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Boat Financing Basics

Written by First Boat Staff Writers
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So you are ready to buy your first boat. You have visited boat shows, talked to some boat dealers, decided on the style of the boat you want; maybe you have taken safety classes or even chosen the specific make and model to buy. It is time to see if you could afford the boat, how much your monthly payments will be, how much you'll need to put down, and what the ramifications will be on the rest of your life.

Somewhere in the land between the Jupiter of house mortgages and the Mercury of a car loan, is the wide world of boat loans. There are many advantages to getting a boat loan over other types of financing. Like a car loan, you can be approved quickly and easily for a boat loan if you qualify. Unlike a car loan, you can spread your boat loan payments over several years. That's right; with a nominal down payment, you can stretch a boat loan over seven, ten, or even fifteen years. With low interest rates, a term of that length can make a seventy thousand dollar boat more affordable than you think.

There are some details to look into before choosing a loan provider. Many banks or credit corporations require that you borrow a minimum amount for boat loans. Depending on the institution, this amount can be as much as fifteen or twenty thousand dollars. The good news is that you may have to consider buying a bigger boat in order to take advantage of the terms of a boat loan!

- - - Try our free online boat loan calculator - - - Consider Other Costs

Other costs to consider when organizing your finances and buying a boat are dockage fees, gasoline, supplies, and general maintenance. If you are keeping your boat moored at a marina, this could be your biggest annual expense. Don't forget to find out how much winter storage costs at the marina you choose, as this could be another factor you will have to budget for.

As of this writing, gasoline prices have come back down to Earth, but fuel will still be one of your larger boat owning expenses. My single-engine 27 foot express cruiser requires a full tank of gas every weekend when I use it regularly; and a boat's gas tank is much larger than a car's. For example, Sea Ray's 39 foot 360 Sundancer has a fuel capacity of 250 gallons (946.2 L). Of course, that sport yacht has two engines and may be bigger than your first boat, but many models over 25 feet have twin engines and subsequently will require more fuel to operate.

Help from Uncle Sam? If you are thinking of buying a boat with a head and a galley (that's a bathroom and a kitchen for you new boaters), you may be able to claim your interest on your boat loan when you file your Federal income tax in the United States each April. These features, which are standard on most express cruisers, and sailing and motor yachts, may make your boat qualify as a second home in the eyes of Uncle Sam. Don't forget to save your fuel receipts every time you fill up on the water. Another perk from the US government: a credit or refund may be allowed for the excise tax on fuel used in a boat, since a portion of that tax is used by the government to repair and maintain roads. So as a boater you may be able to get that portion back, since you are not doing any damage to the road while you are boating. Check with the IRS website for details of these potential savings.

Back to boat loans, there are many online tools available to figure out how much you can borrow, and how much you can afford to spend on your new boat. On this page are some links to sites that have free online calculators, as well as free quotes for financing a new or used boat.

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