How do you buy a private purchase boat with financing?

[Cap'n Mike]

I know of a CD300 Motorsailer that will be for-sale by owner soon.

Since my wife and I bought our CD22 with cash, I am unsure of the process with boat financing for a private, non-broker purchase.

Even if we don't get or want the boat, we want to take this opportunity to learn the process.

From purchasing Adoryble, our CD22, we understand the process and costs involved with survey, quick haul, insurance, etc., but financing is new.

Any guidance or comments would be appreciated.

[Steve Laume]

Friends and realitves? It depends what you want to put at risk, Steve.

[Stan W.]

There are a number of companies that specialize in boat loans. Do you have "Soundings" magazine in your area? It always has several ads for these companies. The main catch is that these companies often have minimum requirements for boat age and for loan amount that you may not be able to meet.

The other main alternative is small local financial institutions like savings and loans and credit unions.

There are two ways of documenting these loans depending on whether the boat is a U.S. documented vessel or just registered with a state. In the case of U.S. documented vessels, the lender's security interest is perfected by recording a ship's mortgage with the Coast Guard documentation office, very much like a real estate mortgage. In the case of state registered vessels, the lender typically appears as a lienholder on the title issued by the state, very much like a car loan. The companies that specialize in boat financing are intimately familiar with both methods. Small local institutions may not be familiar with ship's mortgages and may shy away from U.S. documented vessels.

[Parfait's Provider]

Personal line of credit, BOAT/US, bank, mortgage on your house, etc. The broker has contacts, but that is usually all he will have that you don't, so you get to do the digging instead of using his pre-arranged sources. I think you will also find ads in the many boat magazines. Just to be certain you get the boat for your money, you will also want an attorney for the closing.

Good luck.

[Bill Goldsmith]

I bought Loonsong through a broker but arranged my own loan for the financed portion of the purchase. I used the BOAT/US-arranged financing and found them to be competitive, flexible and nice, too! Don't assume that the absence of a broker is going to deprive you of access to competitive financing. In this financial climate, lenders are clamoring to lend to creditworthy individuals.

The only drawback to not using a broker is that you need to be aware of all the paperwork, taxes, and red tape which differs state by state. However, I found the people at BOAT/US reached beyond just the loan and examined and approved all the transfer paperwork as well. It's in their interest to make sure the sale is clean.

[Joe CD MS 300]

I don't think you necessarily need an attorney for the purchase. It depends on how comfortable you are with the transactions details. The lender whoever you decide on should be of some assistance if only by way of the information they will require. One major item is to make sure that you are getting a good title to the boat. At a minimum you will probably need a copy of the current registration and at least the last bill of sale from the current owner. If the boat is not documented and you have intentions of getting it documented it is helpful to be able to verifiy all past owners. Ask the current owner if he has the original builder's certificate.

I believe the US Coast Guard site has standard Bill of Sale forms and possibly standard agreement of sale forms. I may have a blank some where I could email to you if you would like.

The other most important aspect is getting a good survey.

[mahalocd36]

One thing you might want to look into is home equity/refinancing. The financial picture might have totally changed now than it was a few years ago; I know mortgage rates are rising. But I think it's generally true boat loans are higher than house loans. So if you have equity in your house, you can refinance the house and take extra cash out to put toward the boat. Then you own the boat free and clear and can deduct the mortgage interest on your taxes just like you always have. To deduct boat loan interest takes extra "maneuvering" and is difficult unless you live on it.

[Joe CD MS 300]

If you don't already have a "second home" a boat like a CD MS 300 will qualify as a second home and the interest will be deductible as long as the loan is secured by the boat / "second home". The home equity interest is also deductible but limited to $100,000 (of "home equity debt").

[Bill Goldsmith]

If you live in the Northeast (read: high-tax state) and if you are a busy professional or businessperson then forget about deducting boat loan as a second home--in fact forget about any other deductions and exemptions as well because the AMT (alternative minumum tax) will probably apply to you. Tax cut? Yeah, right.

[dasein668]

But I think it's generally true boat loans are higher than house loans.

And how! When we bought Dasein 5 years ago, the marine lenders wouldn't loan us less than 15k (the boat cost 8) and wanted, iirc, 17%. The local banks wouldn't touch it because of the age, but were getting about 15% on boat loans. Both our mortgage and credit cards were below 8% fixed at that time.

No, we didn't buy the boat with a credit card, but sheesh!

[chase]

Mike,

I financed my boat through Key Bank. Look them up online, they will do older boats that most lenders will not. Look for rates to be in the higher single digits. They are very professional, and should be, for the money they are making!

Good Luck!

Chase