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Boat Loans and Financing Basics

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I recently spoke with several new boat sales reps and yacht brokers to find out what alternative methods people use to borrow money to buy a boat. I was surprised to find that so many boat buyers do not simply go to a bank and get a boat loan. There are many methods of utilizing your existing assets to get the boat of your dreams.
 
Relatives and friends
 
Got a rich uncle? If you and he come up with an interest rate that’s higher than what he can earn on a CD, but lower than you can get on a bank boat loan, you might be able to make a deal. But beware; you don’t want to look ungrateful, but you may find yourself scheduling weekends on your own boat if your “co-owner” takes a liking to it.
Our recommendation: Don’t go there
 
Your 401k from work
 
Check with your company to see if you can borrow against your 401k or 403b; sometimes you can borrow up to half, and repay it through payroll deductions at a very low interest rate.
Our recommendation: Consider this, especially if you own the company!
 
Home Equity Loan or Line of Credit
 
Is your home your biggest asset? Has its value risen over the past few years? With home equity you can get tens of thousands of tax-deductible dollars at pretty good rates. To keep interest at a minimum, get a home-equity line of credit instead of a home-equity loan to pay for things that you won’t need right away such as future slip or docking charges.
Our recommendation: Definitely worth looking into!
 
Your stocks & bonds
 
This one’s tricky, but worth looking into if you’ve got a big portfolio. You may be able to get a margin loan from for up to 50% the value of your securities, and the interest may be deductible. If you go this route, make sure you keep the amount you borrow to a minimum in case you get a margin call!
Our recommendation: Tread carefully.
 
Your life insurance
 
If you have life insurance, you can borrow against it, but you'll have to pay taxes on the interest.
Our recommendation: Not recommended.

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