The formula to calculate the Monthly Payment is:
\[ \text{Monthly Payment} = \frac{\text{Loan Amount} \times \left(\frac{\text{Interest Rate}}{12}\right)}{1 - \left(1 + \frac{\text{Interest Rate}}{12}\right)^{-\text{Loan Term}}} \]
This calculator helps you determine the maximum loan amount you can afford for a boat based on your monthly wage, monthly expenses, interest rate, and loan term.
Let's assume your monthly wage is $4,000. Your monthly expenses include: $1,500 rent; $500 bills; $400 car loan; $300 food; $300 other fixed payments. So, your disposable income per month is:
\[ 4,000 - (1,500 + 500 + 400 + 300 + 300) = 1,000 \]
Having $1,000 disposable money per month technically allows you to take a loan with a monthly payment up to that sum. However, taking into account any potential risks of losing part of your income within the boat financing period, we would rather take a maximum of 30% of disposable money (so $300), leaving a safe liquidity buffer for unexpected expenses. If you input that value into our boat mortgage calculator's monthly payment box, together with loan term and annual interest rate, the calculator will compute the loan amount you can take. In our example, for a 5% interest rate and 5 years boat loan term, it is $15,897.21. That should be enough to buy quite a decent boat!
