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Old 11-25-2013, 08:36 PM   #1
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Financing ?

Finally think I might have my boat search down to one. One problem is I can't afford to pay for the boat outright. The boat is 30 years old and many sites tell me that boats that old can't be financed. Does anyone know of any banks or agency that will make loans on an older boat?
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Old 11-25-2013, 09:09 PM   #2
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Ah, the power of the internet and all the subject matter experts.....

Yes, there are lenders that will loan on an older boat. Most have a formula of LTV, or Loan To Value, that they use, along with standard credit criteria.

USAA, Navy FCU, and other credit unions will lend based on the individual more than the collateral. Be prepared with a higher down payment, and hopefully your survey value is comes out well.
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Old 11-25-2013, 09:11 PM   #3
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GS13, most banks won't touch anything older than 15 years.

Do you bank with a large, national bank or a small regional/community bank or credit union that you might be able to get a loan through? I was lucky when I bought mine that BofA was financing boats, but now they've tightened up their loan regs and wouldn't touch mine for a refi.

Having a long standing relationship with a bank helps when you need something out of the ordinary.

I would not suggest you take out a home equity line of credit (HELOC) or first mortgage to buy a boat. Should your situation change it would be much easier on you (and your family) if you had to give the boat back to the bank rather than having to give your residence back.
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Old 11-25-2013, 10:07 PM   #4
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Old 11-25-2013, 10:15 PM   #5
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Try suntrust bank. Or go through trident funding. Good luck.
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Old 11-25-2013, 10:27 PM   #6
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I just financed our 32 year old trawler thru my credit union.. was no big deal.
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Old 11-25-2013, 10:37 PM   #7
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I'm personally against financing boats but was told by my credit union that financing my 45 year old boat wouldn't be a problem. That answer puzzled me so I questioned the genesis of the Internet rumors about financing older boats. My contact at my credit union told me they routinely deny boat loans to folks with low down payments and FICO scores. Just a wild guess on my part but wonder if the rumors started with folks that have been denied???
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Old 11-25-2013, 11:02 PM   #8
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There is nothing wrong with financing a boat. If we had not had the equity on home back in 2005 we never would have purchased our first Nordhavn. When we decided to test the waters last month with N3 we could have paid cash but decided to keep the money invested in the market and put 30% down and financed the balance. Keeping the payments affordable (along with slip fee's) is important so your not stressing out on the monthly payments. Not spending a lot of money on N3 does feel good. Believe me you spend lots of cash once you decide to buy your boat in addition to the monthly costs. Good luck.

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Old 11-25-2013, 11:04 PM   #9
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The down goes up incrementally with age. I financed mine this year with 20% down, if it had been over 15 years old (with Essex Credit) the down would have gone up to 25%. My credit union was 25% down and the interest rate was sky high, starting at 6.5% for new vessel purchases. I got in at 4.25 for 15 years. It limits what you can finance, but financing was the only way I could afford my vessel after the Fannie Mae and Freeddie Mac debacle... Loans with your partially unfinished home for collateral are over forever!
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Old 11-25-2013, 11:25 PM   #10
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There are several reasons for financing a boat purchase. While I generally agree financing recreational purchases is not a good idea, sometimes it makes sense. I financed my 1977 boat 7 years ago without a problem. It wasn't because I didn't have the money in the bank, but it allowed me to use my money for other purposes. Since I could write off the interest as a second home, it helped offset some of the interest costs.

Once those other funding needs ended and before retirement, that loan was paid off. That felt VERY good!!
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Old 11-26-2013, 12:30 AM   #11
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I just financed our 32 year old trawler thru my credit union.. was no big deal.
That's the way I'd go, and follow this guys VVV lead:

Quote:
Originally Posted by FlyWright View Post
There are several reasons for financing a boat purchase. While I generally agree financing recreational purchases is not a good idea, sometimes it makes sense. I financed my 1977 boat 7 years ago without a problem. It wasn't because I didn't have the money in the bank, but it allowed me to use my money for other purposes. Since I could write off the interest as a second home, it helped offset some of the interest costs.

Once those other funding needs ended and before retirement, that loan was paid off. That felt VERY good!!
Our home is paid off, but we're re-fing a 2nd to get a lower interest rate and shorter term. Overall we'll save over $32k in P & I, and get the write off on interest at the same time.
For us unfortunately, it's a not a boat but it is a new metal roof and a complete makeover of our master bath, but the same would (probably will) apply for a vessel purchase. Unless you've got the expendable $$$$ and no where else to make it work for you, and if you have the equity available, I'd do the HELOC for just about any major purchase any more. Rates are low, the process is easy, and there are tax advantages.

If you had the cash to purchase outright, I probably still wouldn't necessarily do it. I'd place the funds in a MM account at a CU, and draw (borrow) from that. You control the payments, duration and most of the interest. If you suddenly have a need to dump the monthly payments, you can either stop them temporarily or default with no penalties (credit wise). If you stalled them, you could start them up again at any time.

Regardless, I would recommend looking at the credit unions. I've always found them great to work with

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Old 11-26-2013, 01:14 AM   #12
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So, that's how people have a higher standard of living without having a higher income.
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Old 11-26-2013, 01:29 AM   #13
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So, that's how people have a higher standard of living without having a higher income.
You sound a little bit elitist there Potter...

Surely that's unintentional? I mean, should "regular folk" have to save up the entire amount for their house as well?
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Old 11-26-2013, 01:43 AM   #14
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You sound a little bit elitist there Potter...

Surely that's unintentional? I mean, should "regular folk" have to save up the entire amount for their house as well?
If believing it's best not to borrow except for life's necessities or a business venture, yes I'm elitist. (I have obtained loans for sequential homes and a car.)
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Old 11-26-2013, 04:16 AM   #15
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To continue the slight thread drift....

I''ve got old school ideas on this, and don't finance boats, cars or anything that goes down in value.

Also - I had some wise advice when deciding on my latest boat.
"Don't spend more than 10% of your overall worth (house, share investments, savings etc) on any boat."

There are times that I wish I'd ignored the above and bought a Nordy, but not often.
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Old 11-26-2013, 05:51 AM   #16
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I financed a 1976 48LRC Hatteras. I think it will depend on the boat and condition.

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Old 11-26-2013, 06:46 AM   #17
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Don't finance any of the 3 Fs.
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Old 11-26-2013, 08:47 AM   #18
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Quote:
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So, that's how people have a higher standard of living without having a higher income.
Quote:
Originally Posted by cardude01 View Post
You sound a little bit elitist there Potter...

Surely that's unintentional? I mean, should "regular folk" have to save up the entire amount for their house as well?
Quote:
Originally Posted by markpierce View Post
If believing it's best not to borrow except for life's necessities or a business venture, yes I'm elitist. (I have obtained loans for sequential homes and a car.)
Quote:
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Don't finance any of the 3 Fs.
Like most things in life, to each their own.

I chose law enforcement and the military (reserves) as career options. Not a great money makers, but very rewarding in so many other ways.

I now own one very cash flow intensive-non-maritime related-business, and a maritime related startup (coming up on 2 years), so cash flow is limited at best at the moment. I've managed to keep my businesses debt free for the most part, but it's always a struggle.

As for pulling the trigger on a boat loan, I have a LOT of regrets not making a vessel purchase while my kids were young. When utilized properly, a boat and the water can be a great teacher of "life lessons", and can go a long way toward keeping kids out of trouble.

My business associate and I use our marine related business and his 23' Proline CC for various youth and charity related events throughout the year. I will assure you that, as long as my health allows, Trawler or not, I will ALWAYS have a small boat available for such operations.
The magic that comes out of these events is unequivocably amazing!!

My granddaughter lives with us and has since birth. At 7, she already has her "papa's" love for the water, can tie several knots quick as you can bat an eye, and hops on a boat at the drop of a hat!

So yes, when the "right" boat comes along, I'll pull the trigger. Will I be able to drop cash? Who knows? Depends on too many factors. But I'll not let another child's lifetime slip away while I "wait" for the "right time."

I agree with the percentages stated previously for luxury purchases.
And I do believe in having an emergency fund, and being prepared for retirement, but I also know for a fact, that you can't take it with you.
Thus, the HELOC or Home loan.

First, INSURE the loan!
If something happens to me, the loan's paid and the wife is taken care of by our other savings, retirement and investment.
It also allows us to continue investing and saving, while getting things done that need to be done, and getting a small benefit on our taxes each year.

The same would hold true for a vessel purchase.
If you have the equity, use it to get what you want to enjoy life (*yes, this is a luxury purchase, and no, Dave Ramsey would not agree).
Insure it and take the tax deduction!

Mark mentioned business ventures.
Hell, start a business related to it, get a top flight accountant, and reduce your tax burden as much as you can. Maximize the purchase, or as my CPA says, you beat the IRS with their own rules.

If something happens to you or the vessel, since both should be insured, the loans are paid off. If something happens to you, your other half has options. Either way, the lending institution (or your money market account) is now made whole, and your spouse has the vessel, and options. Keep it and continue to live life to it's fullest, or sell.

Back to the OP's question, I'd seek out a credit union (first), or a small local/regional bank (second). I'll bet you'll feel more at home with them than most of these POS mega banks.

BTW-Rick, what are the "3 f's"?
I know what they are in my world, but I'm guessing we're talking two separate languages

OD
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Old 11-26-2013, 08:51 AM   #19
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Don't finance any of the 3 Fs.

If it .Flies , Floats or F,,,, its better to rent than buy.

From an old Captain that could never keep his pants up and had 3 alimony payments per month.
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Old 11-26-2013, 09:36 AM   #20
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We financed through Suntrust in 2009, but it was at a pretty high rate (8.5%). There were rate bumps for the boat's age and for a loan less than $100k, but once we paid it down to within the limit of our home equity loan, we transferred the balance there (prime + 1%). Granted, we paid off the $55k loan in four years and not everyone can do that, so your mileage may vary. However, be patient and shop around. There is no shame, stigma, or reason not to finance if you have the income stream to pay off a loan.

Keep in mind this: As you probably know, boats are more expensive to maintain than to own. You need to plan on a lot of expenditures over-and-above just the cost of the vessel itself. We bought Skinny Dippin' for about $75k on 2009 and have easily spend more than that in upkeep and upgrades since. Now, not everyone needs or wants to throw money at it like that and there are certainly projects that I didn't HAVE to do. Still, it's worth noting.

Finally, like I said, shop around. in 2009, many banks have locked up their loans and stopped marine loans altogether. Since then, it appears that there are more institutions coming back online with yacht loans (which reminds me... you are probably looking at a YACHT loan and not just a boat loan... there IS a difference). Just be ready for then to do some fairly deep digging into your life before they approve you.

Good luck!
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