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Old 11-13-2015, 02:11 PM   #1
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Financing.....

Hey there trawler brain trust..... who's got the smoking best deal on financing a two or three year old bateau these days? Thanks!
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Old 11-13-2015, 04:33 PM   #2
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If you can't afford to buy the toy I'd consider buying a smaller/cheaper one. Can't relate to buying a yacht on credit. One can always go canoeing.

Could be special circumstances that would perhaps justify it though.
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Old 11-13-2015, 04:55 PM   #3
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The answer to your question really varies widely based on the age, type, and price of the boat you're buying. Are you really talking about a bateau?
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Old 11-13-2015, 05:06 PM   #4
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I'm talking about a two-three year old production model. Cutwater 28. I know, not quite a trawler, but at least "Down East" in spirit. To fill the gap between now and five years from now when I'll have a lot more time to be a full time boat dude on the "yacht"......

And, it's on wheels. Have the one ton dually to drag it, and it can live in the back yard, not to mention the shop right here to do required MX and improvements.

As far as buying on credit... yes I know. But, my retirement bucks are taken care of and those ducks are in a row. Meanwhile, money is cheap.
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Old 11-13-2015, 05:15 PM   #5
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,,,who's got the smoking best deal on financing...

Cash does.

I'm with Eric on this issue. Problem is that most boats only lose value, they never gain it. We paid almost three times in dollars for the cabin cruiser we have in the PNW than the same boat cost new in dollars in 1973. But that does not mean the boat gained value. It didn't. In fact, it lost a lot of value.

The dollar difference represented inflation and the loss the dollar's value between 1973 and 1998. The same boat was still being made in 1998 and it cost over three times in 1998 dollars what we paid in 1998 dollars for the then-25-year-old version of the same boat.

Financing something that loses value means you are paying more for something that will not reflect that additional cost as it continues to get older. You're simply paying more for it than the asking price.

Financing can have advantages, of course, particularly if the cost of financing--- the interest--- can be written off in some manner. And it's often the only way to get something one really wants but can't afford.

When I was a teenager a family friend who was an extremely successful businessman--- among his achievements was conceiving and founding a company he called Telecheck----gave me a piece of advice I've never forgotten and have always lived by. And that is "Never finance your toys."

As to who has the best financing that is an almost impossible question to answer because it depends on the location, the current economy, and the policies of each individual financial institution.

We've noticed that credit unions often offer good rates simply because many if not all of them are non-profit organizations. But there may be as many exceptions to this observation as there are examples, I don't know.
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Old 11-13-2015, 05:31 PM   #6
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I'm talking about a two-three year old production model. Cutwater 28. I know, not quite a trawler, but at least "Down East" in spirit. To fill the gap between now and five years from now when I'll have a lot more time to be a full time boat dude on the "yacht"......

And, it's on wheels. Have the one ton dually to drag it, and it can live in the back yard, not to mention the shop right here to do required MX and improvements.

As far as buying on credit... yes I know. But, my retirement bucks are taken care of and those ducks are in a row. Meanwhile, money is cheap.
While I personally don't like the idea of financing a boat, I'll try to address your question. If the boat is purchased through a broker they can certainly direct you to lenders.

The real concern is the costs post purchase, bringing the boat to what you want. Make sure these are adequately covered. Make sure the survey and the engine survey come out good.

Boat US is actually financing a lot of boats in that size range. If your relationship is strong with a local bank they might. Then there are many marine financers such as Essex Credit, Chesapeake Financial, and Suntrust.

Back to the boat for a moment. Be prepared to lose 40% of what you pay for it in the five years. Not meaning this at all as criticism of the boat as I'm not that familiar with it. However, boats of that type, in that price range tend to depreciate more rapidly than older trawlers might. .
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Old 11-13-2015, 05:59 PM   #7
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Financing can have advantages, of course, particularly if the cost of financing--- the interest--- can be written off in some manner. And it's often the only way to get something one really wants but can't afford.
I am NOT a tax adviser, but I thought you could write off your boats interest if it qualified as a second home? Even a trailerable boat should have a galley, berths, toilet, etc. . .might be something to look into?

https://www.irs.gov/publications/p93...link1000229900
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Old 11-13-2015, 06:06 PM   #8
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OK kids..whilst I appreciate the sage advice... I am 58, VERY solvent and savvy enough to evaluate my financial and tax situation. The reasons and decision to finance are mine, for private reasons. The simple question was: "Who's got the smoking deal right now?"

Essex seems to be leading the pack, but I am open to suggestions. I am a USAA member, but have been discouraged with them lately. Suntrust is close, but not quite. Will have to check Boat US. Also have to check Chesapeake.

As far as depreciation..... looking at 2013's with 100-300 hours on them.

Any others?
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Old 11-13-2015, 06:08 PM   #9
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I am NOT a tax adviser, but I thought you could write off your boats interest if it qualified as a second home? Even a trailerable boat should have a galley, berths, toilet, etc. . .might be something to look into?

https://www.irs.gov/publications/p93...link1000229900

Google AMT...... sigh.
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Old 11-13-2015, 06:26 PM   #10
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I'll throw out a 'counter point' to the argument that if you can't afford to pay cash you shouldn't buy it...(whatever "it" is.)


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. The money that is invested can earn more interest income than what you would pay on the loan.


As far as tax deductibility, if the boat has sleeping quarters and a running water system and a toilet system the interest on the loan will be deductible as a second home.
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Old 11-13-2015, 06:32 PM   #11
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BB&T had really good rates this past spring.
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Old 11-13-2015, 06:35 PM   #12
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TBH, you need to move fast. interest rates now are about as low as they will be and are starting to inch up some. You can't get cheaper money. Even IF you could buy it with cash, there is a good case to be made to still borrow. your cash reserves would work better staying invested than to burn it on something you might not keep for more than five years.

We got3 1/2 (I think) in August from US Bank thru Intercoastal Finance in New Bern. That's pretty darn good no matter how you slice it.
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Old 11-13-2015, 06:38 PM   #13
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As far as tax deductibility, if the boat has sleeping quarters and a running water system and a toilet system the interest on the loan will be deductible as a second home.
It's also a great way to prick up the IRS' ears. This from a family friend who is an auditor for the IRS.......
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Old 11-13-2015, 06:54 PM   #14
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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.......
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.
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Old 11-13-2015, 06:57 PM   #15
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If I am audited it will not be from that deduction.

That's something you'll have to discuss with your auditor when the time comes. I'm just repeating what an auditor has told me: that second home and home office claims have triggered many audits that he has ended up conducting.

According to him, while the initial trigger is automated the decision to audit is in the hands of individuals. And every agent is different. What might cause one to initiate an audit might not be considered sufficient cause by another.

Our friend does not say second home and home office claims mean an automatic audit. Only that they automatically trigger a flag, to use his expression.

And that is the extent of my understanding of the subject. We've been audited once. It stretched out over two years and it very effectively demonstrated that the IRS doesn't forget about or overlook anything when they decide to conduct an investigation.
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Old 11-13-2015, 07:02 PM   #16
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Oscar,

You may want to consider an equity loan against your home. Those rates are usually better than the best "Boat Loans".

YMMV

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Old 11-13-2015, 07:05 PM   #17
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Old 11-13-2015, 07:16 PM   #18
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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.......
edited....

At the risk of ruffling some feathers... and completely getting off topic... in my personal experience IRS auditors are not too bright. Many moons ago my business was audited and they found a small disputable item and rather than fight it I paid the $118 dollars along with interest and small penalty. From that point forward I was audited every other year for 10 years. In all of those future audits the IRS never got another dime from me. What I experienced was more of a witch hunt than an audit for valid reasons. In each audit they, the IRS, sent some part time seasonal auditor who found his/her job via a posting on the unemployment office cork board listing available jobs and not one of them had a decent level of knowledge of the US tax codes. Finally, after ten years of audits, I had my attorney write a threatening letter to the IRS about their tactics etc. and from that point forward I've not heard a peep from them. Moral of this off topic story is, don't let the IRS bully you into paying something that you shouldn't. So write off that "second home" and enjoy the legal tax benefits the IRS regs provide for.
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Old 11-13-2015, 07:20 PM   #19
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At the risk of ruffling some feathers... and completely getting off topic... in my personal experience IRS auditors are not too bright. Many moons ago my business was audited and they found a small disputable item and rather than fight it I paid the $118 dollars along with interest and small penalty. From that point forward I was audited every other year for 10 years. In all of those future audits the IRS never got another dime from me. What I experienced was more of a witch hunt than an audit for valid reasons. In each audit they, the IRS, sent some part time seasonal auditor who found his/her job via a posting on the unemployment office cork board listing available jobs and not one of them had a decent level of knowledge of the US tax codes. Finally, after ten years of audits, I had my attorney write a threatening letter to the IRS about their tactics etc. and from that point forward I've not heard a peep from them. Moral of this off topic story is, don't let the IRS bully you into paying something that you shouldn't. So write off that "second home" and enjoy the legal tax benefits the IRS regs provide for..
The second home interest deduction does get flagged sometimes but you don't just avoid a legitimate deduction because it might.

As to your audits, they sound like what is a training audit, but takes the form of a fraud audit. Basically to train new agents, they have them check and question everything. So, they go to the depth that a fraud auditor would.

I would also say the new auditors are generally not trained or in the position to decide what they should pursue further or those things that are too minute to worry about. I've seen people actually have to bring the audit to an end with a talk to their supervisor.

In a billion dollar company we had audits that the adjustment was to deny $2400 of travel deduction where our policy differed from theirs. We just used that number for years forward. As we grew, we were large enough that it was a perpetual audit.
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Old 11-13-2015, 09:11 PM   #20
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I'm for buying a boat cash, signing a mortgage for a boat up to my ears, trading my wife for one, borrowing one or stealing ..... well probably not stealing one.

I go through YachtWorlddotCom and have created three lists of boats that I would really love to own:
List 1. This is a great boat.
List 2. What would I give to have this boat.
and
List 3. The right ball boats.
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