Sunday, March 2, 2008
Boat rental vs. buying
When comparing renting to buying a boat money becomes the biggest deciding factor. Here is a look at the specific costs associated with purchasing a competition wakeboard boat. Let’s take a 2008, Tige RZ2, manufactures suggested retailed price is $80,308.00. Let’s assume you are an excellent negotiator, and talk the sales rep. down $8,000, for a new purchase price of $72,308.00. Now, add in state sales tax (6.6% Utah) =$4772.32, property tax of Est. $320, and additional boat dealer processing fees $200.00: for a final purchasing price of $77,600.32 Assuming you have excellent credit and you secure a loan for 20 years, @ 7% interest, your payment will be $602.00 per month.
Next, let’s break the cost down yearly.
Monthly payments $602 x 12 months = $7224
Insurance = $450
Property tax = $320
Maintenance (winterization, oil changes, boat care products, etc.) =$500
Storage $100 per month x 12 months = $1200
For a grand yearly total of $9694.00
The average American uses their boat 14 days per year, so let’s divide $9694.00 by 14 to find our cost per day of $692.42 sound expensive yet? We have just started.
Now look at a three year window. Let’s assume you want a new boat in three years because, most of your warrantee has expired. Because your term is 20 years, very little of the $21,672 you paid has been applied to the loan. In-fact, only $3,997.18.has been paid towards principal.. You will still owe $73,603.14 after three years! Because boats depreciate an average of 30% or in our example $23,280, in the first three years your boat is now worth $54,320.00. Now get out of your upside down boat, you will have to come up with $19,283 cash.
Let’s look at your new cost per day with depreciation factored in. We previously figured your yearly cost at $9694.00, so we will times that by 3 years to get $29,082.00. Next, add in the amount your boat depreciated: $19,283 for a grand 3 year total of $48,365.00. Assuming you use your boat the average of 14 days each year, we will times that by 3 to get 42 days of total use for three years. Next divide $48,365.00 by 42 days to get your daily cost of $1,151.54.
Finally, we will look at your cost per day over 20 years, or the term of your boat. We determined your yearly cost to be $9694.00, so we will times that by 20 years for a total paid of $193,880.00 with $66,791.20 going to interest! Next, 14 days per year times 20 years = 280 days of use. So, we will divide $193,880.00 by 280 days of use for $692.42 per day! Sounds better than the $1152 per day that I showed you would have paid after three years, right? But remember your boat is now 20 years old and is not the sleek cutting edge boat you once had. Also we factored no maintenance cost into the equation (outside of the winterization and oil changes) you should plan on a big ticket item(and engine or tyranny) wearing out on ya over the 20 year term of the loan, remember we did not factor any of those costs! Ok, ok, so you told yourself you can store the boat at your house and you would not have to pay the $1200 annual storage fees, fine. But I did not include any money for toys that you will need to purchase to go along with your new boat. Figure on a minimum of $3000.00 dollars to get your boat set up with wakeboards, tubes, wake surfboards, water-skis, ropes, anchor, life jackets, wetsuits, etc. Remember that stuff becomes out-dated and wears out quickly, so you can factor that in annually or however you would like.
Still thinking of buying a boat? We currently rent a 2007 Tige RZ2 for as low as $490 per day! We store it, we registered, we maintain it, and we teach you how to use it. Give us a try.
This article may be reproduced without permission of the author with a valid link to website http://freedomrecreationrentals.com thanks for your interest.
Next, let’s break the cost down yearly.
Monthly payments $602 x 12 months = $7224
Insurance = $450
Property tax = $320
Maintenance (winterization, oil changes, boat care products, etc.) =$500
Storage $100 per month x 12 months = $1200
For a grand yearly total of $9694.00
The average American uses their boat 14 days per year, so let’s divide $9694.00 by 14 to find our cost per day of $692.42 sound expensive yet? We have just started.
Now look at a three year window. Let’s assume you want a new boat in three years because, most of your warrantee has expired. Because your term is 20 years, very little of the $21,672 you paid has been applied to the loan. In-fact, only $3,997.18.has been paid towards principal.. You will still owe $73,603.14 after three years! Because boats depreciate an average of 30% or in our example $23,280, in the first three years your boat is now worth $54,320.00. Now get out of your upside down boat, you will have to come up with $19,283 cash.
Let’s look at your new cost per day with depreciation factored in. We previously figured your yearly cost at $9694.00, so we will times that by 3 years to get $29,082.00. Next, add in the amount your boat depreciated: $19,283 for a grand 3 year total of $48,365.00. Assuming you use your boat the average of 14 days each year, we will times that by 3 to get 42 days of total use for three years. Next divide $48,365.00 by 42 days to get your daily cost of $1,151.54.
Finally, we will look at your cost per day over 20 years, or the term of your boat. We determined your yearly cost to be $9694.00, so we will times that by 20 years for a total paid of $193,880.00 with $66,791.20 going to interest! Next, 14 days per year times 20 years = 280 days of use. So, we will divide $193,880.00 by 280 days of use for $692.42 per day! Sounds better than the $1152 per day that I showed you would have paid after three years, right? But remember your boat is now 20 years old and is not the sleek cutting edge boat you once had. Also we factored no maintenance cost into the equation (outside of the winterization and oil changes) you should plan on a big ticket item(and engine or tyranny) wearing out on ya over the 20 year term of the loan, remember we did not factor any of those costs! Ok, ok, so you told yourself you can store the boat at your house and you would not have to pay the $1200 annual storage fees, fine. But I did not include any money for toys that you will need to purchase to go along with your new boat. Figure on a minimum of $3000.00 dollars to get your boat set up with wakeboards, tubes, wake surfboards, water-skis, ropes, anchor, life jackets, wetsuits, etc. Remember that stuff becomes out-dated and wears out quickly, so you can factor that in annually or however you would like.
Still thinking of buying a boat? We currently rent a 2007 Tige RZ2 for as low as $490 per day! We store it, we registered, we maintain it, and we teach you how to use it. Give us a try.
This article may be reproduced without permission of the author with a valid link to website http://freedomrecreationrentals.com thanks for your interest.
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