Financing Advice/Help

M

mchad

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Apr 30, 2001
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4410
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I am looking to buy a new boat, and will need to obtain financing. I am putting about $10000 down, (cash + trade) and will need about $50000 in financing. My issue is that my credit is not great (FICO of 661), so I don't want to have to apply to many different companies, as each inquiry will lower the number even more. I make a good salary (+$125K) and have only about $2000/mo in debt (car pmt, rent, ccd's)

Anyone know of a finance co I should be looking at?
 
I assume that looking for credit for a boat basically is the same as looking for credit to buy a car. If that is the case, not to worry. The credit bureau's have figured out a way not to ding someone's credit for credit shopping for a new car, and actually, I think for any major purchase.
 
My advice is to work through an agent, who will work to get you the best rate possible with a lender willing to finance you. That's better than having to go to one bank at a time, plus your credit gets "hit" only once. I worked with and agent from Beacon Marine Credit, and he did a fantastic job for me. I believe his hame was Joe Flynn? Not sure... But I recommend Beacon Marine Credit (you can find them online) with no reservations at all.
For example he fought hard to get us approved for a special 5.99% loan offer based on our excellent credit, however that didn't pan out as the lender started to put through many roadblocks, so then (after consulting with me) he quickly turned around and locked us with another lender at 6.25%, still a great rate and saved a lot of work on my part.
 
Not sure if it applies to boats, but whenever I bought a new car (or even used), the car dealer finance dept Always came up with better financing deals than I could find on my own. Usually much better than even my own bank and I have excellent credit, around 800.
 
Ditto CWMS. I bought from a dealer who had a bank lined up for their financing and it was a better deal than my local bank offered. But you should check with your primary bank and see what they can do.
 
How about a home equity loan or line of credit? This way, the interest can be used as a deduction on your income tax return. Yes, if your boat has a sleeping area, head, and cooking area, it usually qualifies as a second home and can also be deducted, but it's much easier to deduct it if it's on the house - nothing to prove.
 
661 credit score isn't that bad but may not earn you the lowest rate. Lenders look at why the score is low. There's a difference if it's low because of slow or overdue payments or because of high debt ratio, numerous inquiries, etc. Recently credit unions are becoming very competitive lenders and often don't require affiliation. LV (loan to value)is a major consideration lenders look at when evaluating a loan. The more you put down the better. It puts the lender in a better equity position, reducing the risk of loss for the bank if the loan goes bad.
 
Google prosper.com it is a people to people lending,borrowing site. Also check zoba. They are called unbanks. It might interest you. good luck Jim
 
Multiple credit inquiries while loan shopping do not ding you. My best deals, by far, have always been through my credit union. See if you're eligible to join one near you (or perhaps not even near you), and look at their rates. They're usually a little more favorable toward their members than most banks are...

Another option: At your salary and debt levels, you ought to be able to put away another 10k easily in 3 months -- then you can double your down payment, which will reduce the lender's risk.
 
quote:
Originally posted by blouderback

How about a home equity loan or line of credit? This way, the interest can be used as a deduction on your income tax return. Yes, if your boat has a sleeping area, head, and cooking area, it usually qualifies as a second home and can also be deducted, but it's much easier to deduct it if it's on the house - nothing to prove.

Click to expand...


Bob, not so fast......if you use a HELOC to buy a boat, and claim it as home mortgage interest and you get audited, you're screwed. The IRS will only allow interest deduction on home purchases or home expenses. A check written from a credit line to "So-and-So Yacht Sales" will throw a red flag quicker than you can blink. Most people get away with it, but just pray you don't get audited.

The safer route is a traditional boat loan, assuming of course the boat in question does indeed qualify as a second home.
 
Jason,
Are you sure about that? I've always been of the understanding that you could use the money for anything from a HELOC and still deduct the interest.

What if you refinance your house and take out equity and use it to buy a boat? IRS isn't going to say anything about that, so why should they if you use your equity line.
 
Ah, didn't notice that. I guess Home Equity is not an option.
 
16 years ago, I tried to get a loan for my boat, but as a woman, I was denied because it was a "luxery" item. Same companies would have loaned me money for a car, but not a boat!

Finally, the company selling me the boat loaned me the money. I had a 50% down payment, and the loan was secured with the boat, so he wasn't going to lose if I defaulted. I still have and enjoy that boat!

I'm sure glad that kind of discrimination has gone away!
 
quote:
Originally posted by cwms

Jason,
Are you sure about that? I've always been of the understanding that you could use the money for anything from a HELOC and still deduct the interest.

What if you refinance your house and take out equity and use it to buy a boat? IRS isn't going to say anything about that, so why should they if you use your equity line.

Click to expand...


Cash-out refi's is exactly that, cash out. Cash is not traceable, therefore whatever you do with the cash you take out is your business, and the IRS doesn't mess with that. HELOC's are essentially checking accounts with a set limit, when you draw from a HELOC you are writing a check. The best way to do that is to write the check from the HELOC account payable to yourself. It can still be traced but not as easily.

My recommendation is don't try to screw the IRS over, because they'll just screw you harder.

And if you want to take cash out to finance a boat purchase, rates are still low on conforming 30 year fixed mortgages. Contact me, it's what I do for a living! ;)
 
I agree that you don't want to screw with the IRS but I still think you are completely wrong about use of equity line funds.
 
Better yet, call the IRS and ask them yourself.
1-800-829-1040.
 
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