Financing for an older boat

[hdparsons3]

Hey cruisers! ,

Been dreaming about making the jump to full time cruiser for about 4 years now and have now found a wonderfully equipped vessel that I'm head over heels for ... unfortunately it was also built in 1974 which is presenting a problem all in itself attempting to get financing for her. I was wondering if anyone on here might be able to shed some light and point me in the right direction maybe a company or someone who would consider financing for such an old bird. Any wisdom would be greatly appreciated !!

[JPA Cate]

From everything I've heard, what you're trying to do is very difficult, so keep that in mind. Sometimes, someone in one's extended family may be well enough off to make you a loan, you surely wouldn't want to default!

Some credit unions offer personal loans.

If you have large savings you might be able to borrow against them, or against equity in a home.

It's really quite risky financially to borrow money to obtain a depreciating object like a boat that will cost you heaps to moor and renovate.

Ann

[250224]

Originally Posted by hdparsons3

.. full time cruiser .. found a wonderfully equipped vessel .. built in 1974 .. problem .. get financing for her. .. Any wisdom would be greatly appreciated !!

Reduce your requirements. Pay cash.

How is financing for such an old boat suppose to work when you go full time cruising? There should be enough cheap old boats on the market that you can find your dream boat without needing a credit, no?

[model 10]

Put it on a credit card. $25K for example can get you a pretty nice boat that's been around the world and might only need another $25k to go again and you could put that on another card.

[tkeithlu]

The central problem is that there is a glut of boats on the market, I suspect as a result of the 2008 crash, that are now available for sale at low prices. That's a problem because they have, in large part, been neglected for a number of years, and are not really sail-aways. They need a lot of work, the topics of which keep showing up in threads in this forum. They have dead engines, rusty tanks, deteriorated electrical systems, seized seacocks; just look at the threads. They are projects, can be taken to sea again, but anyone taking one on better have a very thorough survey done and have cash reserves to cover the costs. That, and a lot of time to work on them, because paying professionals to resurrect one could well exceed its ultimate value. If you need a loan with which to purchase a 1974 boat (that's 42 years...) then you need to seriously consider whether you will be able to afford to bring her back up to snuff. That's why the bank is not very interested.

[UNCIVILIZED]

There are times when just being honest with a boat’s owner about your financial situation will allow you to work something out. To even include the owner extending you a partial loan towards buying her.
Also, if you go this route, be up front about the fact that while you have X dollars to spend, you’re only able to part with Y dollars for the boat. So that you have some coin left over after buying her, to fix her up to your likings, or a good ways towards such anyway.

It’s worked for me on the 3 boats that I tried it. And a similar plan also worked for the Dashew’s daughter, & her friend, when they were choosing a boat to cruise on.
The specifics of their; pre-buy wish list, fit out, search, & success, is detailed in the Dashew’s Offshore Cruising Encyclopedia Vol. II Which you can (& should) download (free) at SetSail
They wound up with the boat they wanted, at about half of the asking price. She’s called Hio Avae, & the story starts on page 1123.

Also, folks here are usually more than happy to steer you towards a great boat on the cheap, if you post your; budget, boat type, sailing plans, & location. As, for example, I’ve showed guys 30’ers listed online, ready to cruise, for $5k, with only 10min. of searching.
And if you use Google to do various custom searches of the site, you'll turn up loads of threads, full of the kind of wisdoms you're seeking.

PS: I’d also suggest downloading all of the Dashew's books while you’re on their site. They’re excellent info sources, & the price is great… gratis!

[denverd0n]

Best option: pay cash.

If you can't pay cash, then you have to look long and hard at your finances, and ask yourself if you can really afford this boat.

If you must finance, then you either need other assets that can act as collateral (a house, perhaps?), or you need significant savings (in which case you COULD pay cash, you are just choosing not to), or you need a really, really good credit rating along with an extremely trusting banker.

That, or try to get the seller to finance. Which, if I were the seller, I would absolutely NEVER agree to!

Good luck.

[Shrew]

I'm not going to debate the "Cash vs. Note". There are pros and cons to each. However, I would determine what a livable monthly payment would be, and start saving that every month, right now. If you're going to get saddled with a monthly payment for the next 60 months, then you might as well work it into the budge now. Open a savings account dedicated to this (avoid tying it to an ATM card so you don't make withdrawals from).

Consider a 2nd job. Put 100% of that income into the boat fund IN ADDITION to the monthly payment deposit. The balance can be used to buy your boat, or secure a loan, or handle the refit if you do manage to get a loan.

On a 40 yr. boat, expect to pay a minimum of 50% of the cost of the boat, just refitting it. You're can easily dump 12K into a 25K boat of that vintage. Updating electronics alone is going to be a minimum of 2-3K to get a barebones GPS and Radar system. Heck, you'll spend between $500 - $1000 in paint, cleaners and materials alone (1gal. of bottom paint is going to run $200+).

[valhalla360]

Unless this is a classic that has been recently refit to a very high standard, if you can't afford it cash, you probably can't afford it and the banks know that.


You say you are going to go full time. Presumably that means your income is suspect from the banks point of view.


Another consideration is what happens if you sail away and never make another payment? With a $500k boat, it's worth it for them to track you down and go thru the repo procedures to get it back from a foreign port. With a $10k boat, they will probably have to write it off, so it's actually a much riskier loan.


Not to get too personal but:
- What is the sale price?
- What needs to be done to make it sail away condition?
- What assets do you have?
- How will you fund the full time lifestyle once you depart?
Knowing this may change some of the responses.

[TomLewis]

I just got a HELOC for a boat. Around 50K. The HELOC is close to the prevailing mortgage rates so easy payments. Only catch is it is an ARM, but with the current regime, I don't expect it to go up much. If it does, we will just pay it off. It is also a tax write off. It does take time to get the loan though, so trying to buy a boat and getting the loan requires some time management. Good luck shipmate.

[TrentePieds]

Financing for a 40 year old boat????

Simple: Finance it from your savings account. Another option: Buy the right lottery ticket :-)!

TrentePieds

[Cheechako]

Hopefully a '74 boat isn't much money..? Pay cash. and if the boat IS a lot of money, reevaluate if it's worth it, or if the seller has a "fish on!"

[reed1v]

Getting loans on old boats is almost impossible. Need either to hock the house, draw down your savings, or go personal loans. Next challenge will be getting insurance. Then you got the maintenance costs associated with old boats. If the boat is over 25 years old, probably cheaper to buy a new one. Remember, you got to sell the junk down the line and not many folks want to buy an old boat(dreamers, yes).

Most old boats have unrealistic asking prices. Remember well a nice 45' wooden ketch with an asking price close to 100k that finally sold 10 years later for a bit under 10k. Wonder what ever happened to the Ruana?

[Dave22q]

If you need to finance an older boat, how are you going to pay for fitting out and maintenance much less upgrades? Those costs can run a third to a half of your initial investment.

[scgilligan]

essexcredit.com they finance older boats, although at a higher interest rate..as long as the boat meets their NADA-type values. You will also need a higher down payment I believe. I have not used this company myself, so all of this is conjecture, but I have sent them questions a couple of times about this very subject. They require a minimum boat loan of 10K, 25K for a liveaboard. Minimum credit score is 690 IIRC. They use the boat as collateral, so no need to maintain a house..
If you go this route I would be interested in how the process worked out for you..since I may consider it in the future myself.