Our annual Buyer's Guide is loaded with all kinds of great tips and can help you know what to look for when it comes to finding the right boat for you and your family. But what about finding the funds to pay for your new pontoon or deck boat? Answering these 15 questions will give you a better idea about how much you really know-and should know-about financing.
Question 1 True or False
You always need a survey to buy a boat.
Question 2 True or False
Boats depreciate slowly.
Question 3 True or False
Finance rates are negotiable.
Question 4 True or False
You can cancel a signed sales contract within 48 hours without a penalty.
Question 5 True or False
A home-equity loan is your best finance option for your boat.
Question 6 True or False
Interest on a boat loan is always tax deductible, provided that boat has living accommodations.
Question 7 True or False
You always need to get your new boat documented.
Question 8 True or False
The finance rate offered by the dealer is lower than the rate at your bank.
Question 9 True or False
You can get a variable rate boat loan.
Question 10 True or False
The dealer makes money on the rate he sells.
Question 11 True or False
You can finance all boats over a term of 15 years in order to keep you monthly payments low.
Question 12 True or False
You can always pay a boat loan off early, a feature termed "no-prepayment penalty."
Question 13 True or False
You can use your trade-in as a down payment on a new boat.
Question 14 True or False
The minimum down payment for a boat loan is always 20 percent.
Question 15 True or False
Any financing deal is subject to insurance.
Bonus Question True or False
The dealer is obligated to give you the "book value" for your trade-in.
ANSWERS
So how did you do? Often when we take tests or quizzes we know right away how we did, even before we find out the correct answers. But with only two choices, you basically know it, don't know it or you're really good at guessing. Check out the answers to the 15 questions to see how you really did.
Question 1: You always need a survey to buy a boat.
Answer: B False
A survey is generally only a condition of financing/insuring a used boat. However, it makes sense to do it so you can discover what needs to be fixed prior to delivery.
Question 2: Boats depreciate slowly.
Answer: B False
The value plummets similar to the auto industry, but it's worth it!
Question 3: Finance rates are negotiable.
Answer: A True
Dealers typically "buy" the rate at one price, add a point or two, and then "sell" you a higher rate.
Question 4: You can cancel a signed sales contract within 48 hours without a penalty.
Answer: A True
Most state laws allow consumers "second thoughts."
Question 5: A home-equity loan is your best finance option for your boat.
Answer: B False
Not always. The rate may be less expensive, but if you borrow against your home, you're limiting the "ready amount" you can borrow.
Question 6: Interest on a boat loan is always tax deductible, provided that boat has living accommodations.
Answer: B False
If you're already taking the vaunted "second home deduction" on say, a vacation home, motor home or another boat, the IRS won't let you double-dip. Check with a CPA.
Question 7: You always need to get your new boat documented.
Answer: B False
Documentation of your new boat is not always necessary.
Question 8: The finance rate offered by the dealer is lower than the rate at your bank.
Answer: A True
This is because the dealer is "selling" you a rate he "bought" from a financial institution specializing in boats.
Question 9: You can get a variable rate boat loan.
Answer: A True
Sure you can, usually for a lower "teaser" rate. But you risk rising rates in the future.
Question 10: The dealer makes money on the rate he sells.
Answer: A True
He can make money by pocketing the spread between the "buy" and "sell" rates, but often will turn over the lower "buy" rate to help facilitate the sale of the boat.
Question 11: You can finance all boats over a term of 15 years in order to keep your monthly payments low.
Answer: B False
Boat finance terms are usually tiered. The more expensive the boat, the longer term you'll be offered.
Question 12: You can always pay a boat loan off early, a feature termed "no-prepayment penalty."
Answer: B False
There are exceptions-it's wise to check before you ink the deal.
Question 13: You can use your trade-in as a down payment on a new boat.
Answer: A True
Absolutely. But the dealer doesn't have to accept it. If he does, the value of the trade-in isn't taxed, making it a better deal that a cash down payment.
Question 14: The minimum down payment for a boat loan is always 20 percent.
Answer: B False
You can put down less than 20 percent-if you're creditworthy. Bear in mind you'll have less equity in the boat.
Question 15: Any financing deal is subject to insurance.
Answer: A True
If you can't get the boat insured then you're out of luck when it comes to getting finance.
Bonus Question: The dealer is obligated to give you the "book value" for your trade-in.
Answer: B False
The dealer isn't obligated to take your trade-in. If he does, he'll buy it for less than it can be sold for because he needs to turn a profit. Until he does, he hasn't made any money on the new boat you bought. Since it takes more time and trouble to stock and sell a used boat, it's valued less that its cash value.
SCORING
12-16 Correct. You're ready to go get that boat!
6-11 Correct. You're not likely to get taken.
0-5 Correct. You better pay with cash.
