# Boat Loan Calculator Article byHarsh Katara ## Boat Loan Calculator

A Boat Loan similar to a vehicle loan wherein the purchaser can make a down payment and pay the rest of the amount through a loan, and this calculator will exactly let you know the amount of installment to be paid by the purchaser.

#### Boat Loan Calculator

(L * r *(1+r)n*F )/ ((1+r)n*F-1)

Wherein,
• L is the Amount borrowed.
• r is the interest rate per annum.
• n is the number of periods for a loan will be outstanding.
• F is the frequency wherein the loan amount is to be repaid.
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The formula for calculating Boat Loan as per below:

(L * r * (1+r)n*F )/ ((1+r)n*F-1)

Wherein,

• L is the Amount borrowed
• r is the interest rate per annum
• n is the number of periods for a loan will be outstanding
• F is the frequency wherein the loan amount is to be repaid

One of the major investment ones can make a boat. For example, in the united states, 22-foot sailboat can cost around \$25,000, and further, the cost can vary across a choice of the boat also. Further, one needs to fully understand how the costing of the boat works as along with the cost of keeping it. There is another cost associated with a boat like the initial taxes applicable on the same, then mooring fees, fuel cost, winter storage fees (if applicable), etc. Insurance could also be an added cost. Hence, one should do deep research on the same before buying the boat, and most of them can also be financed by the bank. One can make an initial down payment as per their capability and get the rest of the price financed by the bank. Again, banks provide finance on the basis of the credit rating applicable to them, and hence one needs to also maintain their credit score.

### How to Calculate a Boat Loan Installment?

One needs to follow the below steps in order to calculate the installment amounts for the boat loan.

Step #1 – Firstly, determine the boat that one wants to purchase and the price of the same along with the percentage of the loan that will be financed by the bank and the same would be the loan amount:

Step #2 – Now, one needs to multiply the loan amount by the applicable interest rate.

Step #3 – Compound the periodical interest rate by the frequency of the interest payout.

Step #4 – Discount the value arrived in step 3 by following (per given in the formula):

Step #5 – After entering the above formula, one will get the installment amount that shall be repaid for the Boat Loan borrowed.

You can download this Boat Loan Calculator Excel Template here – Boat Loan Calculator Excel Template

### Example #1

Mr. Tim, a Delaware resident, wants to buy a motorboat, which is costing around \$35,000. On inquiry with the dealer, Mr. Tim got to know that he would also be liable to pay taxes, insurance on the same. The cost of insurance will be 5% of the cost, and taxes applicable would be 7% of the cost price. Since he doesn’t have that many funds in hand, hence decides to borrow a loan from the bank. The bank is financing him 90% of the total cost of the boat, and the rest will be paid by him upfront to the dealer. He chooses installment for 36 months equal installment. The Interest rate that the bank is charging is 10%, and there are 2% upfront processing charges on the sanctioned amount.

Based on the above information, you are required to calculate the monthly installment amount of the boat loan and calculate the total interest outflow.

Solution:

We need to calculate the cost price of the boat.

Now, we need the loan amount, which will be 39,200 *90%, which is 35,280.00. There is 2% of the Processing fees of the sanctioned loan amount, which will be paid upfront, which is \$705.60. Lastly, the down payment by Mr. Tim will be 39,200 – 35,280.00, which is \$3,920.00, which is 10% of the cost price

The loan period repayment is 24 equally installments, and further, the interest rate is 10.00% fixed, which shall be compounded monthly, which is 10.00%/12, which is 0.83%.

Now we shall use the below formula to calculate the EMI amount.

EMI = (L * r *(1+r)n*F )/ ((1+r)n*F-1)
• = (\$35,280.00 * 0.83% * (1 + 0.83%)^36 ) / ( (1 + 0.83%)^36 – 1 )
• = \$1,138.39

Therefore, the installment amount for Mr. Tim for next 3 years on the loan amount \$35,280 shall be \$1,138.39 and when multiplied same with 36 the total amount repaid will be \$40,981.91 less \$35,280.00 which equals to \$5,701.91 and total cash outflow due to a loan will be \$5,701.91 + \$705.60 which is \$6,407.51.

### Example #2

Mrs. Pooja is seeking to purchase a new boat and is looking the same to be financed by a bank. The total cost of the vehicle is \$40,8000, which includes all. The Bank will grant a loan to the tune of 80%, and the rest will be repaid upfront by her. However, she is unsure as to what tenure she would choose as her goal is to keep her monthly cash outflow lower than \$1,300 and, she is not ready to pay any cumulative interest amount throughout the loan period more than \$8,000. The interest rate that the bank shall charge her will be 11.00%. The Bank can grant her repayment period either for 36 months or 48 months.

Based on the given information, you are required to advise Mrs. Pooja as to what should she do?

Solution:

We need to calculate the installment amount that will be paid monthly basis; for that first, we need to know the amount of the loan, which is \$40,800 * 80%, which is \$32,640.00. The interest rate given is 11.00% fixed, and its compounded monthly that will be 11%/12, which is 0.92%.

Now, using the below formula to calculate the installment amount for 36 months.

EMI = (L * r * (1+r)n*F) / ((1+r)n*F – 1)
• = (\$32,640 * 0.92% * (1 + 0.92%)^36) / ( (1 + 0.92%)^36 – 1 )
• = \$1,068.59

Total interest outflow will be equal to (\$1,068.59 * 36) – \$32,640 which is \$5,829.30.

Again, using the same formula, we will calculate the installment amount for 4 years, which is 48 months.

EMI = (L * r * (1+r)n*F) / ((1+r)n*F– 1)
• = (\$32,640 * 0.92% *(1 + 0.92%)^48) / ( (1 + 0.92%)^48 – 1)
• = \$843.60

Total interest outgo equals to (\$843.60 * 48) – \$32,640 which is \$7,852.70

Advice: Since her preference is to not pay cumulative interest more than \$8,000 in entire loan duration and for that, both are meeting her requirements and her second requirement is that installment amount should be lower and not more than \$1,500 which only second option is preferable, and she should opt for 48 months.

### Conclusion

Boat loans need to design in such a way that total outflow is not that big since the cost of the same is already huge. Boat involves a lot of expenses after acquiring them like fuel expenses, storage expenses, etc. and hence one should try to keep as low as possible.

### Recommended Articles

This has been a guide to the boat loan calculator. Here we discuss how to calculate the amount of installment to be paid by the purchaser using a boat loan calculator along with examples. You may also take a look at the following useful articles –