#3686, "Buying a Boat Out of State - Part 2" Tue Dec-01-09 05:39 PM by swimbait
Financing + Paperwork
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, 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 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. We adjusted the price of the boat by $500 right before we did the paperwork. The DMV paperwork 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 (yes you have to take it in and have them inspect it) they didn't write the weight of the trailer on the inspection. This delayed my trailer registration paperwork. I should have checked this out, 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.
Drive, fly, rent, or ?:
The big dilemma with buying a boat out of state is getting it. Missouri is 2,000 miles from my house. I looked at flying out, renting a truck, and driving back. It was about the same price as just driving out and back myself, perhaps a bit more. It was also hard to find an outfit that rented full sized pickups one way long distance. You could get a cargo van or a box truck but that seemed less than ideal. I also looked in to shipping the boat. The rates varied from $1 to $2 a mile. In other words, $2,000 to $4,000. Some dealers seemed able to offer cheaper shipping rates, or perhaps they were bundling it in to the price. The biggest issue with shipping was that I wouldn't be able to test drive the boat.
So I started planning the road trip. You'd be amazed how many people seem excited by the thought of a crazy cross country road trip. It was like Tom Sawyer's fence. Nico was down to go so we booked a Motel 6 in Kingman, AZ and Springfield, MO for the way out and left the trip back open ended. With two people we figured we could do the 4,000 miles in 3 to 4 days - driving in shifts and sleeping a few hours each night.
The approximate breakdown on cost was as follows, averaging $2.70 per gallon on gas:
Hotel - $120 Gas to MO - $335 Gas to CA - $490 Tolls - $40 Food - $100 Monster Energy - $25 DMV Fees related to out of state purchase - $70
Total = $1,180
I also paid Nico some money for the hassle and bought him some tackle at Bass Pro Shops. You may be too cheap to pay your friends to help you get the boat so I didn't factor it in. In case you were wondering, the Bass Pro world headquarters had no giant bass swimming in tanks due to a remodel (huge let down). They did have a crocodile. It looked tired.
So in an economic sense, I paid a $1,180 premium to get the boat out of state (some DMV fees would be paid irregardless). If you consider the food cost as a sunk cost (we all need to eat), you're down to $1,080.
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.
The Road to MO:
We left after work on a Wednesday night and headed south from Dublin. By 3am we were in Kingman, AZ. It became apparent right away that 2-hour shifts worked well for driving. One guy could sleep or rest in the back of the cab while the other guy drove. The first leg was uneventful, and dark.
6am Thursday we were on Hwy 40 headed for Missouri. The Arizona high country was nice. New Mexico seemed dirty, but scenic. They really want to sell you turquoise jewelery and knives in New Mexico. There's also a cool energy shot called "Truckers Love It" in the gas stations there. I tried to get Nico to try one but he wussed out.
Texas has giant bugs around Amarillo. We passed a cool rest stop / tornado shelter that was built out in a giant pile of earth. Oklahoma was long. There were an inordinate number of tolls here, and signs advertising adult video. Gotta tell it like it is. Finally at 2am we hit Springfield.
After driving for 20 hours we pulled off the freeway. I was at the wheel. On the offramp I see headlights coming my way. My heart jumped. I thought I might be going the wrong way but it was a drunk coming up the offramp. Scared the pants off me. We headed to the Motel 6 and immediately got lost. I took business 65 instead of 65. After sorting things out I pulled on to a residential street to turn around. A 3-point turn was required. As soon as I get sideways in the street a cop comes around the corner and lights up a car that turned in front of him.
Here we are sideways in the road at 3am in Springfield with a spotlight on us. I had to laugh inside. The cop just gave us idiot out-of-staters the once over and sent us on our way. We crashed out.
Buying the Boat:
When the seller pulled around the corner as we sat at McDonalds at 7am that same morning it felt a bit surreal to see the boat. We headed to Table Rock Lake. It was cold and windy. Good day for a boat test. Nico got a 1-day fishing license. Cell reception sucked so I couldn't get one. We ran down lake, pulled up on a point and our guy cast out and hooked one on the first cast. Pretty cool.
Fisherman are fisherman no matter where you go. We spent 3 hours BS'ing and checking out the boat. Nico caught a couple spotted bass. It was blowing 15 and tough to fish. I bought the boat and we headed to the aforementioned Bass Pro Shops. From there we continued West to Amarillo, TX. I don't remember when we got there, but it was some time after dark. We were wiped out and Nico was catching a cold. We got the crappiest Domino's pizza I've ever seen delivered to the hotel.
The Road Home:
Saturday we got up and on the road again early. The weather was good. The tolls in Oklahoma were more expensive with a tandem axle trailer. I was beginning to experience the joy of big boat ownership. My 2002 Tundra V8 did a whopping 10.5mpg with the boat in tow at 75mph. Sure I have a KNN and a Magnaflow exhaust but let's be real here.
You have to hand it to other states for building smooth roads and letting you drag your boat at high speed at least. We drove and drove this day. I saw a herd of antelope in Arizona and thought they were fake. By 10pm we hit the California border. Nico was at the wheel and thought the truck felt funny so we pulled over. It looked a little low on oil. We were somewhere near Blythe and stopped at a gas station. All it said was GAS.
Inside there were aquariums everywhere. I bet someone reading this knows this place. Behind the counter the guy was itching his leg and going on about how he had just gotten stuck by a cactus. Next thing I know he's spraying his leg down with Windex. It was the most priceless moment of the trip. Wish I had it on video. This dude was plumb off his rocker.
We drove on. And on. It was a 2 Monster evening. Finally around 7am the next day we were home.