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Only read this section if you want to know what a boat is really going to cost you.  If you don't like pain and agony, skip to the next section. 

Financing:

Interest rates on used boats are not very good.  From the lender's point of view, a boat is a luxury item and if someone is going in to default, a boat is something they will stop paying on first.  Hence rates are high.  At the time I'm writing this, the best 5-year rates are around 7%.  Historically this is not bad at all, but relatively speaking it's high.  I'm also hearing that the 7+ year loans that were popular during good economic times are more difficult to get.

Costco.com is a good place to look at rates if you are a Costco member.  Banks are a good source as well.  I wound up financing through my credit union, which offered the best rate I could find.  They also handled all of the DMV paperwork for me, which was a huge plus.  Bottom line on financing is that you just need to pick up the phone and make some calls.  Find a good quality lender advertising a reasonable rate and see what you can do.  It's all about the interest rate.  Here is a convenient calculator (Excel file) to help you calculate your payment. 

Paperwork:

Paperwork varies by state.  I could go in to all the detail for buying a boat in Missouri but there would be no point.  By the time you read this, the paperwork could change, and odds are you'll buy your boat in a different state anyway -with entirely different paperwork. 

Just to give one example of a state-specific nuance; the outboard motor has it's own registration and pink slip in Missouri.  The DMV specialist had me take the pink slip for the outboard as part of the sale of course, but she advised me not to fill it out.  The reason is that if I wind up selling the boat to someone in another state that has separate outboard motor registration like Missouri, having the unsigned pink slip for the outboard will make the transaction much easier. How a normal person would know this, I don't know. 

This is where having the DMV specialist at the credit union was a huge help.  They bungled a few things but they also filled out all the paperwork, collected the DMV fees, and marked every place where the seller and I had to sign with color coded sticky notes.  There's something to be said for color coded sticky notes when you just drove for 2 days and have to fill out 12 pages of paperwork on 3 hours of sleep. 

Here are some examples of things that went wrong for me:

1. The seller and I adjusted the price of the boat by $500 right before we did the paperwork.  The DMV portion was all filled out already so I made the change to the sale price and both the seller and I initialed it.  I learned (when I was back in California of course) that even an initialed change to the price is not acceptable in the DMV's eyes.  You can initial other changes, but not the price!  So the credit union had to mail the seller the paperwork again and have him sign it and mail it back. 

2. When The California DMV did the VIN inspection on the trailer the inspector didn't write the weight of the trailer on the inspection.  This delayed my trailer registration paperwork because the DMV refused to process it without the weight.  I should have checked over the form before submitting it but made a foolish assumption that the DMV would actually know how to do their job. 

3. My insurance company sent the credit union the proof of insurance but apparently they did not get it or misplaced it.  More time was wasted as they figured this out, contacted me, and I provided it again. 

Maybe I just had a little bad luck with the paperwork, but I would expect at least a few things to go wrong with the paperwork on any out of state transaction.  Be ready for it.  Ask a lot of stupid questions and confirm everything twice. 

Taxes: 

Ah taxes.  The cost you didn't think about when you were dreaming of rocketing down the lake.  The State Board of Equalization posts use tax rates here.  Wonderful Alameda county has one of the highest rates in the state at 9.75%.  If you were paying cash for the boat or doing the paperwork yourself you could play games with the sale price to avoid tax.  I didn't.  The credit union wants the taxes up front so you should be prepared for that.  I paid $24,000 for the boat so that meant a check for $2,340.

But what about leaving the boat out of state for 90 days to avoid the use tax?  This was a viable way to avoid taxes up until quite recently.  Unfortunately with the state in a budget crunch they closed this "loophole" by requiring you to prove you kept the boat out of state for 12 months before bringing it in to California.  With the way boats depreciate you'll lose more in the value of the boat doing that than you'll save in taxes. 

People play other games like registering the boat in Arizona.  Google around and you read all manner of neat schemes.  The feeling I got after researching everything was that it would be a lot simpler to pay the money and not worry about it. 

Insurance:

Getting insurance on the day I bought the boat was important since who knows what might happen on a 2,000 mile trip.  I made a few calls and went through Stan and Ken Vandenberg at 1-800-BASSBOAT.  $300,000 liability, $5,000 medical, $2,500 tackle, $500 towing and labor, and insuring the boat for $24,000 ran just shy of $400 annually.  That was the best quote I got in relation to the coverage offered.  I didn't dig too hard though here. 

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