A person takes a loan to buy a boat when he doesn’t have enough money to pay for it upfront. He uses the loan money to pay for the boat and then repays the loan installments every month along with interest for the entire loan term.
It is all very well to take the loan when one is unable to finance the purchase from one’s own funds. But there are some who take a boat loan even when they can afford to buy a boat without borrowing. They do this because they feel that taking a loan and then paying it off would be more profitable. This is not true most of the time. This is because by the time they are finished with the loan, the boat would have lost much of its value. So they would have paid much more than the boat value.
The worth of the boat after the loan is paid off, depends on various factors.
As a boat ages, its value keeps falling at a faster pace. So if the tenure of the boat is very long, say 15 to 20 years, the value of the boat at the end of the loan term would be only a fraction of the total boat loan repaid with interest.
The value of the boat is also dependent on how it has been used and how often. If the boat has been put to rough use frequently, it would adversely affect the worth of the boat. So at the end of the repayment period, the boat would have lost much of its value.
How the boat has been maintained by the owner also affects the value of the boat. If special care has been taken- if the boat has been serviced regularly and repairs carried out as and when needed, then the boat would be worth more than if the maintenance has been irregular and shoddy.