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Go Back   WakeWorld > >> Boats, Accessories & Tow Vehicles Archive > Archive through February 15, 2009

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Old     (wake1823)      Join Date: Dec 2005       01-06-2009, 8:27 AM Reply   
Anyone have any experience on how dealers react to "downgrading boats". I looking into getting a less expensive boat. I really have no need for a $60k boat. Was looking to get into a late model used price point ( v-ride, moomba, ect) boat....close to $30k. The easiest way (less hassle) for me to do this is go thru a dealer ( Tradnig my current boat in on one fo their used boats). I'm probably $2k upside down in my loan. I know how it works in the car world, just curious about boats

(Message edited by wake1823 on January 06, 2009)
Old     (pnichols)      Join Date: Jan 2007       01-06-2009, 9:08 AM Reply   
I'm sure it will depend on the price you pay for the used boat. The banks have guidelines on financing.....they don't want to lend more then the boats book value. I'm sure if you can buy the used one for $2k less then trade value, and you pay your tax upfront, and not finance them you'll be fine.
Old     (wake1823)      Join Date: Dec 2005       01-06-2009, 9:15 AM Reply   
^^^Wouldnt' there be a net tax defecit? So basically I wouldn't pay any tax, as I don't think the state will give you credit for tax payed over the amount of the purchase price.

When you trade a vehicle you only pay the net tax diff., so you don't end up paying tax twice.
Old     (05mobiuslsv)      Join Date: Apr 2006       01-06-2009, 9:24 AM Reply   
You pay tax on the final purchase price after trade in credit.
Old     (wakeride26)      Join Date: Dec 2006       01-06-2009, 9:57 AM Reply   
You only pay tax on the difference, not the final purchase price....
Old     (skier12)      Join Date: Mar 2006       01-06-2009, 9:59 AM Reply   
But if I understand what he's saying is that he should be free and clear on the taxes.

The boat he's trading in is worth more than the one he's buying. Correct?
Old     (05mobiuslsv)      Join Date: Apr 2006       01-06-2009, 10:02 AM Reply   
Bret thanks that's what I said.
Old     (05mobiuslsv)      Join Date: Apr 2006       01-06-2009, 10:03 AM Reply   
If he doesn't have to pay anything then he won't pay any taxes.
Old     (brucemac)      Join Date: Dec 2005       01-06-2009, 10:08 AM Reply   
what about the other way around, or upgrading on a trade-in? you only pay the difference as well, right? say you trade in at $30 and you buy at $50, you only pay tax on $20K right? or is that not right?
Old     (polarbill)      Join Date: Jun 2003       01-06-2009, 10:14 AM Reply   
That is correct Bruce. The problem I see is how in the hell are you going to get anywhere close to your payoff on your trade in and who is going to take a 60k boat in on trade for a 30k boat. The only way for it to make any sense is for the dealer to rape you on your trade in.

I am interested on what kind of boat you have currently.

(Message edited by polarbill on January 06, 2009)
Old     (brucemac)      Join Date: Dec 2005       01-06-2009, 10:42 AM Reply   
yeah good point brett, unless they put a bunch of money down it's going to cost a lot and going to be pretty tough selling a $60K boat private as well. boat show is around the corner, maybe you could get lucky. sounds like he already realizes he's going to lose some money on a deal, but yeah, the dealer isn't going to pay off the note, that's for sure. yeah, what boat is it?
Old     (wake1823)      Join Date: Dec 2005       01-06-2009, 10:42 AM Reply   
07 22 SSV, every option you can get, including multiple gel coat upgrades...msrp'd around 64k, paid low 50's. put a few $$$ down.

boat is probably worth high 40's???

I thru out $60k as an arbritrary number...should have been more exact.
Old     (patrick232)      Join Date: Aug 2008       01-06-2009, 10:46 AM Reply   
Dealers will not put a more expensive used boat on their lot to move a cheaper one. Most don't have the cash right now and floor plans are gone
Old     (wake1823)      Join Date: Dec 2005       01-06-2009, 10:46 AM Reply   
Brett, you kinda answered my question...will dealers actually make these kind of deals?

The way I understand it, is dealers haev to sell your trade before they actually realize any profit.
Old     (deltadave)      Join Date: Mar 2005       01-06-2009, 11:10 AM Reply   
You better check with the CA State Board of Equalization or your local dealer. I think you pay tax on the total amount of the sale, there is no credit for a trade-in that reduces the sales tax. It's like when mobile phone companies give you a discount on a phone. They charge you the tax for the pre-discount amount and that tax is added to the discounted amount of the phone. I think it's going to be tough to find a dealer that has the cash or wants to pay off your $50k loan and sell you a $30k with a small profit. It's a tough market out there. I think dealers (and the public) are only taking trades/buying at 10% under the low book value, so you may not be able to unload your current boat without a significant loss.

(Message edited by deltadave on January 06, 2009)
Old     (hatepain)      Join Date: Aug 2006       01-06-2009, 11:30 AM Reply   
Here's the deal if a dealer can make some GP on the deal their gonna make it whether they are taking on a more expensive boat or not. While flooring might be a factor the dealer is gonna factor that in to the trade value. If you are a good credit risk, which you probably are, there should be no problem with rolling some of the negative equity over to the next loan. Yes LTV's need to be inline but those vary from one buyer to the next based on their credit worthiness. I'm not sure about CA but as Brett and NuBu said if you are trading in a vehicle here in WA you only pay tax on the difference of the the trade value and purchase price thus if the trade value exceeds the purchase price there will be not tax due, again that is her in WA.
Old     (helinut)      Join Date: Apr 2007       01-06-2009, 11:31 AM Reply   
Totally in the same boat as you are :-) I'm hoping to run my boat through my dealer if/when I sell it. I should be able to get back the difference in taxes on it. It's the only way to do it and not take over a $4k hit. Man I wish I had bought it in Oregon! $4K is worth a PO box and hoping you don't get caught :-)
Old     (wakeride26)      Join Date: Dec 2006       01-06-2009, 11:34 AM Reply   
This is a tricky situation. You need to find a dealer who can write a check for your boat. We have done it plenty of times if we can buy the trade in at Current Market Value... You should try consigning your boat with the dealer during their boat show and see if they can sell it for you. They can do what is called a " Pass Through" so that it looks like a trade in, and you save paying the tax on the new boat. Just an Idea....
Old     (helinut)      Join Date: Apr 2007       01-06-2009, 11:51 AM Reply   
They can do what is called a " Pass Through" so that it looks like a trade in, and you save paying the tax on the new boat.

That's exactly what I'm hoping to do. But I'm trying to dump the boat all together. I'll buy another one in a few years.

(Message edited by helinut on January 06, 2009)
Old     (polarbill)      Join Date: Jun 2003       01-06-2009, 12:02 PM Reply   
Doing the pass through like Bret mentioned is the only way you are going to get close to what you owe. If a dealer is just taking in you boat on trade they would be stupid do give you anymore than trade in value without adding any options. I don't even think I would give you that if I was a dealer right now. I honestly think you would be lucky to get 40k trade in for your boat.

Just my 2 cents.
Old     (deltadave)      Join Date: Mar 2005       01-06-2009, 12:37 PM Reply   
I agree. I would try to get a dealer to consign it for you at a reasonable price. He can probably roll over the negative into the new loan. I'm fairly sure in CA you must pay the total tax on the new boat price and there is no way to deduct the trade or sale value and get the sales tax based on the lower amount. They have been closing the out of state/Oregon/NV deal in CA. A dealer in CA might be the one getting stuck with the sales tax if he sells it "out of state" and you bring it back in or reside in CA or it doesn't meet the SBE's guidelines. Are you sure WA lets you do that? And you can get your tax refunded? Hard to believe WA would do that.
Old     (polarbill)      Join Date: Jun 2003       01-06-2009, 12:42 PM Reply   
If you live in Washington and buy a boat in cali you don't pay the tax to begin with. I believe you would then have to pay the full amount of tax when you register it up here. If that is not how it works I would like to know.
Old     (05mobiuslsv)      Join Date: Apr 2006       01-06-2009, 12:54 PM Reply   
^^^You are correct sir, only washington will make you pay tax on what they think it's worth not what you actually paid for it.
Old     (brucemac)      Join Date: Dec 2005       01-06-2009, 1:16 PM Reply   
i bought my boat in orgeon and when i registered it in washington, i had to bring in the bill of sale. i didn't pay taxes up front in oregon, but i did pay sales tax off of the bill of sale for the boat at the licensing office. hopefully will still be able to write off that sales tax with 08 taxes. i think this is the last year for that.

if you're just looking to dump your boat and there's no upside for the dealer (another purchase) you're out of luck i'm sure. better off listing it private and crossing your fingers.

(Message edited by brucemac on January 06, 2009)
Old     (wakeride26)      Join Date: Dec 2006       01-06-2009, 1:16 PM Reply   
You pay the tax for the state your residence is in. I have never seen a trade in that does not get the purcahser credit for the trade when it comes to taxes. It has nothing to do with being out of state. However I did hear something about Cali. getting rid of tax credit and making people pay the full amount again.
Old     (helinut)      Join Date: Apr 2007       01-06-2009, 1:23 PM Reply   
Brett,

Yes you do pay the taxes when you register the boat if you buy it out of state. Nothing says you can't register it in another state though :-)
Old     (dhcomp)      Join Date: Jun 2003       01-06-2009, 1:39 PM Reply   
2 grand isn't that much to be upside down. Still not good, but i would think trading in and downgrading and paying taxes would be more hassle/cost than the $2000
Old     (wake1823)      Join Date: Dec 2005       01-06-2009, 2:00 PM Reply   
My motivation for doing this is the monthly increase in cash flow by lowering my boat payment. If I can save $250 ish a month it may be worth it, and possibly lower the term on the new loan?

As far as I know ( as of late 2007) you will get tax credit when you trade...I'm banking on that or it wont' make sense at all.

Another reason to not sell private, I could potentially lose a tax credit by not trading.
Old     (meathead65)      Join Date: Sep 2006       01-06-2009, 2:27 PM Reply   
As a CA dealer, I am 99.9 percent sure you are going to pay tax on the gross sale of the new boat, and the tax you paid on the old boat is long gone. There will be no credit applied.
Old     (aarond0083)      Join Date: Apr 2007       01-06-2009, 3:37 PM Reply   
meathead is correct. Unless your state has really cool tax laws you will pay the tax on the sale price of the new boat. Your previously paid tax will not matter.

In NC, tax for boats maxes out at $1500. Really good when your spending 60K on a new boat.



(Message edited by aarond0083 on January 06, 2009)
Old     (deltadave)      Join Date: Mar 2005       01-06-2009, 4:33 PM Reply   
Sam, there is no tax credit in CA. The tax you paid on your boat is gone. The State is not going to give you a credit. It's not like you're returning a pair of unused jeans to Macys. I don't know what you payment is now, but I guess if you have a payment based on $54k and you're going to finance $30k, you could lower your payment that much. But I don't see how that's going to happen if you have negative equity and no cash.
Old     (polarbill)      Join Date: Jun 2003       01-06-2009, 6:13 PM Reply   
If that is true in Cali then you are not going to gain anything by trading in your boat. The dealer is going to give you at least 10k less then what you owe currently so you can add that on to the 30k boat you plan on buying. Add the tax on the 30k boat and you are going to be 10-15k backwards immediatly. I don't think it really matters because I don't see any bank in this economy giving you a 45k loan on a 30k boat. You are better off keeping your current boat or trying to sell it yourself. You may want to really see how backwards you are. Even though you think only 2k it may be more like 10k since used boats are being sold at huge discounts compared to the last couple years.
Old     (aarond0083)      Join Date: Apr 2007       01-06-2009, 7:45 PM Reply   
Have your dealer give you payoff on your trade and let them tack on the difference to the sale price of the boat you are trading for on the paper work. Granted this wouldn't work too well if your upside down 10K or more but if it's more like 5K you'll be fine. As long as your credit is good you'll get the loan for the price that is on the bill of sale of your new boat, where as if your asking for more on the loan than what the dealer is selling the boat for it might be much more difficult to get financed, especially in this economy. 40K on your 30K boat wouldn't be so bad if you can get a better rate, possibly a shorter term, and get out of your current loan that you no longer want to pay for.
Old     (bftskir)      Join Date: Jan 2004       01-07-2009, 12:56 AM Reply   
I downgraded from a $30,000 boat to a $6500 dollar boat(virtually the same model just lost 112 horsepower), spent a little to fix it up and pocketed 20,000 cash.

plus I can go ski my old boat whenever I want so its cool.
Old     (hatepain)      Join Date: Aug 2006       01-07-2009, 8:48 AM Reply   
Banks don't just look at the sale price they look at the book value of the boat so just tacking on the 5-10k on to the "sales" price doesn't work. In the same token I'd bet the book values haven't caught up with the sales market. So he'd likely be buying a boat for 30k which may book for say 35k and most lending institutions will allow for 110% LTV which would get him outta his old boat well close anyway. It's all moot anyway because it's likely not gonna lower his payment enough for it to make sense but the only way to know is to give it a run and let is know how it goes.

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