The Price of a Boat
There are many ways the price of a boat is established. First you must eliminate data such as found in buyer’s guides. They seldom take real market data into consideration. Each boat sets it’s own price. The real value is set by:
- Supply and Demand
- Condition of the vessel
- Options and Electronics
- Engine Hours
- Seller’s Situation
- Marketing Strategies
You must also take into consideration the value of the boat to you. If this is your last boat and you plan on keeping it for a very long time, it will obviously be worth more. If this is a rung on the ladder to larger boats, the value may be less. Historically, Grand Banks owners who have kept their boats for a long period have made out very well when the time comes to sell. This is more true if a model is discontinued. Take the Grand Banks 32 for instance. The boat now sells for about the same price as it did when it left the factory.
Determining a Budget
You must first establish a budget. In addition to the offered price your budget should also include other pre-purchase expenses:
- Surveyor’s Fees
- Hauling the Boat
The pre-purchase expenses are not negotiable and are payable even should the deal not go through. It is a good idea to make your own careful inspection of the boat before incurring these expenses on a questionable boat. We often make pre-offer inspections for our clients alerting them to problems a surveyor may run into. Bear in mind that we are not surveyors, but we can spot potential problems which may cause a boat to fail a survey. The cost of having a yard spend an hour or so on inspections is relatively cheap.
You should also budget in after-purchase costs, such as documentation, insurance, etc. There will probably be some surveyor findings that should be attended to that are not covered by the seller.
Some shopping around will always pay off. There are many options to explore for “creative” financing.
Boat buyers have many choices when it comes to paying for their purchase, but an informed decision is always best. Securing a loan is fairly simple if you have a good credit history and can make a down payment, usually 20 percent of the boat’s total delivered price.
You may want to pre-qualify for a boat loan before you shop. That will give you some extra leverage and breathing room when you’re negotiating prices. Though you can get financing for boats 15 years or older-and boats needing a lot of repair-the rates may be higher than for newer boats.
Two points to consider:
- Interest expense paid on a loan secured by a boat may be deductible on your federal income tax return.
- The interest costs of a boat loan over the anticipated life may be considerably less than investment earnings on the same amount of money.
If you’re going to use your boat as a second home, you may be able to deduct the interest on your boat loan-as long as the boat meets certain standards, such as:
- Sleeping accommodations
- A galley
- A head
Marine insurance: How much does it cost?
Your costs depend on several factors, such as:
- How much boating experience you have
- Whether you have previous insurance claims
- What kind of navigational equipment your boat has
- Where you will use your boat and
- The boat’s value
Expect to pay more for insurance if you’re going to own a high-performance boat or a wooden boat, or if you will live aboard or cruise offshore.
And don’t forget to project what the maintenance costs will be on the boat over the years to come. The bigger the boat, the more you need to spend to maintain it.