If someone is selling a boat in a installment agreement what is the lowest interest rate they have to charge? (Buying or Selling a Business Agriculture Agriculture

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If someone is selling a boat in a installment agreement what is the lowest interest rate they have to charge?

I have a client selling his Commercial Fishing Boat doing a Installment Sale, $20,000.00 down with a ballon payment due every November. He wasn't going to charge interest on the loan of $140,000.00, but I told him he had to. I've looked up Prime Rate which is 3.25% can he charge just the 3.25% to make it a legal Installment loan?

Categories:	In Legal > Buying or Selling a Business
Industries:	In Agriculture > Agriculture - Other

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dlyons

Hi,

You may be asking two different questions. You should consult an attorney and a CPA. (I am niether!)

I don't believe there is any 'legal' requirement for interest on any sale between two individuals. There may be 'legal' restraints on how HIGH a rate of itnerest can be. There may be a 'requirement' for interest to be charged on a sale if there are other considerations involved than just the transfer of property.

IRS rules may apply on both principal (capital gains?) and interest payments (normal income?). Depreciation?

Good Luck!

Source: http://www.abusinessmentor.com

Answered: Nov 10, 2009