Boat EconomicsBuying and Financing
Pay Cash or Finance the Boat?
See the interest cost of financing against whether paying cash would breach your own target reserve, the resilience question a pure cost comparison misses.
The cheaper path on paper isn't always the resilient one
Financing costs interest, that's straightforward. What a pure cost comparison misses is whether paying cash leaves you with enough left over to actually own the boat: reserve for repairs, storage, and the unexpected. This tool checks both sides together.
How this is calculated
Interest paid is the difference between the total financed cost and the sticker price at zero down. Reserve after a cash purchase is your available cash minus the price; if that drops below your stated target, it's flagged as a reserve breach regardless of which path costs less overall. The horizon cost comparison adds ownership cost across your horizon to both paths, crediting the finance path with the scenario value of the cash it lets you keep.
Worked example
A $30,000 boat against $40,000 cash available leaves $10,000 in reserve if paid cash, above a $5,000 target, so the reserve isn't the deciding factor. Financing at 6% over 84 months adds real interest cost on top, so cash wins here unless retained-cash return is set high enough to offset it.
Common mistakes
Focusing only on total interest cost and ignoring reserve impact can lead to a technically cheaper choice that leaves no cushion for the first real expense. The other mistake is assuming retained cash will earn a specific return; that's a scenario you're testing, not a promise.
Frequently asked questions
Why does this care about my reserve, not just cost?
A cash purchase that looks cheaper on paper can leave you without money for the first repair, storage bill, or emergency. This checks whether cash purchase would drop you below a reserve target you set, since that resilience question matters as much as total cost.
What is "retained cash annual return"?
An optional scenario: what you assume the cash you didn't spend could otherwise earn. It is not a market forecast or investment advice, just a number you supply to see how it changes the comparison.
Should I always finance if it protects my reserve?
Not automatically. This shows the trade-off, interest cost against reserve protection, so you can weigh it against your own risk tolerance; it doesn't make the call for you.