Owner Financing - A Bad Idea to Ask ?

[btrayfors]

Peter,

I'm very glad that worked out for you. Really.

But, it's exactly the kind of arrangement to which I was referring in the cautionary note above.

With you as the title holder all that time, you were also potentially liable for any damage the boat did to others or to the environment.

That's a mighty big risk to take these days, IMHO.

Bill

[Exocet]

A fellow cruiser sold his boat financing the buyer. Long story short, after only 3 monthly payments buddy disappears. Luckily for my friend he spotted the boat for sale at a local broker 8 months later. After a some paperwork and probably a lawyer, things worked out for him in the end. My answer is no, I would not finance the buyer, if he cannot get the money from the bank (wether a boat loan, second mortage, or line of credit), what makes me think I know more than the banks in assuming this risk? When the bills start pileing up who do you think gets the shaft, the bank, or some guy you owe money too?

[shawnbush12]

it is approcahing 2 years since the guy has had my 1985 38 foot Beneteau and I have not seen a penny. She was a nice boat and he is somewhere in the northeast with a free boat.

[Pblais]

The hapless seller was deemed to be liable, and was hit for the costs of cleanup, refloating of the vessel, fines, past dockage, etc. It was a terrible case which also resulted in the guy losing his new boat....along with his shirt!

It points out that you need a real process. You need to US Document the boat and record the mortgage. The buyer then owns the boat but it is encumbered by the recorded lien. Just like a car loan. Next you secure collateral that does not include the boat. Boat sinks in the slip you can't be sued because the buyer holds the title but could not legally sell it. You lose the boat and collect the collateral. The issue of vicarious liability has come up with car leases. It may yet destroy that business. When you hold the title you are leasing the boat with conditions. For folks still working daily and have assests and a job you could expect them to stay around long enough to pay off the boat but life happens. They say screw it and quit the job and sail off.

The worst thing to do is to hold the title yourself. You still own the boat and have entrusted it to someone you don't know. Boat sinks and you clean up the mess your boat made. Your buyer never owned it and they walk away. Given this is Cruisers Forum I just can't see selling a boat and holding a note with someone that sold evrything they own and sails off.

Banks write a lot of loans and can expect a percentage of failures. You can't really expect a failure and carry the most risk.

[endoftheroad]

I purchased 2 nice sailboats with owner financing.

The first was 50% down from a very fine gentleman basically on a handshake, I made every payment on time as I deeply respected his trust in me, we became great friends.
The second was from someone that had to leave the area in a hurry, life changing circumstances, I got the boat for 10% of it's value and still had to finance some. The individual left town a few days later and I sent the balance soon after. I had no contract, the boat was registered and titled in my name.
I don't piss around when someone has faith in me.

We are shopping for a bluewater boat, the right person with the right boat will know immediately what I am about.

[Pblais]

I had no contract, the boat was registered and titled in my name.
I don't piss around when someone has faith in me.

If there were more folks like you - there would be. Sometimes rare is a good thing.

[cal40john]

I looked at a boat a few years ago, even made it to the survey, before I decided not to buy it. Anyway the boat wound up being returned to the original owner because I didn't buy it. This was the second time the original owner had gotten the boat back because people he sold it to with owner financing couldn't make the payments.


John

[cottonsail]

I sell capitol automotive service equipment. The range is $3000 to $250000. These deals are called "lease to purchase". The purchaser "rents" the product from the seller for an agreed amount of time. This usually runs from 6 months to 72 months. The purchaser then buys the lease for $1.00 & then owns the product. A 60 month lease costs about $200. per $10,000. A simple example is a $20000 boat would cost $400 per month for 60 months and the 61st payment would be $1.00 to "buy the paper" I would say that owner financing could work very well with a lease to purchase deal.

[Krakken]

I have just started the search for a catamaran and while I could organise finance for the Fountaine Pajot Eleuethera I want in Australia, there's none for sale here! Australian banks DO NOT lend on vessels in overseas locations!

So 50% down and regular payments would suit me nicely. You could also take security over property or assets the buyer owns or offer to secure your yacht. I have a car hire business and we install hidden GPS locators in each vehicle, so finding them would not be a problem if the buyer did not pay.

But in my case - So brokers, go to work find me a deal and make yourself some commission on the side.

I guess the only way to find out about vender finance - is put it out there and ask!

[FrankF]

Old post, but I just stumbled onto it. There are very few questions that are a bad idea to ask. I contacted a broker about a KP 44 he had listed for someone, and ultimately ended up buying the brokers own Perry 47 that he was about to list. I put 10% down, 6% interest, on a 5 year plan. I asked him if he would owner finance, and I laid out my situation and what I had in mind. He took the offer, and I paid it all off in about a year and a half. We did draw up a simple contract, got it notarized. The boat was on stands, and the contract stated that neither one of us could use the boat until the contract was resolved. So he couldnt trash it while I was paying on it, and I couldnt sail away before I paid it off. It was a massive win-win for both of us. You can always ask! Be open, honest, humble. Many people love the boat they are selling, and are happy to see it go to a caring and responsible home. We are still close friends with the previous owner our our Perry.

[Krakken]

I have been a finance broker in Australia for over 15 years now. I believe owner finance/loans will be a very favourable means of selling your boat/yacht/catamaran in the future.

Obviously it won't work for everyone but banks are making it harder and harder to finance marine vessels.

For owners thinking of offering their pride and joy up for sale and offering vendor finance as an option - I have three suggestions, get a good lawyer, ask for a substantial down payment and demand a fixed security. Something you can't sail over the horizon!!

Providing you can achieve these three basic requirements and the buyer has sufficient collateral acceptable to you - I believe it could possibly be a win, win situation for everyone!