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Old 11-14-2015, 02:16 PM   #41
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Jeeze o'pete! Who has that kind of spare cash floating around I must be hanging around the wrong group of people

Back to the OP's question, in my searching I've found good rates with:

Essex (been mentioned)
Light Stream (max 7 years)
Good Sam (Caters to RV, but does boat loans as well)
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Old 11-14-2015, 05:32 PM   #42
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Wow..... I thought only Anchors, Guns on Boats or Varnish vs Cetol would get this level of response....

LOL

OK, Essex it is.....

AMT folks, no audits for me.

Getting closer to getting me and my lovely bride back on the water.....
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Old 11-14-2015, 06:58 PM   #43
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Originally Posted by Tom.B View Post
I would use caution doing this. I don't know that it is really a good idea to attach your boat to your house. If you default on your boat loan, the could put a lien on your home. I was always advised to keep the two separate.
If the above is a consideration one should not be buying a boat!

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Old 11-14-2015, 06:59 PM   #44
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I'm with Essex, who is actually Bank of the West, at 4.25% so I probably didn't hit the bottom of the interest rates when I did my deal. I do get the second home deduction for my boat, the requirements are separate spaces for cooking, sleeping, and I think a full bathroom. RV owners get it too, so no reason why the IRS would flag a boat owner if the requirements are met.

I didn't have the cash in hand, want to do it while I have the health and interest to be doing it, and it beats the heck out of playing around in a canoe when I could be out enjoying my trawler. Cash sounds great, but some of us don't have it and there is no reason to deprive yourself of something you really want if you can afford it.

All of the arguments for depreciation mean nothing when you are willing to admit that "no matter what", boats are a black hole you pour money into. Either it's worth doing (to you) or it's not. You will never get your money back out of it, and you can't take it with you when you go.

Go for it! JMO
Some of the best advise so far in this crazy thread! How often do the same folks give the advice to "just do it!", "pursue your dream", and now answering a request for a lender recommendation with - if you have to finance it, you can't afford it??!! Geeze guys.

Sterling btw. Great folks.
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Old 11-14-2015, 07:19 PM   #45
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It's also a great way to prick up the IRS' ears. This from a family friend who is an auditor for the IRS.......
There is no reason it should show up on your return any differently than mortgage interest on a first or second dirt home. As such, I don't see how it can trigger an audit. Moreover, it is legitimate, so who cares. Being audited without an adverse adjustment is not a bad thing.
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Old 11-14-2015, 07:34 PM   #46
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With the low interest rates available right now, in many instances it does not make sense to take money out of investments to pay cash for a boat.
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While I generally believe in paying cash for things like boats and houses, I can see a situation where it makes sense to borrow. Basically it comes down to return on investment versus interest on the borrowed money. If the return on investment is greater than the cost of borrowing, then borrowing makes sense. .
Well, since the OP is already VERY (note the all caps) solvent:
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OK kids.... I am 58, VERY solvent
he isn't talking about liquidating an investment. He already has way more than enough cash. Even so, your analysis ignores that investments involve risk. Since I wasn't VERY liquid when I decided to buy my boat, and since I couldn't enjoy the boat as much if it had debt, I sold a good investment in 2006 (when I signed the contract to have the boat built). Turned out to be a great decision, given what happened to real estate in the years that followed.
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Old 11-14-2015, 07:49 PM   #47
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How often do the same folks give the advice to "just do it!", "pursue your dream", and now answering a request for a lender recommendation with - if you have to finance it, you can't afford it??!!
Like everything else in life when it comes to paying for a boat there is no one-size-fits-all solution. There are a lot of things it makes sense to finance, and there are some things that don't give most people a choice, like a house.

The points raised about how financing a boat can make better use of x-amount of money than paying cash can be a smart solution for some people. Paying cash for non-essentials aka "toys" is the smart solution for other people. There is no right or wrong here.

However Doug brings up something a lot of people overlook, more often than not until it's too late. An example is my mother.

She grew up during the Great Depression and like a lot of people who lived through that experience she retained an innate fear that someday the Depression would come back. So she took a very conservative approach to spending.

My mother had always wanted to travel to Europe and later in her life she did bring herself to do that once. But her answer (to herself) about things like buying a house instead of renting, traveling, buying a brand new car, and so on was always, "I'll do it later when I know I'll have plenty of money to do it"

Problem was, "later" never seemed to come. There was always some rational (to her) reason to put something off "a little while longer."

Now I certainly don't advocate over-reaching one's means and ending up living in a box under the freeway. But we all go around just once-- on this planet anyways-- and when it's over it's over. I have always been an advocate of doing things I and my wife really want to do as soon as we can possibly do them rather than take my mother's road of waiting until "it's safe."

Because to me remembering all the cool things I did is a far, far better way to see myself off the globe than thinking about all the cool things I wish I'd done while I was here.

The challenge, of course, is to find the right balance, and that's going to be different for each person. For me and my wife it's been to figure out how to do the things we've wanted to do without incurring any debt in the process. So for us pay as you go is the answer.

For others, financing enables them to do the things that are important to them at the time in their lives when they are best prepared or able to do it.

I think Doug's point is the most important one brought up in answer to the question of how best to acquire a boat. We can talk about the value of money and compare interest earned to interest paid. We can talk about the value of financial freedom if we simply pay cash and are done with it.

But perhaps the more important value to be talking about is the value to one's life of having a boat versus not having a boat. That, too, will be different for each person.

One of my favorite sayings is a line from a Mary Chapin-Carpenter song: "We have two lives, the one we're given and the one we make." If a cruising boat is truly going to add value to the life one makes, the right way will be found to acquire it. What other people have done or advise to do is irrelevant.
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Old 11-14-2015, 08:30 PM   #48
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Thumbs up

Quote:
Originally Posted by Marin View Post
Like everything else in life when it comes to paying for a boat there is no one-size-fits-all solution. Snip....


Problem was, "later" never seemed to come. Snip.....

Now I certainly don't advocate over-reaching one's means and ending up living in a box under the freeway. But we all go around just once-- on this planet anyways-- and when it's over it's over. I have always been an advocate of doing things I and my wife really want to do as soon as we can possibly do them rather than take my mother's road of waiting until "it's safe."

Because to me remembering all the cool things I did is a far, far better way to see myself off the globe than thinking about all the cool things I wish I'd done while I was here.

The challenge, of course, is to find the right balance, and that's going to be different for each person. Snip...
Well said Marin. The entire post articulates my feeling. Snipped to shorten my response. Thank you.
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Old 11-14-2015, 08:32 PM   #49
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I got $70k from Lightstream at 4.17% in like 3 days time, with no lien on the boat, no paperwork, etc. 7 years max as explained above. They are a division of SunTrust. Gotta have 800+ credit.....


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Old 11-15-2015, 05:53 AM   #50
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I respectfully disagree. It is quite common and not unusual to consider a boat or motorhome a second home and deduct the interest paid from income. My father did this with two boats and a motorhome and I have with 5 motorhomes. My accounting firm advised it. If I am audited it will not be from that deduction.

addendum: There are requirements (mentioned in a previous post) concerning livng accommodations as well as minimum time spent occupying it in given year.
Agreed...loan interest shouldn't even raise an auditors eyebrow....it is hugely common.

Any other deduction might raise an eyebrow unless you are in a business that deals with boats.

At least that's what my experts say......
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Old 11-15-2015, 07:52 AM   #51
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I didn't have the cash in hand, want to do it while I have the health and interest to be doing it, and it beats the heck out of playing around in a canoe when I could be out enjoying my trawler. Cash sounds great, but some of us don't have it and there is no reason to deprive yourself of something you really want if you can afford it.
This!

We don't have the cash laying around to buy outright, but we can afford the debt service and expenses. I own my dirt house free and clear, and will probably mortgage it to pay cash for the boat. That's easier than getting a boat loan.

We're not getting any younger, and there is too much I still want to do/see before the dirt nap. Toured this guy yesterday, and we think it might be "the one". Not a fan of all the teak, but everything else was stellar!

Back to the OP, Seacoast Bank is a viable option.
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Old 11-15-2015, 08:36 AM   #52
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We don't have the cash laying around to buy outright, but we can afford the debt service and expenses. I own my dirt house free and clear, and will probably mortgage it to pay cash for the boat. That's easier than getting a boat loan.

We're not getting any younger, and there is too much I still want to do/see before the dirt nap.
Back to the OP, Seacoast Bank is a viable option.
First I'll apologize for the hijack of the OP question

My $0.02...
I understand the financial calculations (IRR ROI PV) and tax implications very well and know several equally financial savy friends who have done the math and determined it best to borrow vs pay up front.

My problems with this...
  • If you go strictly by the #'s - the more you borrow the further ahead you are!?
    Make sure the ability to borrow doesn't increase the budget vs what you would be willing to pay for.
  • My friends (not implying this is the case w/ anyone else here especially OP) did the calculation over & over and used the results to continue to borrow to acquire the things they couldn't / didn't want to wait for...PROBLEM was they used the same investment(s) to "justify" several purchases
  • Few of us have "that much cash "lying around" - that's part of the point it is a little painful to divest for a purchase vs easy way of a signature and it brings a degree of discipline
  • We all use average investment rates but know there are times when the actual rate turns negative and the actual results turns out much worse than the calculated benefits
  • Some of my intelligent friends didn't have enough "emergency cash on hand" to fund the normal "ups & downs & emergencies"... made more sense to them to be "fully invested" vs holding cash given terrible interest rates - result had to borrow again for every one of lifes speed bumps

I'm not saying don't ever borrow! just do it carefully and after an honest evaluation vs a justification / rationalization...
Be honest w/ yourself - would you (and spouse if applicable) be doing the deal if it meant divesting? If yes and you want to consider borrowing be sure to take that money / investment off the table (separate account ideal but not practical if there are tax implications, etc)... put it in writing to yourself / spouse and review it each / every time another financial decision comes up.
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Old 11-15-2015, 08:46 AM   #53
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This!

We don't have the cash laying around to buy outright, but we can afford the debt service and expenses. I own my dirt house free and clear, and will probably mortgage it to pay cash for the boat. That's easier than getting a boat loan.
I agree with you that if you want it... GO GET IT!

BUT---

Go get a boat loan, please. It is very easy with a good credit score. The bursting of the real estate bubble on '08 piled a TON of new regulations on real estate mortgages, but other loans like auto and boats (in this case) did not fall under the new restrictions and/or safeguards. I was amazed how little info they needed from us (this was just this past August) to get loan approval. And like many have said before, it is not smart to tie a boat/RV etc. loan to your home. Too many bad things can happen.
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Old 11-15-2015, 12:24 PM   #54
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Wow..... I thought only Anchors, Guns on Boats or Varnish vs Cetol would get this level of response....

LOL

OK, Essex it is.....

AMT folks, no audits for me.

Getting closer to getting me and my lovely bride back on the water.....
I would not settle on one until you shop the rates.... I think BB&T will beat anything Essex has....maybe not by much...but hey....we sweat .036 gallons per hour ya know!!!
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Old 11-15-2015, 12:26 PM   #55
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Funny you should mention this. We initiated an application with a lender (not going to mention names yet, but it's a well known marine lender), providing all the information they requested except financial statements, which hadn't been compiled yet. I made it clear to the person I was dealing with that:
  • We had not yet selected a boat, so could not provide specifics for the collateral. We did provide a maximum $$ we were looking for, along with proof of funds for the down payment.
  • We would forward the financial statements as soon as my CPA had them compiled.
We were looking for Pre-Approval/Pre-qualification (in real estate parlance), so we wouldn't have to use a financial contingency in any offer we made. A week letter we received a turn down letter from the bank stating:
  1. Our income was insufficient for the amount of credit requested, and
  2. The value of the collateral is insufficient
Clearly there was a disconnect in that the application should never have gone to underwriting, as it was incomplete. It's a typical case of the bank not listening to the customer. This was with a 791 credit score.

Suffice it to say that I'm thoroughly pissed! Now I get to start over, and there's a hard credit inquiry ding on my credit report, which will lower it 10-20 points for another 60-90 days.

I can go to Wells Fargo tomorrow, have my local banker fill out all the paperwork (so I don't have to), and get a mortgage on my house that will pay for the entire boat purchase, with no down payment. Remember, we own the house free and clear, and the only debt we have is a car payment. I can easily get a home loan if I make 6 figures... but I can't get a boat loan?

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Originally Posted by Tom.B View Post
I agree with you that if you want it... GO GET IT!

BUT---

Go get a boat loan, please. It is very easy with a good credit score. The bursting of the real estate bubble on '08 piled a TON of new regulations on real estate mortgages, but other loans like auto and boats (in this case) did not fall under the new restrictions and/or safeguards. I was amazed how little info they needed from us (this was just this past August) to get loan approval. And like many have said before, it is not smart to tie a boat/RV etc. loan to your home. Too many bad things can happen.
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Old 11-15-2015, 01:25 PM   #56
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I'm working with Michael Jenkins at Trident from recommendations.

Looking at boats in the $400k +/- range in the PNW

Pulled the trigger last spring, financing pre-approved-went thru survey, etc but never came to agreement. Easy process, standard applications-tax return, financial statement, etc.

Rate then was low 3%.
Renewed/updated application in last few weeks and now interest is about 4%.

I am financing some portion of purchase because I have the cash flow to cover it and I have chosen not to deplete my cash reserves. It is worth some (tax deductible) interest to me to have a comfortable cushion of liquid assets if some unforeseen need arises.

And we are talking about boats here...right...certainly not liquid and the king of unforeseen problems.
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Old 11-15-2015, 04:25 PM   #57
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Wow, look what I started. LOL Although I feel no need to justify my decision to finance, I will give the highlights of why. My retirement money is the VERY solvent part, but it's all tax deferred and untouchable. Meanwhile I have 7 years of substantial W2 left in me, so carrying a nut for a while is no issue. And, right now money is cheap, very cheap. One often forgets that coughing up the cash in a more conservative approach has a hidden cost, ie lost ROI, that is often overlooked. So while I'm still able to, health wise, me and momma will get on the water.... Reading between all the lines I found someone recommending Sterling.... they look very good. We proceed.
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Old 11-15-2015, 04:33 PM   #58
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Thanks for the insights. Makes sense to me. I hope you really enjoy your new boat!
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Old 11-15-2015, 04:39 PM   #59
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Thanks for the insights. Makes sense to me. I hope you really enjoy your new boat!
Still looking. Champagne taste and beer budget and all that. And, an interesting peeing contest between manufacturer and dealers. There are victims, which makes me look for spoils we shall see. May have to start a new thread....
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Old 11-15-2015, 09:52 PM   #60
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The prior responses reveal that this choice can be more about emotion than reason and certainly was in our case. For highly qualified borrowers there are likely some sound reasons to finance and counter intuitively, I think the less you NEED a loan for a boat purchase, the more likely it is that it will make sense to get one for some of the reasons referred to earlier in this thread.
In a perfect world, the time value of money (interest rate or yield of an investment) is related to risk. The lower the risk, the lower the rate or yield. For folks with strong balance sheets and great credit scores/ history, the rates should be low. For those same folks, it can make some sense to take some risk in an investment portfolio in which case the yield can likely be higher than the rate on a low risk loan. It is also these same folks that are subject to high tax brackets where the interest write off can reduce the effective rate by over 1/3 and in the current environment result in an effective rate of under 3%. In the meantime, a moderate risk investment portfolio may yield nearly double that.
Still, we went through all of this in our heads and even though it made complete sense and was the more responsible/resource conservative way to go, being one generation past the Great Depression generation, we couldn't do it and burned the cash. Easier to recognize interest paid as a cost than forfeited yield. Plain stupid.
As was mentioned previously here, as with all things boats, reason rarely prevails. We are living proof.
To the OP where penalties apply to withdrawing cash from a tax deferred investment, this could be compelling.
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