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Old 09-06-2008, 19:37   #1
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Join Date: Jun 2008
Location: Marina Del Rey, CA
Boat: Hardin 45 - Kindred Spirit
Posts: 27
Marine Loan Requirements?

I was wondering if anyone could provide some information on the criteria or formula that lending institutions use to determine if they will make a loan or not. It is near impossible to know what the criteria is. For instance, when we bought our house, it was easy: 10% down, earn 2.5 times the value of the house and have a decent credit score.

Questions I have are:
1. what kind of credit score are they looking for?
2. what should income to boat value be?
3. what if you put down a really large down payment (for instance 50%)
4. does the year/make of the boat matter?
5. what if your income ratio isn't that high, but you have a very large savings/investment portfolio and would prefer to finance the boat?
6. does it matter where you keep it/use it?
7. what if your credit score is good, but you don't have a lot of credit because you work and pay cash for the majority of things you want?

Thanks in advance!
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Old 09-06-2008, 20:07   #2
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Posts: 64
I have some expertise in lending, not necessarily boats but maybe I can help. First there are no hard and fast rules, every lender determines their own underwriting criteria and appetite for risk. Especially in the USA at this time. I have no idea what you are buying or how much so I will just throw wild-assed numbers out. You may be spending $10,000 or $1,000,000 the principles are the same.

1. The higher the credit score the better. 700 great, 760 and up they are loving you. Lower can and will be approved, but as with all your questions, they look at the whole picture.
2. Unlikely they utilize a boat value to income criteria. They will utilize "loan to value" and "payment to income" more likely.
3. Banks love big down payments, the more equity the better. People with marginal credit can often "buy" their way into a loan.
4. Year of boat will absolutely matter. The older the boat the fewer lenders play in the market. But how old are you talking? 5 years, 10 years or 30 years old? Make or manufacturer will likely play more into determing value and equity as they book it out than just make alone. An Island Packet is worth more than a Hunter. (don't flame me)
5. Great question, if you are disclosing all your investments it will definitely help. If you are going to a local bank or a national bank and have accounts with them even better!! Be prepared to disclose and prove it. Somebody with a $2 mil. portfolio and living off the interest of $80,000 annually they will love.
6. It may well matter to some where you keep it and if you are going to take it offshore. If you have a loan against it, insuance will be required and where you keep it and take it will definitely matter to the insurance company.
7. Another great question. The lack of "prompt major credit" will catch their eye. A seasoned credit analyst can usually recognize someone that acquired some assets and has done it conservativley without the use of debt. The lack of credit will also prevent you from reaching the highest levels of credit scores.

And finally a bonus answer. What is a credit score?
Basically, it is mathematical model to determine the probability that someone may file a bankruptcy. Proper and responsible use of debt increases your score and decreases your probability of banko. Irresponsible or overuse of debt drives your score down and increases your probabilty. No use of debt at all obviously would preclude any possibilty of bankruptcy right? But no use of debt gives the model nothing to look at and evaluate. College kids and retirees are most often in this group.

Oh, and the reason your mortgage is so easy to determine is because the lending criteria are pretty much set so the loans can be packaged and sold on the secondary market as asset backed securities. I doubt too many banks have boat loan portfolios that are large enough to be sold on the secondary market. It could be done and may be done, but definitely a niche market and not something standardized nationally.

I hope this helps.
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Old 09-06-2008, 20:42   #3
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Join Date: Jun 2008
Location: Florida
Boat: C & C Landfall 38
Posts: 130
We just bought

our C & C Landfall 38 and the 3 things the bank seemed most concearned with were our credit score, income and morgage payment, in that order.
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