Boat Financing???

[North Carolina Fishing]

I have looked around and asked lots of questions and think I am going to pull the trigger on a 258 DLV. I will have to finance about 15K, what are your thoughts on the best way to do this at the best rate? Thanks!

[Dave]

Congratulations NCF. 012 I just went to my Credit Union for the loan. If you go to a bank/credit union, keep in mind that their loan rates are not locked in stone. My credit rating was such that I was able to negotiate with my loan officer a lone at 1% below standard. I'm not very creative when it comes to this but we have a CPA in the CCC of CSO that might be willing to give you some ideas. I'll send him a PM.

Dave

[North Carolina Fishing]

Thanks, I am a member of the NC State Credit Union and have an excellent credit rating. Would it be better to borrow against the equity in my house or do a straight boat/auto loan?

[Harry]

My credit union was high. I wound up borrowing 10k against my 401k and they take "X" amount out of my pay check a week to pay myself back.

If I sell the Chevelle in the spring, I can pay it off in full, plus have a bunch left over, IF I get my price for the car. 008

[Shakespeare]

I was suprised, uhhhh shocked that my dealer offered better rates than my credit union. This was back in early October. It doesn't hurt to shop around ESPECIALLY if you have a good credit rating.

Mike C.

[redneckredfishr]

I was going to use USAA (6.5%), but they sent me the wrong type of check and I wasn't able to pickup my boat on time; therefore, I canceled the loan with them and secured my final financing with Navy Federal Credit Union (6.25%). By the way, I gave USAA and opportunity to makeup for their mistake and they declined, which is one of my reasons for going with NFCU.

Like Dave mentioned, your credit rating will have the greatest affect on your financing. The better your credit score, the better your rate will be. Based on the information you have provided, I would find a lending institution that lowers your interest rate based on LTV (loan to value), much like a mortgage. I.e. the more money you put down the lower your rate will be (because it reduces the risk for the lending institute). ** This is one of many options - It's hard to give advice with so little information. I assume that you are putting about 30% down on the boat.

Will

[redneckredfishr]

Thanks, I am a member of the NC State Credit Union and have an excellent credit rating. Would it be better to borrow against the equity in my house or do a straight boat/auto loan?


NCF,

There are many things you need to consider with a second mortgage. 1st, there is almost always a funding fee associated with a second mortgage, which you must consider as an expense for the loan. 2nd, there is always closing fees on a second mortgage, which you must also consider as an expense for the loan. Above all else, many lending institutes are misleading when offering interest rates, which can be much lower than the actual annual percentage rate you are paying.

IMHO, the only benefit you stand to gain from getting a second mortgage on your home is the option of writing-off the interest of the loan. However, everyone’s situation is unique, and it’s hard to give advice with limited information.

Bottom Line - I would not acquire a second mortgage on my home unless there was a substantial gain to be made. Look at the whole picture and do the bottom line math once you have all the information from your lending institution.

One last thing to consider (remember, I do not know your financial or employment sitituation), the economy is shaky right now, so if it were me, I would keep the equity in my home and use it only if I needed to survive, or if I needed funds for home repairs or practical (money making) upgrades.

Good luck,
Will
012

[redneckredfishr]

Congratulations NCF. 012 I just went to my Credit Union for the loan. If you go to a bank/credit union, keep in mind that their loan rates are not locked in stone. My credit rating was such that I was able to negotiate with my loan officer a lone at 1% below standard. I'm not very creative when it comes to this but we have a CPA in the CCC of CSO that might be willing to give you some ideas. I'll send him a PM.

Dave



NCF,

By the way, I'm not a CPA. Maybe we should wait to see what the CPA has to say. Take my advice with a grain of salt, after all my CSO.com name is Redneckredfishr.

Will
;D

[NarrowPath]

Good points coming from experience boat buyers. It’s great that you are able to put cash down on the new boat. That will protect you from getting upside down in the loan & save you a ton of interest. 010

I would definitely consider using a Home Equity Loan. Most have fees but some do not. A few lenders will absorb the cost to get your business. A $15K loan for 5yrs @ 6.5% int. would be over $2500 in interest. This would save you about $750 of payable income tax ($1,500 if 10yr loan). Actual #s would change depending on your tax bracket & loan details. So, compare the fees associated w/ the loan to see if you have a net cash savings that’s worth while. Right-on, Will “the whole picture”. If you need to sell your house, just payoff the lien w/ a “no fee” boat loan. You should have plenty of equity in the boat because of the down pmt amount.

As far as a boat secured loan; definitely see what the dealer can offer! They want to move boats off the lot & will in most cases have relationships w/ the lenders that provide the most competitive financing options. Also, shop a couple local credit unions (anyone can join Federal Credit Unions). They are Non-Profit Orgs & SHOULD beat the banks. ::) Make a few calls & be sure to let them know your down pmt amount & credit score. As Will said, a lower LTV will sweeten your interest rate & give you better term options. Limit the number of lenders that pull your credit / get quotes not pre-approvals. Also check w/ the bank/CU that has your other accounts (savings, checking, etc) it may give you a little leverage to negotiate a loan. It’s nice to have everything under one roof & maybe they will match the terms of the cheapest lender.

*Know you Credit Score before you shop*
1 Home Equity - Interest tax advantage / look at net savings if there are loan costs.
2 Dealer options
3 Credit Unions
4 Banks

Just a few suggestions / hope you find it useful…. 006 Good luck & let us know who earned your business.

Jason

[North Carolina Fishing]

Jason, THANKS for the info 012 if you aren't already you should go into the financial adviser business! 013 I'll let you all know what happens. Thanks again.