Canadians - Boat Financing

[Lodesman]

For the Canucks on board,

Has anyone financed a boat in Canada? With whom?
How easy/hard is it to get financing in the States or elsewhere? Hints/advice welcome. Thanks.

Kevin

[Buddy_Y]

I did my boat loan financing here in Vancouver. The boat brokerage had the business card of a local Royal Bank loans officer who specialized in marine loans, but I decided to try the CIBC (my usual bank), since I had a more detailed credit history there.

Unfortunately, the loans officers at the local branch seemed baffled as to how to even go about figuring out if I qualified for a boat loan -- there seemed to be a 'marine loan' option on their computer network, but they didn't even know how to use it. Finally, they gave me some figures on interest and a loan amount, but the numbers were not impressive despite a decent credit history and my three paying jobs.

So, I suggested to the loans officer that I should just simply use a Personal Line of Credit -- I already had one with the CIBC since my student days, all paid off. I just increased its limit to reflect my better circumstances. As an added bonus, the PLC did not fix me to a regular repayment schedule (beyond a modest minimum monthly payment), and it did not penalize me for quick repayment. (If I paid the boat off in one year, I just paid one year's interest.) The interest rates were comparable to a fixed loan.

Using the PLC, I bought the boat with a money transfer.

As a post-script to the story: it all worked out fine, because I bought a boat only half the price that I figured I could afford -- and I never regretted this caution.

[Lodesman]

Buddy,

I had similar results at both CIBC and Scotiabank - clueless loans officers and criminal interest rates. We're looking for a cruising catamaran, and were hoping to be "pre-approved" so as to have a price limit, but that's apparently not an option here. With the price of boats being what they are, I would have thought there would be some on this board experienced with boat mortgages and the like.

Kevin

[Buddy_Y]

I hear you, Kevin. That was one of the nice things about the PLC -- the CIBC formula gave me a clear target number, i.e., "We calculate that, based on your income etc, you qualify for a PLC of ___ thousand dollars."

Mind you, I'm also keenly interested in hearing about other canucks' financing approaches. I'm wrapping up PhD work next summer, and since my main source of income is an online consultancy, which I can continue aboard, I'm considering going cruising somewhere warm for a couple years while I write my thesis. That means a bigger boat, which I'm not certain the PLC would be suited for.

Cheers

[talus]

*BUMP* - Gotta bump this because I'm looking for the same info. Anyone had any luck with loans in the 100-200K range?

[msmith132]

ScotiaBank just approved me for $300k with 0% down (based upon A1 credit rating), as long as the boat is registered in Canada (regardless of whether it ever comes to Canada).

Michael

[Lodesman]

Who did you talk to at Scotiabank? And if you don't mind my asking - what is the interest rate? Feel free to PM me if you don't want it in the public domain. Thanks.

[msmith132]

Lodesman, I'll PM you the person's name and info. It is the Scotiabank branch in St. Stephen, N.B. Rate is 6%, amortized over 20 years if the vessel is <= 3 years old, or over 15 years if over 3 years old. Of course your debt service ratio plays into your individual situation. My 20-year history with the branch may be a factor, I can't know whether it does or not.

Michael

[BigVee]

The info is getting dated now. Anyone with more recent experiences? My wife and I are thinking of a boat in the $400-500k range and prefer a mortgage type loan.

Oh.. and hello everybody eh!

[Nickolas]

Hi everyone my name is Nick I'm from Montreal first time here ,very interesting.
Me too I'm looking for financing in the range of 75 to 150k
to Purchase from US any ideas?
I'm looking for my first boat Grady white, as there not many in Canada.

[GordMay]

Greetings and welcome aboard the CF, Nick.

[scargo]

Just spoke with a Scotiabank representative here in Montreal and here's what she told me.
They do boat loans (mortgages) up to 150K Canadian. The amortization can be up to 20 years, but may be lower if the boat is old and represents a certain risk for them. The loan is pretty flexible and can be paid in part or in whole anytime without penalties. The boat must be registered in Canada (blue book) and they will require a survey.

Now I called Scotiabank because it's my bank. But I think any Canadian bank could do it. Personally, I am looking for boat loan in US $, because I don't want to pay 1.35 $ CDN every 1$ US. But at the Scotiabank, at least, they don't do loans in US $.

But if you need a loan in CDN $, you don't have to ask for a boat loan. If you have a house or any real estate assets, you can have a mortgage line of credit that you can use to buy a boat. The line of credit can be more than 150K.

[pcmm]

Unless things have changed alot in the Canadian banking climate. The last time I looked to finance a boat ( with excellent Credit too) the lenders I spoke to all wanted close to 50% down payment! so I just gave up on that idea and bought my last boat for cash! works out better in the long run that way!

[BigVee]

Originally Posted by scargo

Now I called Scotiabank because it's my bank. But I think any Canadian bank could do it. Personally, I am looking for boat loan in US $, because I don't want to pay 1.35 $ CDN every 1$ US. But at the Scotiabank, at least, they don't do loans in US $.

But if you need a loan in CDN $, you don't have to ask for a boat loan. If you have a house or any real estate assets, you can have a mortgage line of credit that you can use to buy a boat. The line of credit can be more than 150K.

Yeah, I know that Canadian banks cannot do loans on foreign property/asset (hence Canadian registration) and cannot do loans in any other currency due to the added risk to exchange fluctuations. But then, if your income (to repay the loan) is in Canadian $, then I think it would be beneficial for you to convert the CDN $ -> US $ at purchase and repay in CDN $ and not take on the risk of exchange fluctuations either.

I understand the LOC from your home idea. The problem is, we are probably not going to have a home. Or if we do, it is going to be way cheaper than the boat. And secondly, if the boat were to turn into a submarine, i would rather not also become homeless, because the bank would foreclose on me.

BV

[scargo]

Originally Posted by BigVee

Yeah, I know that Canadian banks cannot do loans on foreign property/asset (hence Canadian registration) and cannot do loans in any other currency due to the added risk to exchange fluctuations.

I think RBC does loans in US dollars if you have real estate in USA.

But then, if your income (to repay the loan) is in Canadian $, then I think it would be beneficial for you to convert the CDN $ -> US $ at purchase and repay in CDN $ and not take on the risk of exchange fluctuations either.

Even if your income is in CDN dollars, you may still want to do the loan in US dollars unless the CDN/USA exchange rate is > 1. As of today, the rate is 0.7541 on the forex (your bank will charge you a lower rate plus fees), but if you check this table. The rate, on average, during the last 17 years is 0.8115. On $100K US it is about $9000 CDN in your pocket if you exchange currency when you do your payment instead of exchanging it all at once at the beginning. But if you look carefully to that table, you can see that you can easily beat that average rate.

I understand the LOC from your home idea. The problem is, we are probably not going to have a home. Or if we do, it is going to be way cheaper than the boat. And secondly, if the boat were to turn into a submarine, i would rather not also become homeless, because the bank would foreclose on me.

BV

You need two things, a mortgage on the boat and a good insurance. But then, the insurance company may not want to let you go wherever you want to go depending on your sailing experience