Loan recommendations?

[redneckrob]

Originally Posted by S/V Illusion

Happens all the time. About 20 years ago, we had a mechanical failure and fire. Underwriter denied claim and refused to pay. Took 2 law firms and years of litigation to resolve.

Not an uncommon scenario.

I'd be intrigued to hear the details of that case. Was the fire not covered because it was caused by a mechanical failure, or was it not covered because the mechanical failure was due to some (alleged by the insurance company) negligence on your part? In any event, if you won the suit it sounds like the case wasn't one of insurance not covering the situation, but instead a specific company not honoring their contract? In the marine insurance world there are certainly companies infamous for that.

[Shrew]

Originally Posted by Jammer

Everyone's situation is different. You don't know the OP's expected future income or whether the OP has assets that cannot currently be liquidated.

Some people who wait until they can afford to pay cash end up having their dreams shattered by health problems and end up with nothing to spend the money on except for a golden wheelchair.

Some people who buy an inexpensive, older boat find that the cost of maintenance and repairs, combined with poor resale, make them worse off financially than buying a newer more expensive boat.

Some people who buy a smaller boat that they can afford find that it does not meet their needs so that they incur the frictional costs inherent in trading up to something more suitable

Don't judge

Your argument is against insurance, rather than financing. I also believe your theory to be more rumor than fact and more an academic argument for regular inspections and proper maintenance than anything.

[goboatingnow]

Originally Posted by S/V Illusion

Happens all the time. About 20 years ago, we had a mechanical failure and fire. Underwriter denied claim and refused to pay. Took 2 law firms and years of litigation to resolve.

Not an uncommon scenario.

Commonly there is two different scenarios , mechanical failure in itself is generally not insurable , but damage resulting from such a situation to the boat , other then the engine itself , is entirely covered

I have personal knowledge of two engine failures leading to fires and complete loss , both insurers paid up.

I have financed several boats over the years by way of chattel mortgages. If you are in your productive years , it’s makes absolute sense to finance as your cash reserves are more likely to be needed for things you can’t easily finance

Very few chattel mortgages go to term , the boat is nearly always sold well before the term ends. Think of it as simply financing your fun via depreciation !!

It’s a good deal , for a person with a reliable sufficient income. I certainly wouldnt let unfounded bogey man insurance stories put you off. Most boats don’t burst into flames or randomly sink. In 7 boats I’ve never made a single claim in 32 years of ownership.(all boats were continuously insured )

[Jake Tanley]

I don't know the answer, but would be curious to understand if financing a boat vs. outright ownership has any implications on insurance premiums (similar to a car - in many states when you own a vehicle you are required to just have liability - if there's a bank loan involved you are required to carry both liability and collision insurance on the vehicle - which is much more expensive).

Separately, the cost of the boat is one thing. It's really just admission to the dance. The recurring costs of boat ownership are an entirely different matter. This comment is not directed at the OP, but to future readers of the thread that may not be familiar with boat ownership.

When I see/hear about people financing a boat purchase, I'm concerned they may not appreciate the ongoing costs of the hobby and are just looking at the monthly payment of the boat loan. Even if a DIY'er - insurance, repairs, upgrades, slip/mooring fees, storage, named storm haul outs, pandemics, etc. will add up to thousands of dollars a year - even with a new or well found boat.

It's all manageable if one understands the ongoing investment, but I wouldn't want to walk into it w/o an understanding of what's actually involved in non-trailerable boat ownership.


EDIT: Just read KingGuppy's parallel post about engine work from a recent survey. Does not sound like the OP has a clear understanding of the ongoing costs associated with boat ownership. This doesn't mean he/she shouldn't follow their dreams, just puts things in a little different light. It's a good sign they are asking questions.



https://www.cruisersforum.com/forums...it-256107.html

[goboatingnow]

Typically a chattel mortgage on a boat , this side of the pond will require flag registration , and note of encumbrance and will require full comprehensive insurance ( I mean seriously are you going to have a new boat with no or liability only insurance )

As for running costs. , most people discover quickly what B.O.A.T actually stands for. That trap exists for cash or financed purchase.

[Jammer]

Originally Posted by redneckrob

@Jammer, I have read over and over about how insurance companies will negate insurance due to mechanical failures or unauthorized repairs, but over several policies with several different insurers I've never seen an exemption for them for either of these and to the contrary a mechanical problem that leads to a loss is usually specifically covered, i.e. if your engine failed and it caused you to go aground on a reef and sink they'll cover the boat, but if your engine failed and sailed back to your pier they won't cover the engine repair. Do you actually have firsthand knowledge, or anyone else for that matter, of a claim being denied because a mechanical failure caused the casualty? Every time I've asked this before here I get crickets, but people still insist on pushing this narrative based on a friend of a friend heard it on the docks....

Boat policies vary widely.


Typically the wording used is that the policy will not cover a loss that was caused by a lack of proper maintenance or a failure that could have been identified and repaired had proper procedures been followed. They also will not cause a loss where the cause was a gradual rather than sudden failure. Your policy probably has similar wording even if it does treat "mechanical failures" as a covered peril.


Where this usually comes up is when boats sink at the dock or on a mooring. When a seacock breaks off due to dezincification or a hose starts leaking because it wasn't clamped properly or was overdue for replacement, or a bilge pump fails because of poorly maintained wiring, that's "maintenance." When a mooring line fails because of chafe, that's a gradual failure that could have been prevented by maintenance.

[S/V Illusion]

Originally Posted by goboatingnow

Commonly there is two different scenarios , mechanical failure in itself is generally not insurable , but damage resulting from such a situation to the boat , other then the engine itself , is entirely covered

)

Like any generality, that isn't true in many cases.

[KingGuppy]

Originally Posted by Jake Tanley

EDIT: Just read KingGuppy's parallel post about engine work from a recent survey. Does not sound like the OP has a clear understanding of the ongoing costs associated with boat ownership. This doesn't mean he/she shouldn't follow their dreams, just puts things in a little different light. It's a good sign they are asking questions.

Correct. We don't have much experience with any part of the process. We've been reading/researching for a few years and are just making the move now.

We were trying to find out if that survey was $35k worth of repairs, or $100k.

For the loan vs no loan part, we're up in the air. The loan rate we got is 3.9%, which makes it hard to want to pay off early, over just dumping the money into a total market index fund.

[Deep Blue Water]

Depending on interest rates for a home equity line of credit (HELOC), that might be a way to go

[redneckrob]

Originally Posted by Jammer

Boat policies vary widely.


Typically the wording used is that the policy will not cover a loss that was caused by a lack of proper maintenance or a failure that could have been identified and repaired had proper procedures been followed. They also will not cause a loss where the cause was a gradual rather than sudden failure. Your policy probably has similar wording even if it does treat "mechanical failures" as a covered peril.


Where this usually comes up is when boats sink at the dock or on a mooring. When a seacock breaks off due to dezincification or a hose starts leaking because it wasn't clamped properly or was overdue for replacement, or a bilge pump fails because of poorly maintained wiring, that's "maintenance." When a mooring line fails because of chafe, that's a gradual failure that could have been prevented by maintenance.

Yeah, not seeing that anywhere in the fine print of the 3 different policies I've had. And I do read the fine print, I canceled one because they wouldn't define "major storm". I wonder if you have any examples of actual policy language to that effect?

[Mtbguy]

Hello all
I’m not sure if I should put this question in this thread or survey questions, but it’s more related to lending.

I’m approved with a good marine lender for a boat with very good rates. I was looking at a very nice 2011 in my price range 130-150k. We will end up eventually having boat in SW Florida which has many shallow areas and draft is a bit of a concern with that boat so I’m rethinking moving ahead on that purchase.

Most Cats are very pricey but obviously better suited for shallow areas. I found a discounted one (Lagoon) in the BVI. (Ironically I was just there last week and didn’t see it until back in the US looking online.)

The boat in question is has had some previous damage repairs, primary remaining issue is some forward bulkheads that delaminated have been repaired but it wasn’t the best job and need to be re-glassed to a better standard. We have owned many boats in the past and I’m fairly handy. I’m not afraid of having to use some of our own elbow grease to get things ship shape.

My question is : Would a marine survey citing this repair needed scare the lender away?

Also wonder if previous insurance claim would make it hard for me to get insurance.

Thanks!

[clamshack]

The lender is going to go with whatever the insurance company decides. The insurance company will require a survey and then based on that you’ll find out if anything needs to be done before they’ll insure it.

Make sure that you agree to accept the vessel only after you get the insurance sorted out.

[brucecam]

Originally Posted by BillKny

Wow... a 20 year boat loan...

I don't suppose you would consider buying a boat you can actually afford?

It's an old thread, but I can't help but comment that I'm still amazed how ignorance and arrogance cohabitate; this reply is an example. IMHO (and I'm a lifelong 'finance guy'), there are several perfectly rational and even - dare I say it? - clever reasons to finance; and its foolish to assume a necessary correlation between a finance decision and financial soundness: inflationary times are, they teach in MBA programs, a good time to own assets and owe money to others (Hint: the asset appreciates and the loan depreciaates); simple cashflow considerations might also be a creditable reason to finance. Finally, why work so hard to be snarky? The man was asking for help, not a tongue lashing.