need advice on financing a boat

eSailor · #1 (**permalink**) 03-20-2011

Looking to spend in the $20k-$30k range. Any insight and advice on financing a boat is greatly appreciated. I will have 20% or so to put down.

Any suggestions on decent companies to use? Recommendation on loan lenght, etc.....

Also, is it foolish to take the funds out of a home equity loan to buy a boat? I really do not like putting my house on the line just in case something happens and I can no longer make payments.

Thanks,
Matt

Minnewaska · #2 (**permalink**) 03-20-2011

The interest on home equity loans is typically tax deductible. The interest on a boat loan can be deductible if the boat qualifies as a second home (and you don't already have two homes). I think that requires a bed, head and galley, all installed permanently. A cooler, camp stove and port potty don't count.

If you use the home equity loan, just be sure you perform all the due diligence that a marine lender would if they were lending you the money: title searches, proper filing of new title/registration, notorized bill of sale, insurance, survey, escrow to hold deposit, etc.

Where are you and/or the boat located? There may be some recommendations on who to use. Maritime lending is a specialty. Unfortunately, I think small loan amounts are hard to get. Too much work for the lender to make money on it.

JKCatalina310 · #3 (**permalink**) 03-20-2011

I am in the Boston area and we used Sterling Associates. Chris was great, a big help during the whole process.

I think the biggest issue you will have is the amount you want to borrow is too small. From what I can tell, most finance companies are hesitant in anything under $50K. This article from Cruising World has some good info when we were trying to buy our boat.

With the "small" dollars you are looking at, the home equity may be the way to go.

treilley · #4 (**permalink**) 03-20-2011

A few years ago I used Key Bank to finance our previous boat at $32k. I also could have used home equity but I chose not to risk our house should something bad happen. We deducted our normal mortgage interest and also the boat loan interest as it qualified as a second home.

eSailor · #5 (**permalink**) 03-20-2011

I live PA and will keep the boat in Maryland.

scottyt · #6 (**permalink**) 03-20-2011

you might be better with a unsecured bank loan, with the boat listed as the reason for the loan. basicly making it a semi secured loan ( i know they dont exist named that ).

if you have the home equity, you could buy it that way too. then you dont risk the boat, even if you loose the house you still have the boat.

JoeDiver · #7 (**permalink**) 03-20-2011

Quote:

Originally Posted by scottyt

if you have the home equity, you could buy it that way too. then you dont risk the boat, even if you loose the house you still have the boat.

And live on the boat if you had too....

scottyt · #8 (**permalink**) 03-20-2011

Quote:

Originally Posted by JoeDiver

And live on the boat if you had too....

yup thats the idea

eSailor · #9 (**permalink**) 03-20-2011

Quote:

Originally Posted by JoeDiver

And live on the boat if you had too....

well, my wife, daughter,2 dogs, and 8 horses would not appreciate that very much. I would rather keep the house and lose the boat.

night0wl · #10 (**permalink**) 03-20-2011

A boat that price is probably fully depreciated...as there aren't many NEW sailboats that would be in the $20-30k range. Home equity would likely be the ONLY way to go. As for if anything happens...well, since the boat is fully depreciated, sell it and pay off the equity. You'll likely break even after all the tax deductions you'll be able to take.