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Old 14-01-2007, 07:56   #1
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Financing a boat for liveaboard

Just perusing some of the information available online regarding financing a boat, and I see the disclaimer that the banks will not finance a boat as a primary residence. Is this universal, and if so, why? First, it doesn't immediately compute that it would matter. Second, it seems that someone who makes their boat a home is less burdened financially and has a bigger incentive to make the payments on time.

But I am sure the banks have some hidden logic. What could it be?
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Old 14-01-2007, 08:03   #2
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Possibly that it's hard to collect on a default?

Just sail away, and the boat's yours.
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Old 14-01-2007, 08:07   #3
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But, it would be just as easy to do at the end of an apartment lease.
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Old 14-01-2007, 08:47   #4
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Right, but the apartment lease is a matter of staying put once your lease is up. They only have to go through the process of eviction proceedings to get the tennant out. With a house, same story. If you don't pay and you decide to stay put, they go through eviction proceedings and eventually a marshal will come and escort you out.

With a boat you are living on, you can literally vanish... and if they have no other means of finding you (at your house address, etc...), you can literally walk off with the boat if you are willing to trash your credit. Big loss for the lender. It's just not as stable of an asset from a recovery standpoint.
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Old 14-01-2007, 10:18   #5
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Just get a boat loan. leave out the part about making it your home.
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Old 14-01-2007, 10:30   #6
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You would have to ask each bank for their policy. But in general, "home" loans are only made against real estate and the building on it. They simply are not made against chattel goods, even goods the size of boats.

Banks and other lenders generally don't care if you are living aboard or not, a boat loan will be dealt with as a boat loan. And in either case...if you have no "residency" at a fixed address, that's a problem all its own anyway, isn't it?<G> Lenders don't like footloose transients at all.

Once you get into issues like international waters...you'd better have some security to offer them in some way, because none of them want to deal with sending out a global repo man. If you are dealing with a bank, boats are often alien to them, as opposed to a boat loan company. Then again, if you've already paid off a large mortgage, have a verifiable income source and outstanding credit history...sometimes they're just glad to do business. Odds are you'll also have a "fixed" address you can use with that, though. These guys all play the numbers, if you are the exception to the actuarial tables--they don't want to gamble on you.
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Old 14-01-2007, 10:50   #7
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A neighbor of mine purchased one of the first NorSeas 27's. The story behind it explains what Sean just said. The orginal buyer financed the boat. made the down payment, then took off and sailed around the world. After he returned, years later, the boat was repoed. Many miles, and much depreciation later. For a finance company to identify such a risk, the only thing they can reasonably do is put a label on the situation and limit lending to that label. Not realistic, but it is best approach available.
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Old 14-01-2007, 11:50   #8
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put a gps transmitter on the boat for a deposit from the owner, once the loan is paid off the transmitter can come off and the owner gets his/her deposit back
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Old 14-01-2007, 11:59   #9
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"put a gps transmitter on the boat"
Ah, someone has been watching too much Hollywood.<G> The only real GPS transmitters are the military satellites. If you mean a GPS tracker, that's easily and totally defeated by putting a tin can over it, no matter what kind of transmitter you plan to use to send out that location.
About as useful as saying "We'll put up a sign saying "DO NOT ROB THE BANK" and that'll keep the honest men from accidentally robbing it." Yeah, it will. Maybe. Won't do squat about the thieves though.
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Old 14-01-2007, 12:14   #10
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Ah yes, the old "Locks keep the honest people out" ploy. So true. Unfortunately, the only way to address such issues is to assume the majority of people are honest. Fortunately, Most are. It is impossible to beat the true criminals. The only solution is to make the penalties harsh enough to make someone question if it is worth the potential of getting caught. It ain't perfect, but until someone comes up with a better solution...
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Old 14-01-2007, 12:25   #11
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Hellosailor: I do not appreciate your insulting tone, in this or any previous instances.

As for the trackers(thank you for correcting my mistake, although they still do transmit their position to whoever owns it). They are used in shipping situations to track truck shipments across the united states and I assume other places as well. And a close cousin to what I'm suggesting has been in use by the police to keep an eye on house arrested criminals for years. Obviously there are ways of defeating them. But hopefully the owner wants the deposit back and will want to keep from being a fugitive.
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Old 14-01-2007, 15:19   #12
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First - reading in "tone" to text is next to impossible; other than what YOU preceive as tone.

Second - In the above post by HelloSailor, I did not see any disrespect or insult.

Third - If you have preceived that there was some insult or other problem, please feel free to take it off line with the person, or to consult with a moderator.

Retaliation or admonishment from preceived or legitimate insults should not be conducted on the forum. See the third point above.

Lastly: We are all adults on this forum; and should conduct ourselves that way. We should understand that we are often from different cultures and that this medium does not convey intention, inflection, or cultural interpretations. Giving the benefit of doubt, to another poster, would probably be correct 90% of the time.
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Old 14-01-2007, 17:15   #13
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Quote:
Banks and other lenders generally don't care if you are living aboard or not, a boat loan will be dealt with as a boat loan. And in either case...if you have no "residency" at a fixed address, that's a problem all its own anyway, isn't it?<G> Lenders don't like footloose transients at all.
Pretty much. If you don't have the credit you don't get a loan - period. They are not easy to get. They can't do anything to you if you live on it and sail off but ... . Defaulting on the loan is it's own set of problems. To secure a loan you'll need a real residence, a source of income, a credit history, a marine survey, and proof of insurance plus they hold the title and file it with the USCG Documentation Center in WV. In the US you can't buy a boat with a loan and NOT document it with the USCG. No lender with half a brain would let you get away with that. Matter of fact they will handle the paperwork then stick you for a hideous fee so they know it was done properly. At that point they "own" the boat.

If they underwrite the loan they can't force you not to quit your job or move aboard or even make payments. But the first payment you miss is the beginning of the end. If you lied about anything on the application it's criminal fraud. Sooner or later you'll need to prove title. Your USCG title is void after the first year and needs to be renewed every single year on the anniversary. Once you default on the loan you won't ever have a title or be able to renew it. The boat would then be "presumed" stolen under international law if you can not produce a proper original title. They don't have to prove you don't own it - you have to prove you do. That puts you in a position with multiple serious criminal penalties to deal with maybe in a foreign country on top of that. You really think the loan companies can't put the word out? The world isn't all that big.

The loan companies have risks but you won't get far enough to do that much to them. Stories that someone ran off for years and came back sound like urban legend to me. Criminals break out of jail too, but how many never get caught.

I would think just stealing a boat would be far easier than defaulting on a loan and running off.
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Old 14-01-2007, 17:37   #14
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I "financed" my boat by buying a house in fairly run down condition in a neighbourhood that was just starting to become trendy. In less than 4 years, with only a minimum of work on the house - mostly just painting, it went from $115,000 (what I paid for it) to $275 (what I sold it for). The difference was my profit (minus mortgage payments). that difference bought me my boat plus seeded the crusing kitty which is now growing nicely.
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Old 14-01-2007, 19:13   #15
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Sluissa, for whatever odd reason you can't find " <G> " on Goggle but I've never heard of using a GRIN to insult someone.

I may be a curmudgeon, cynic, and grump with an off-base overdry sense of humor, but when I insult someone, there's no doubt about it and no <G> associated with it, either.

What you suggest is so totally impractical, for so many basic technical reasons, and so unlike the situations for vehicle and low-risk criminal tracking.

Only in Hollywood (and a few deceptive web sites from asset tracking vendors) does anyone suggest there are "GPS transmitters" using some magic two-way satellite communication to track assets. In reality...Sure you could, at a steep cost. And, a sheet of aluminum foil could still shut 'em down. To a bank, that's "unacceptable risk" not "collateral".
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