Older Boat Financing Rant

[kthoennes]

Last summer we financed our 1983 Carver 3207 at a local credit union with no problem at all -- although we did just pay off a Cadillac Escalade with them a few months before. They even let us add a few thousand to the loan to cover a portion of the shipping costs, taxes, etc., although that extra amount didn't come close to covering the total acquisition costs. They treated it like an RV loan and offered to finance for 7 years (ha!). We went with 3 years. If you have a decent credit rating, solid income, and a good dti ratio, then it's just a question of finding the right lender.

[offline]

I'd be curious about the total loan value vs the value of the boat.

I can quite easily find lenders who will go 50K on older boats. Even others willing to lend 50% on value.

The problem is that this is an nearly 30 year old high value cruiser (nearly six figures) and that higher value makes this a tough to work deal.

Originally Posted by kthoennes

Last summer we financed our 1983 Carver 3207 at a local credit union with no problem at all -- although we did just pay off a Cadillac Escalade with them a few months before. They even let us add a few thousand to the loan to cover a portion of the shipping costs, taxes, etc., although that extra amount didn't come close to covering the total acquisition costs. They treated it like an RV loan and offered to finance for 7 years (ha!). We went with 3 years. If you have a decent credit rating, solid income, and a good dti ratio, then it's just a question of finding the right lender.

[Sam Plan B]

You can borrow against a taxable mutual fund account up to about 50% of the value of the account. In 2004 my taxable account value was about $85k. I borrowed $25k and used that to by my Columbia 41. I paid back the loan in two years. In the mean time I went to work on the boat taking care of the marine survey items one by one.

[kthoennes]

Originally Posted by offline

I'd be curious about the total loan value vs the value of the boat.

I can quite easily find lenders who will go 50K on older boats. Even others willing to lend 50% on value.

The problem is that this is an nearly 30 year old high value cruiser (nearly six figures) and that higher value makes this a tough to work deal.

That's true, we did get the Carver at an incredibly good price (distress sale). The accepted sale price was about 50% of NADA blue book (even though NADA is almost worthless in determining boat prices in the real world, that's what our credit union used). When we were all done we borrowed about 70% of the book value of the boat. Wasn't anywhere near six figures though so I'm sure you're right, probably a very different situation for a higher-end, higher-cost boat (well, everything's relative of course, higher-end compared to ours).

[libertyshipcapt]

I want to thank you all so much! In 10 minutes, I learn more reading Cruisers Forum than I do in 10 hours anywhere else on the internet !

[JayCall]

Offline-someone mentioned borrowing against your retirement accounts. If you have 401k or similar account, you can actually borrow from your account, can do the same thing if you have an insurance policy that builds cash value. You are borrowing from your self, the repayment terms are great (in some cases repayment in almost discretionary) and the rate is miniscule. If you repay it does not affect retirement benefits and any interest paid goes to your benefit. With an IRA or SEP, there are some trickier methods to detailed to go into here, but these can be used as financing vehicle in certain circumstances.

[offline]

Thanks JayCall.

Considered something along that line however the wife and I long ago agreed that retirement savings (including 401K) and the kids' college funds are off limits.

We do maintain a small cash value life policy but it's not enough to even consider for this. Our other life insurance policies are injury and death benefit only.

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In this case , maybe the seller is willing to hold the loan, Hell we don't even want or need a super long term.

Originally Posted by JayCall

Offline-someone mentioned borrowing against your retirement accounts. If you have 401k or similar account, you can actually borrow from your account, can do the same thing if you have an insurance policy that builds cash value. You are borrowing from your self, the repayment terms are great (in some cases repayment in almost discretionary) and the rate is miniscule. If you repay it does not affect retirement benefits and any interest paid goes to your benefit. With an IRA or SEP, there are some trickier methods to detailed to go into here, but these can be used as financing vehicle in certain circumstances.

[hogfighter]

Offline, I think what's ticking you off is the same for many people.

Not so many years ago, the banks were giving away money like "Drunken Sailors" (pardon the obvious pun). They have swung the pendulum so far in the other direction that they are seriously affecting the valuations of things such as boats, homes, etc.

I agree, it just stinks.

[sdowney717]

age issues so no loan.
Look at it this way, if you default on your loan, they own the boat.
Do they want a boat, no.
Do they want an older boat? even less so.
To them they own the boat not you and how will they unload an old boat?
This is worse than an old house, the risk they just are not interested. Boats are luxury items and if you loose your job, your investments go bad, you get sick, you die, etc... the boat payments to them will be the first to go bad.

[David_Old_Jersey]

Originally Posted by sdowney717

age issues so no loan.
Look at it this way, if you default on your loan, they own the boat.
Do they want a boat, no.
Do they want an older boat? even less so.
To them they own the boat not you and how will they unload an old boat?
This is worse than an old house, the risk they just are not interested. Boats are luxury items and if you loose your job, your investments go bad, you get sick, you die, etc... the boat payments to them will be the first to go bad.

"why did you loan all that money to people who were (overall) bad prospects to repay?"

"dunno really - just seemed like a good idea at the time "

"well, stop doing that"

"ok"

------------

"why aren't you lending money (other people's money) to every Tom, Dick and Harry who wants a loan?.....and who all swear blind they can afford it"

"Because we now only lend against good (saleable) assets, with plenty of margin"

"oh, I didn't realise that also applied to me "

(to be continued...........)

[offline]

Let's not turn this into a well deserved bank bashing thread. Lord knows that we are in this financial mess because of them and that they are still causing market pain by failling to lend to the small and middle enterprise markets and by foolishly mishandling foreclosure assets. IDIOTS!

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