Alternative financing?

[ben2go]

I had a boat offered to me. I'm going to look at it Friday. This boat appears to be in great shape in pics but the elderly owner wants out. I think his family is hounding him to sell it. It is a great boat and pretty much exactly what I've been wanting. He gave me his bottom dollar offer. It's an older boat so financing the boat with a loan or mortgage is out. I am not ready to sell my home and move aboard. My son has another year of school before he is off to the USAF. My savings is only about half way to his bottom dollar price. My income falls just below what I need to take a personal loan out, plus I need collateral. I have no collateral that I am willing to risk. Owner is looking for payment in full when we sign the paperwork, if I decide to buy it. Sounds reasonable to me. What alternative financing options or strategies have you used? Crowd funding was mentioned on other sites for different purposes. I don't know how that works though. I'm short roughly $25,000. I know $25k is peanuts for some of you guys.

[Fore and Aft]

Ben "No collateral I am willing to risk" just sounds like you even consider yourself a high risk lender and there is a fair chance you will never pay the loan back?
Once you have crowd funded your way to a boat you cannot afford you can always send some funds my way? I am always looking for a sponsor or sugar mama to help with my boating addiction.
Cheers

[daletournier]

You say if you decide to buy it....you cant, you dont have the money. Crowd funding isnt finance, its other people buying you the boat, why would they do that?

[OloteleMtn]

If you must have a boat, buy one you can afford, there are a few deals out there. Don't sell the farm over a boat.

[carlosproa]

This sounds like a disaster in the making. Add 20% to the final price of the boat in repairs and basic upgrades that will have to make. If you are short already, then you are placing yourself in a very vulnerable position

If you are dead set in getting the boat, get an owner finance on the delta and your collateral is the value of the boat. If your current income is below $25K a year if i understand right, maybe you want to reconsider this purchase

[Westcliffe01]

Sounds like it is a $50k boat. Thats quite a lot of boat. Slip is going to run you close to 4k if not more. Storing on the hardstand might be $1000. And those bills are never going to stop till the boat is in the water and in a state that you sail out the harbor and start anchoring out. Then the slip fee is replaced by fuel or whatever operating costs you have.


I have been thinking about buying a 32' bayliner and that is after selling my house and I should have cash and asking price is $25k. As soon as I have possession I am going to need liability insurance or else I cant keep it at a marina and then the slip fees will start piling up. And if I move it, I have to pay for fuel for the diesels.


If you cant afford it, dont do it. Scale down the dream, there are millions of smaller cheaper boats.

[ben2go]

Originally Posted by Fore and Aft

Ben "No collateral I am willing to risk" just sounds like you even consider yourself a high risk lender and there is a fair chance you will never pay the loan back?
Once you have crowd funded your way to a boat you cannot afford you can always send some funds my way? I am always looking for a sponsor or sugar mama to help with my boating addiction.
Cheers

This Covid virus is why I'm not willing to risk my house for collateral. It's paid for. I feel that my main source of income is secure. My investments and other sources of income I don't feel so secure with currently. If we were in a booming economy, I'd have no problems putting up my house for collateral.

Originally Posted by daletournier

You say if you decide to buy it....you cant, you dont have the money. Crowd funding isnt finance, its other people buying you the boat, why would they do that?

Thanks and I agree. I'm not looking for a hand out. I still don't understand why crowd funding is a thing. People throw money at other people to make themselves feel better?

Originally Posted by OloteleMtn

If you must have a boat, buy one you can afford, there are a few deals out there. Don't sell the farm over a boat.

The boat I'm looking at is fairly basic. Not much to go wrong. It's also a fresh water boat and land locked. If the owner is being straight with me the boat doesn't need anything to be usable. Sure there are always things that can be done.

Originally Posted by carlosproa

This sounds like a disaster in the making. Add 20% to the final price of the boat in repairs and basic upgrades that will have to make. If you are short already, then you are placing yourself in a very vulnerable position

If you are dead set in getting the boat, get an owner finance on the delta and your collateral is the value of the boat. If your current income is below $25K a year if i understand right, maybe you want to reconsider this purchase

My income is significantly more than 25k a year. The boat is $39k. As stated above, the boat is in fresh water and has been all of it's life and well taken care of if the owner is honest and the pics are as recent as they seem. Yes of course, there are things I'd like to do to make the boat mine. If the boat is as the owner states. It needs nothing to be usable.

Originally Posted by Westcliffe01

Sounds like it is a $50k boat. Thats quite a lot of boat. Slip is going to run you close to 4k if not more. Storing on the hardstand might be $1000. And those bills are never going to stop till the boat is in the water and in a state that you sail out the harbor and start anchoring out. Then the slip fee is replaced by fuel or whatever operating costs you have.


I have been thinking about buying a 32' bayliner and that is after selling my house and I should have cash and asking price is $25k. As soon as I have possession I am going to need liability insurance or else I cant keep it at a marina and then the slip fees will start piling up. And if I move it, I have to pay for fuel for the diesels.


If you cant afford it, dont do it. Scale down the dream, there are millions of smaller cheaper boats.

See above. Also I don't know where you're getting your prices but they don't reflect what is in the area where the boat is that I am looking at. Boat is $39k, slip fee is $250 a month. Insurance through my agent was estimated at $1300 a year liability. That could go down with a survey and also where the boat is slipped. The boat is 36ft, 11ft beam, with a 3 cylinder Volvo diesel. I can't remember the model info. A fuel miser engine. I'll be hoisting sail as much as possible anyway.



Affording the boat after the purchase isn't the problem. My money is tied up in getting ready for next year. My savings is down because I have been using it to do work to my properties to add value for what I hope to be a better sell next year. More money more time on the boat or more boat goodies. I would buy a more expensive boat and take care of everything that it needs to be on the water and safe. My income appears low on paper. I have multiple sources of income. Those sources are not considered reliable income by lenders and they will not count them in with my regular pay checks.

[Chotu]

Ideally, Hold off until you have $39k cash. It’s not that hard to come up with given your financial picture above.

If you’re unwilling to risk your assets, it’s a sign no one should lend to you at all. How is it any more safe for them to lend to you if you wouldn’t lend to yourself?

Home equity line of credit?

The boat itself is typically the collateral in a marine loan however. So I think you’re missing the key point.

The lender would evaluate your credit, your income and finance about 80% of the boat max. You pay the rest cash.

The boat becomes their collateral.

If you default, they repo it.

[Shrew]

Originally Posted by ben2go

This Covid virus is why I'm not willing to risk my house for collateral. It's paid for.

You would only lose the house if you failed to make payments. If you honestly feel that you cannot afford payments on a $25K loan, then you are overextending yourself and you should not buy the boat.

At the end of the day, this is a modest car payment. If a monthly car payment is going to push you over the top, then the slip fees and general maintenance of a boat will crush you.

Ask yourself honestly.....will $1,000 dollars at a marine supply store make you wince? If so, then buying a boat is not for you. I spent $10K is repairs this past winter to replace a shaft, coupler, cutlass bearing, new dripless, repack a rudder post, rebuild steering linkage and replace a water pump.

If $25K is a hardship, boat ownership will be difficult.

[ben2go]

Boats off the table. I'm sticking to my good ole trusty rusty Chevs.

[Westcliffe01]

When I have been consolidating debt, the best "alternative financing" that is available is a loan against your 401k balance. Interest rates are very modest (3.5-5%) no collateral required, but one is only allowed a single loan at a time, and the amount you can borrow starts at 50% of the value of your 401k balance and then reduces if within the last year you had a 401k loan.


I have always set mine up for 3 years max, the first one was when I bought a backhoe during the 2009 financial crisis. I paid $12k for a 5 year old backhoe that someone had bought new for over $40K and it only had $1200 hours on. If one can afford it, shorten the term to 2 years. Yes, you have to pay more, but if debt isnt at least a bit painful its a bad idea. Forget this 5-6 year crap that people do today with car loans, it makes no sense whatsoever.


If you have any windfalls, pay it off early because there is no penalty. The others are right with regard to maintenance, repairs, accidents and other surprises that can come your way without warning. You need a buffer to be able to cover those expenses and the less handy you are, the worse the sticker shock...

[S/V Illusion]

Stated more bluntly than others - If you don’t have the discretionary money to buy a boat, you can’t afford a boat. And you certainly also can’t afford to finance a depreciating asset. People should never finance toys.

[Rennsail]

Originally Posted by Westcliffe01

When I have been consolidating debt, the best "alternative financing" that is available is a loan against your 401k balance. Interest rates are very modest (3.5-5%) no collateral required, but one is only allowed a single loan at a time, and the amount you can borrow starts at 50% of the value of your 401k balance and then reduces if within the last year you had a 401k loan.


I have always set mine up for 3 years max, the first one was when I bought a backhoe during the 2009 financial crisis. I paid $12k for a 5 year old backhoe that someone had bought new for over $40K and it only had $1200 hours on. If one can afford it, shorten the term to 2 years. Yes, you have to pay more, but if debt isnt at least a bit painful its a bad idea. Forget this 5-6 year crap that people do today with car loans, it makes no sense whatsoever.


If you have any windfalls, pay it off early because there is no penalty. The others are right with regard to maintenance, repairs, accidents and other surprises that can come your way without warning. You need a buffer to be able to cover those expenses and the less handy you are, the worse the sticker shock...

See the CARES Act passed in response to Covid for liberalized 401k loans. As always, consult a financial professional.