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Here's where we shine. Marine financing leaves your other credit lines free-the boat is the collateral. We make it easy and handle all of the details. We offer personal service--just like in the old days! Get your questions answered here and start the process. |
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Financing-made easy!Getting a boat, marine loan.
What you need to know about marine financing now!
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| General Information | Get the Loan Application |
| Incorporating... Yes or no? Includes an on-line application. Also, information concerning documentation | Don't cash in your investments keep them working and have your boat. |
| Should you Document? | All about calculating the payment and interest savings. |
| Qualification/Costs | Selling or refinancing |
| A note about placing your boat in management. | What's next--while your boat is on order--what should you expect. |
Get the loan app. here (Acrobat):
Click on the symbol to the
left to get a pdf finance application that you can fill out
and fax back, and here
to get the Hull Reservation agreement.
To get a finance application that you can fill out in a word format so you can email it back, click here. (to insure privacy, don't fill in the last 4 digits of your SS number--send that info separately with only those digits in the body of your message.)
For even more about how to get qualified for your loan Get registered now and we'll get you your own QuickCalc Pre-Qualification Calculator.
Why use us
for your marine financing, rather than going direct?
We
have experienced, in-house financial analyzing programs which will
confidentially analyze your application and help us to package the information so that you
will get the best rates and terms. This will be done before the application is submitted
so that nothing will show on your credit report until approval is virtually assured. We have multiple
sources, so that we can meet virtually any financial requirement. Often times an
individual source will take an application from a client and then someone up the chain
will reject it because they no longer do Catamarans, or charter boats, or now require a
newly established criteria be met. This could result in a Turn Down
(TD--technical bank term.) showing up on
your credit report which might eliminate a more viable source later. We also offer more
complete services including help with documenting, setting up corporations, financing for
charter boats--Catamarans and Monohulls, and insurance satisfactory to the financing
source. None of our services cost you extra. They are simply a part of the complete
services we offer.
NOTE: BYA is not a financial source itself and simply provides information and submits applications based on previous experience. There is no guarantee of any kind relating to the process, or for maintaining financing in effect once it is approved. The terms of the various sources vary, and it is ultimately the clients responsibility to obtain and maintain financing for any individual boat purchase. Please consult with your own financial advisors and the responsible party at the bank where financing is obtained for the final word on your financing.
For even more about how to get qualified for your loan Get registered now and we'll get you your own QuickCalc Pre-Qualification Calculator.
Bonus!
How to keep your investments working and have a boat too!
- If you have a substantial stock/investment portfolio and you're interested in 100% financing.
- If you're interested in getting money out of your investments without paying capital gains or any other tax.
- If you're interested in getting money out of your investments without cashing in your investments (or using a margin account).
- If you would like to pay interest to yourself (and then deduct it if you set your boat up in our YPSMP)
- If you have a real-estate investment and want to convert your rental property to a rental boat--forget everything you've heard. There is a way. Break out of the box.
We have some new approaches that may offer you additional options never before considered or available. Call Eric Smith at: 410-263-2311 to discuss your situation and to begin to explore alternatives.
NOTE2: Getting some tax breaks immediately! The After tax deduction refers to the second home tax deduction. You can adjust your W4 or withholding and take this advantage every month. See the savings immediately with our loan calculator. If you're planning to be involved in our YPSMP--you will still get this deduction, but it will come as a business deduction and not count against a second home interest deduction.
Setting up a Corporation
Setting up a Corp. in a non-tax state like DE. Includes form to apply.
(Please talk to us first! There are lots of ways to do this, and the bank has
certain requirements--we'll explain.)
Over one-half of the Fortune 500 companies and nearly one-half of the companies listed on the New York and American Stock Exchanges are incorporated in Delaware.
Delaware has a long history of being corporation friendly. Delaware actively has kept its corporate laws at the leading edge of corporate governance. You do not, however, need to be a Fortune 500 company to take advantage of Delaware's friendly corporate laws. No matter haw small your business, Delaware has advantages for you.
Incorporating
Should you incorporate?
Whether you are setting your boat up as a business or not, there are two major advantages to incorporating:
- Some additional liability protection. It makes it more difficult for anyone trying to get a judgment against you to get to your personal assets. In today's litigious society, you are vulnerable to everything from people walking down the dock and tripping over your dock line, to guests on board--coming after you for more than the value of your boat.
- There may be advantages on resale. If you've paid sales tax, you can sell the stock in the Corporation, rather than the boat and the new owner may then not need to pay the tax again--this makes your boat worth more at resale. There may be other advantages if you want to get partners, etc. to just selling or exchanging stock rather than "selling your boat". (Check with appropriate tax authorities.)
- More specifically, concerning placing your boat in our management plan:
- With a Sub S, it's been reported that chances of audit are all but eliminated--this type of election seems to warrant the least amount of scrutiny. (Of course, this is appropriate to avoid the hassle and time spent enduring an audit and in no way means that we are suggesting anything that would keep you form paying whatever amount is actually due.)
- With an LLC election, you can deduct losses up to the total value of the investment (including the financed portion.) Talk with me for a more detailed explanation, but ultimately talk to your financial adviser.
What incorporating in DE or whatever state does not do is relieve you from local state tax responsibility. In general, states like Maryland require a use tax if your boat is principally used in MD waters --whether you're incorporated in a different state or not! You may, for example, cruise MD waters for a summer after arriving here from the Caribbean in spring/early-summer and if you return to the Caribbean in the fall and you spent the majority of time in the Caribbean over all--you would not be obligated to pay the MD use tax. Also, if you paid it in another state at time of purchase you may be exempt. Consult with an expert if you need more detailed advice.
What type of Incorporation...
- Where: Delaware or another tax free, user friendly state. Links to the left. You can do it on-line.
- Which kind? You probably need to talk to your tax advisor. With a Sub S. or LLC any tax advantages flow through to you personally and these are relatively simple formats. There may be some limits to your deductions with a Sub S. if you set your boat up as a business so there may be an advantage to using the LLC format. Again, consult with your financial advisor concerning anything that affects taxes.
Bonus: If you want to see what the tax advantages are, simply for the second home tax deduction--go to our simple loan calculator.
A word about documentation...
Generally the bank
will require Federally documenting the boat. The main reason for this, rather than
accepting state titling, is that by Federally documenting, the bank gets a Preferred Ships
Mortgage filed on it's behalf. This is an internationally recognized document where as
state titles are often not even recognized from state to state.
Side benefits include:
- Lien protection (for you, and/or the buyer of your boat at resale--this enhances resale value.)
- Easier clearing in and out of foreign ports.
- U.S. government protection in foreign waters.
Return to index... OR Contact
us
Click on the symbol to the left to get finance application, and here to get the Hull Reservation agreement.
To get a finance application that you can fill out in a word format so you can email it back, click here. (to insure privacy, don't fill in the last 4 digits of your SS number--send that info separately with only those digits in the body of your message.)
Want to check your credit out--on line, instantly? Concerned about what might be on your credit report? Follow this link!
For even more about how to get qualified for your loan Get registered now and we'll get you your own QuickCalc Pre-Qualification Calculator.
Qualification/Costs
Type loan/Closing Costs (Different banks will have slightly different requirements which is one reason that our
financial analyzing can help you.) Normally, sailing experience is not a factor for
financing, though it might be for getting insurance. In many cases, we teach new sailors
to sail on their new boat! Get the loan app. here (Acrobat):
To get a finance application
that you can fill out in a word format so you can
email it back,
click here. (to
insure privacy, don't fill in the last 4 digits of your SS number--send that
info separately with only those digits in the body of your message.)
Generally a boat loan
is like a house loan in that it is a simple interest loan. This means no prepayment
penalty should you decide to prepay principal, or pay it off early.
Most marine loans are
for a period of 15 or 20 years (for amounts over $50,000 and $100,000 respectively.) Most
clients elect a simple interest loan with a 15 year term and with 20% (25% for charter
program boats) down. Variable rate and balloon loans are also sometimes a consideration.
Unlike most
real-estate loans, there are really no closing costs with a marine loan. No origination
fees, tax stamps, etc. Generally, these loans are so simple, (more like a regular consumer
loan) that attorneys are not required. The only closing cost normally associated is the
cost to have a Document service do the documentation. As this is written, that fee is in
the $450-$500 range and represents your only closing costs unless you are setting up a
corporation. (We can help you set up a Delaware Corporation or LLC as a part
of your total package. The extra cost is about $300-500.)
Are you qualified?
Profile:
You are a successful individual who has accumulated substantial wealth so that you are
able to invest in a boat. You have at least 20%-25% (Depending on the strength of your
application, this can sometimes be reduced to 10% or less!) of the boat's price available
in liquid assets. Your success qualifies you for a loan. Generally, the bank will look at
a number of criteria. This includes: (Note--this is very general with lots of exceptions!)
There are many variations. A very high net worth, for instance, may cause the bank to
accept a much higher debt to income ratio. Partnerships or corporations can be financed,
and we can help with setting these up--these will complicate things so talk to us early.
Finance app (Acrobat format)
Click on the symbol to the left to get finance
application, and here
to get the Hull Reservation agreement.
For even more about how to get qualified for your loan Get registered now and we'll get you your own QuickCalc Pre-Qualification Calculator.
Calculating...
Calculating the payment
If you have MS Internet explorer--we have a calculator that calculates the interest deduction/savings as well as payment. Go there now.
Want to know specifically how much boat that you can afford to finance? Find it here. (Or scroll to this section after following the rest of
the presentation.)
TABLE, COST OF LOAN Cost/$1,000 of loan
value before and after the 2nd home interest deduction. (All of the boats we sell qualify
for the second home interest deduction. If you place your boat in our Yacht Profit Sharing
Management Plan you may qualify for additional tax advantages.) This table is based on a
15 year amortization. The cost after tax advantage reflects a combined (Fed./State) 38%
Tax Bracket. (We have an in-house program that plugs in your tax bracket and the rate we
get for you and gives you a complete 15 or 20 year amortization table showing you exactly
what you'll get back in taxes so that you can adjust your W4 or the way you pay taxes in
order to realize immediate benefits. With our YPSMP there are even more tax advantages! Go
to:
YPSMP To find out more, if you haven't yet.
(Yacht Profit Sharing Management Plan)
|
RATE |
COST/$1,000 |
COST/$1,000 |
|---|---|---|
|
8.0% |
$9.56 |
$7.26 |
|
8.5% |
$9.85 |
$7.40 |
|
9.0% |
$10.14 |
$7.53 |
|
9.5% |
$10.44 |
$7.68 |
|
10.0% |
$10.75 |
$7.83 |
|
10.5% |
$11.05 |
$7.98 |
EXAMPLE...
Financing $100,000 @ 9.5%.
Nominal Payment (Use this for Debt/Income calc.) 10.44X100-$1,044 Payment after tax advantage 7.68 X 100=$768.00
Or, try the table below.
If you have MS Internet explorer 4.0 or above--this calculator should work... Fill in any of the variables, and get real-time answers.
NOTE: Fill in Boat Cost, DP by default is 20% but you can change this or any other variable 1-6 (3-8 on spread sheet line #'s). For your tax bracket, be sure to include the total of Federal/State/Local. Results are 7-12. Note the difference between (7) your calculated loan cost and (12) your actual Out of pocket.
For even more about how to get qualified for your loan Get registered now and we'll get you your own QuickCalc Pre-Qualification Calculator.
If your browser supports it, you can sample this Loan calculator here. Put .05 (5%) in for the interest and enter your boat cost. You may change anything in yellow. Especially notice your Monthly payment (9-7) and Out of pocket cost after second home interest deduction (14-12)
Go to
the BYA loan calculator (A simpler, Java based
calculator.). It won't figure your tax deduction for interest, but will let
you play with rates, down payments, etc. --quickly. Give it a try. For even more, see below! (Use the
BACK key to return to our page.)
Selling your boat, or refinancing...
If loan rates change substantially, and you want to refinance, you can
generally do this with little or no cost. At most, the cost of re-filing the
preferred ships mortgage--approximately $150. This makes it
feasible to refinance if the rate goes down, or after
you have gained substantial equity (coming out of our management plan, for
instance) and you want to refinance a lower amount to reduce monthly costs.
On selling your boat, the loan is not generally assumable.
For
people who have bought boats in some of the other charter plans (not our
Yacht Profit Sharing Management Plan!) the charter companies have put their
generic brand label on the boats and sold them at inflated prices. At
resale, in some cases, owners found their boats so depreciated that they
were upside down on their loans, or they found, the banks would simply not
finance a non-branded boat.
Be
careful, and talk to us or some other knowledgeable source before you
consider any non-branded boat.
A note on Placing your boat in our Management Program...
While owner's generate substantial income in our
program, the bank looks at this activity as a new business. They will not,
generally count the income from chartering in the income calculation until
you have 2 years of tax returns showing this income. In other words, you
must qualify for the financing as though you weren't going to charter the
boat.
This does change from time to time.
We strongly recommend that you talk to us and develop a business plan before you approach any bank!
What can you qualify for?
Want to know what is the maximum boat that you can afford? Go to: this calculating program to find out. This program is for a home mortgage so multiply the results based on a 36% Debt/Income ratio by 1.1 to 1.3 depending on how conservative the bank is. Make a note of these numbers in advance that you will need to substitute.
Please read the rest of this before you go to the calculator and understand that this is a very general look. Much higher ratios are allowed when you have a higher net worth, or extremely good credit, etc. There are all kinds of variations--just use this program as a rough guide/starting place then talk to us...
- Monthly debt. Include home, car, any other boat and any long term debt with balances left to pay of over a year. Do not include Credit card debt.
- Cash on hand. Base this on 20% of the potential boat's price. (25% if you want to set your boat up in business.) As mentioned, you can use creative ways to get the down payment out of your stock portfolio, home equity or 401K without cashing these in... Talk to us.
- Property Tax Rate. Set to 0% for our purposes.
- Home insurance rate. Set to 0% for our purposes.
- Interest rate. As this is written 04/01, use 8.0 as an example. It is generally slightly higher if you set your boat up in business.
- Length of loan. Normally 15 years, but it can be 20 for amounts to borrow of over $100,000.
Be sure to use the BACK key of your browser to get back to
our site otherwise you'll be trapped in this new site.
More interesting financial planning tools are available from the same
source, see link below.
Want to check your credit out--on line, instantly? Concerned about what might be on your credit report? Follow this link!
For
even more about how to get qualified for your loan
Get registered now and we'll get you your
own
QuickCalc
Pre-Qualification Calculator.
To get a finance application that you can fill out in a word format so you can email it back, click here. (to insure privacy, don't fill in the last 4 digits of your SS number--send that info separately with only those digits in the body of your message.)
Click on the symbol to the left to get finance application, and here to get the Hull Reservation agreement.
For even more about how to get
qualified for your loan
Get
registered now and we'll get you your own
QuickCalc Pre-Qualification Calculator.
If you should decide to incorporate, here's info.
Quickest
Agents and Incorporation, Inc.
Above is BYA recommended.
#2 Choice below...
-
--perhaps
the best deal and loaded with info. takes time.
- Yacht Registry, Ltd. (We've used these guys successfully many times--they are highly recommended).
- DE Corp--Also recommended. Stephen Robinson
-
Other possibilities
What happens next...
So, your new boat is on order. What can you expect next?
(NOTE: This goes through a new boat scenario. If you are purchasing a used boat, we pretty much follow the same procedure but with a condensed time table (See note at end). In either case, if you have changes or upgrades that you want to add to the financing, let us know as soon as possible, and, as far as possible, work with us to get estimates so that these upgrades can be included in the initial financing request. It's easier to ask the bank for less money in the end, than to ask for more!
- 1. After you sign the agreement, a countersigned copy will be returned to you for your records. This will include a list of the equipment you have ordered and a tentative delivery date.
- If you discuss with us, or others, any changes from this original order, we will make a list of the changes on a change order and ask you to sign off on these. After we receive a signed copy of the change order back, we will institute the change order with the manufacturer and confirm the changes to you with an up-dated statement.
- Of course you can call us anytime while your boat is on order with questions, etc.
- If we are arranging financing for you, we will have submitted the application and you will be mailed the approval notice from the bank. Note: It is your responsibility to maintain this approval in effect. Typically the terms of the approval are only good for a limited time so, depending on this term, it is important for you to re-check with the bank in the last 30-60-90 days (or whatever time period they offer the terms for) before settlement.
- We will send you notice of settlement, and the latest statement as
well as other documents approximately 3-5 weeks before the scheduled
settlement. If you haven't received this for some reason--contact us
immediately. These documents will contain a summary and check list of
what, if anything, you need to bring or have available for settlement.
In addition, if you decide that you want to incorporate--we will discuss that. There are two on-line companies that can arrange a Corporation for you. Just remember, if you are setting your boat up as a business, the bank will generally want you to set up a dedicated, sole-purpose corporation that is not a part of any other business. Call us if you have questions and/or go visit the sites listed to the left for a thorough discussion of your possible questions.
- We will contact you shortly before the settlement to arrange the actual settlement (the settlement may occur in person or by mail), suggest the insurance company you need to contact, and answer any other questions.)
If you are purchasing a brokerage boat, pretty much everything above still occurs, it's just that we provide the settlement package and make arrangements as soon as acceptance is given by the seller, and set up the settlement as soon as all contingencies are met.
If you have any further questions, just call our office for
clarification. You may click the button to download a loan app.
To get a finance application that you can fill out in a word format so you can email it back, click here. (to insure privacy, don't fill in the last 4 digits of your SS number--send that info separately with only those digits in the body of your message.)
Click on the symbol to the left to get finance application, and here to get the Hull Reservation agreement.
This is for information purposes only. You should talk to your bank and financial advisor for the final word. BYA and it's officers or affiliates are not responsible in any way for the use made of this information.
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Bay Yacht Agency, "On the harbor, Annapolis" Since 1972 Use our handy form to register and receive confidential information: Insider news, technical brochures, in depth articles, business plans, pre-announcement of new models and charter specials and more. Call, Sales/Management 1-800-YACHT20 (922-4820) or 410-263-2311 Charter (Let's Go Cruising--offering America's 5starfleet.com): 1-888- 995-BOAT or 410-263-1818
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