agreed to a 5% interest rate per annum and 5 years period. Using formula will bring us to:
Boat loan = (1000 * 5/12 * (1 + 5/12) ^ (5 * 12)) / ((1 + 5) ^ (5*12) – 1),
After which we will get that Mr. John’s monthly payment will be $18.87.
Where to Start?
From the very beginning, you should have a good idea of what your initial budget will be. Make sure your budget covers all the necessary equipment that may not be included in some of the boat specifications, which is included in your shortlist.
Size matters! It is vital to keep in mind that not only does the initial purchase cost usually increase with the size of the boat, but also marina fees, maintenance costs, fuel consumption, lifting, and lowering, will all increase as the size of the yacht climbs. If you want to engage in the charter, do not forget about the cost of certification and permits.
To keep everyone involved in the purchase happy, be open about your financial situation from the beginning. Whether you will use the finances or it is a cash purchase, it is important that the availability of funds is subject to any external factors (selling a house, etc.).
Why Are Your Finances Important When It Comes to Boat Loans?
Personal finances are often the major factor in deciding whether to buy a new or used boat. If you need finances, make sure you contact the financial house in time, as the money must be available when you are done. Always have your written boat loan approval confirmation with you when you are making a deal. You may like the appraisal of the boat, but your bank may not be so thrilled. Your purchase depends on a bank being happy with everything.
Using the capital of your home can be a way to finance your boat. It depends on whether you already have the capital or not. This is known as the Home-Equity Credit Line (HECL), where you repay your boat loan in scheduled installments. Loan fees are supposed to remain low.
A few homeowners may have homes that are worth more than they owe. This added value can be used to pay for your dream boat. Before initiating the application process, make sure you have equity in your home.
Most sellers and agents require 10% cash for a new boat, but a nominal deposit (1%) should be enough for the agent to make a contract. The seller is generally entitled to retain all or part of the deposit in the event that the buyer withdraws without a valid reason.
Are There Other Costs?
The price of the boat and the repayment of the loan with interest, if you have it, are predictable because the cost of ownership of the boat is usually obvious. But hidden costs can ruin your enjoyment if you don’t think ahead and prepare for them. These include costs that you will pay once, or multiple costs such as marina prices, property taxes, maintenance, insurance, etc.
Cosmetic defects caused by time as well as wear and tear are difficult to hide if the ship has not been properly maintained, but structural defects and mechanical problems are much harder to detect. Ask the owner or his mechanic for a list of services and repairs. Has the boat been inspected in detail? Also, the owner of a new boat can run into unexpected problems. Sellers know that dozens of problems, small or large, can arise with each new boat they sell.
Keep in mind that the annual costs of use, maintenance, and repair can be up to 10% of the total value of the boat. Age, use, hull material, quality, and construction are all the things that contribute to the annual costs. These are costs that you will need to inspect and are not part of the boat loan calculator. So be careful and choose wisely before buying the boat of your dream!