Financing first boat purchase

[evonhasseln]

Hi all, first post in a while -

I’m looking for some general guidance on buying my first live aboard boat. I have some capital saved up but will likely have to finance. I know some brokerages offer financing but I’m also looking at some private listings. I’m 34, living in California/ US with fine credit. Have my student loans I’m still paying off. Probably could get a loan but I’m anticipating a higher interest rate. What do you all think? Has anyone ever used BoatUS for loans?

Also most boats within my price range are in the 40-50 year age range. Is it possible to finance boats that old?

[Joh.Ghurt]

Something you might now want to hear:
Boats are toys, don’t buy them on credit.

There’s also the other option to finance a boat: Get a cheap boat and fix it up as you go.

This works perfectly well if you’re into boat repair and tinkering, but as you consider a 40 year old boat, you must be. That’s what I did and it’s nearly as stupid as financing it, with the additional boon that it’ll alienate your wife / girlfriend.

Good luck finding a bank giving you a loan.

[S/V Illusion]

Economics 101 - never finance a depreciating asset particularly one which is a toy. As with all generalities, there are exceptions but only when your capital is an appreciating asset. In your description, it doesn’t sound like the case.

[Dockhead]

Originally Posted by S/V Illusion

Economics 101 - never finance a depreciating asset particularly one which is a toy. As with all generalities, there are exceptions but only when your capital is an appreciating asset. In your description, it doesn’t sound like the case.

I agree with this. If you can't pay cash, you can't afford it yet. Keep saving or choose something cheaper. I feel the same way about cars, but if cars could be kind of ok if you don't overdo it, boats definitely not - because unlike with cars: (1) you don't actually need it at all; and (2) the maintenance, upkeep, docking, insurance dwarf anything you might encounter with a car.

[JPK]

Well, since we're looking at this from the "Economics 101" standpoint, then let's avoid the absolutes like "never". Financing something (whether it's appreciating or depreciating) will cost more than purchasing it outright unless you're making a higher return on your capital than the loan costs. That additional financing cost can be weighed against the benefit of financing, namely the opportunity cost of having the boat sooner than would otherwise be possible. If the financing cost is x, and the alternative would be to wait 10 more years until you could buy the boat outright, and you are willing to spend x in order to have the boat 10 years sooner, than financing a boat may be the right choice. There are no right or wrong answers here, no "always" or "never". There are just informed decisions.

[Jebtrois]

Traditional banks lose interest in financing monohulls at 20 years and Catamarans at 15.

[Shrew]

Originally Posted by evonhasseln

... buying my first live aboard boat.

......boats within my price range are in the 40-50 year age range.

These two items are going to be prohibitive to both obtaining financing and insurance. A bank is going to insist on full/comprehensive (hull) coverage in order to extend a loan. Not many insurance companies are going to offer comprehensive insurance on a boat in that age range. Liability will be about the extent of what they'll underwrite.

Most boats in that range are under $30K. You would need $30K (Likely far more) in cash just to refit a 40-50 yr old boat.

If you are looking at a 40 -50 yr old boat and still need to finance. You are probably not ready to own yet.

What size and price range are you looking at?

[AKA-None]

Or you get a personal loan

[Enfant Du Vent]

A Word Of Caution:
IF you opt to buy a boat with the capital you have now, try to remember to only spend 75% of those funds on the purchase price.
-Once you own it it will be too late to say, "I'm going to put off buying an anchor or bilge pump until next year."

[ChrisJHC]

Originally Posted by Shrew

These two items are going to be prohibitive to both obtaining financing and insurance. A bank is going to insist on full/comprehensive (hull) coverage in order to extend a loan. Not many insurance companies are going to offer comprehensive insurance on a boat in that age range. Liability will be about the extent of what they'll underwrite.

Most boats in that range are under $30K. You would need $30K (Likely far more) in cash just to refit a 40-50 yr old boat.

If you are looking at a 40 -50 yr old boat and still need to finance. You are probably not ready to own yet.

What size and price range are you looking at?

I have comprehensive insurance on my 40-year old boat.
It is at the lower end of the price range.
Insurance through one of the general house/boat/car insurers rather than a specialist marine insurer.

[akopac]

Yeeears ago I was in your same position in SF. Had finished college, had no credit, and the banks wanted a house for collateral to backup a boat loan. I made up a flyer that said something like
“ Wanted, Catalina 30. Owner or easy financing” with my phone number on it on bright gold paper, took it down to kinko’s and had em knock out about 50 of them. I went to the annual boat show and posted it on all the food booths and toilet doors.
Needless to say I had everybody, even yacht brokers calling me. Some awesome deals came out of it. Turned out I was able to pick my deal instead of struggling to find a deal.
I call this an active opportunist approach… [emoji41]

[S/V Illusion]

Originally Posted by akopac

Yeeears ago I was in your same position in SF. Had finished college, had no credit, and the banks wanted a house for collateral to backup a boat loan. I made up a flyer that said something like
“ Wanted, Catalina 30. Owner or easy financing” with my phone number on it on bright gold paper, took it down to kinko’s and had em knock out about 50 of them. I went to the annual boat show and posted it on all the food booths and toilet doors.
Needless to say I had everybody, even yacht brokers calling me. Some awesome deals came out of it. Turned out I was able to pick my deal instead of struggling to find a deal.
I call this an active opportunist approach… [emoji41]

Some people wait for opportunities. Others create opportunities. Good for you!

[Windpilot]

I got a loan on 1 of the boats I've had. Instead of paying rent for an apt I opted for the loan and berthing payments which was close to the same amount and it was a great deal, put 10k down on a 28k 34' Hunter. Paid it of within 2 years.
With a loan, insurance was more though, and you won't be able to take off cruising long distance since you really won't be able to get insurance besides liability only.

[boatpoker]

Originally Posted by evonhasseln

Also most boats within my price range are in the 40-50 year age range. Is it possible to finance boats that old?

Even if you manage to acquire a vessel in that age range and get insurance,
I doubt you have any concept of what it will cost to maintain and make it
safe/functional.

The cost of hiring people to fix anything will rapidly exceed your monthly loan payments.

I suggest you read all of these articles and give it some thought.
If you feel up to tackling all this stuff your self ... you may have a shot.
All about marine surveys and checklists

[Chotu]

Step 0/Edit:

“I am looking for guidance on buying my first weekend boat”

Never, ever EVER use the “L” word with any lender or insurance broker.

Once you get your weekender, change how you use it to include staying on it all the time.