Approved for a boat loan, but bank does not like the boat.

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Marshmallow

Member
Joined
Nov 8, 2018
Messages
13
Location
United States
Vessel Make
Looking to buy
Hello:
I got pre-approved for a bank loan and told the bank I was looking for a boat. They were happy with me and set a max loan amount. I was happy and then I found a boat I wanted that was way less then the max amount and told the bank about the boat. They were happy and said that I was still pre-approved. I got on a plane and went and looked at the boat and I was happy. The bank told me by phone that the boat was ok and the loan was approved, just get a survey to determine the value of the boat as it will be used for collateral on the loan.

I started to work on this and the bank called back and asked what year was the engine. The boat is a 1974, and the engine is also 1974, but it was rebuilt in 2015 and has been working just fine for the last 3 years I told the bank. The bank said thanks and hung up. About 2 hours later the bank called back and said that they could not finance this boat as the engine has been rebuilt. This was their policy. I said that was stupid. Equipment wears out and can be rebuilt by a certified mechanic to new standards. They still said sorry.

So far I have spent $1000 to travel to the boat, hotels, rental car etc. They finally told me that even after a survey, they could still say no. I said "so I could have spent another $1000 for a survey which shows that the value of the boat exceeds the value of the loan, and you could still turn me down at the last minute?" The bank said yes.

What a pain in the rear. As a consumer and a member of this bank since about 1970, this just pisses me off. This loan is not about me and my ability to pay, it is simply about a hidden policy that only the bank knows about and will not let it's customers see until you spend tons of money looking at and inspecting something, just to be told at the last second that the boat is not good enough even if it exceeds the value of the loan.

Any thoughts on this or places to finance a 1974 trawler?
 
Try Cindy Lewis at Sterling. PM me for her phone number. She was really good to work with.
 
Maybe try to take the issue higher up in the bank. Half the older boats out there have rebuilt engines and buyers get loans just fine. If you are only talking to one person, take it a level or two up in mgt.

Otherwise, seek out a different lender.
 
Heaving banked with pretty much every bank in town at some point, I can tell you that the best time to get a bank to say yes is when you would be a new customer to that bank. I got the same response from a bank I had borrowed from, and repaid millions to, when I bought 1965 Delfin. However, the bank that lost my business some years before when they said no, now said yes to get my business back. Just keep looking and you'll find a bank to do your deal.

P.s. this is especially true if there is a new bank in town who is actively building their portfolio.
 
Last edited:
Ski in NC said:
Maybe try to take the issue higher up in the bank. Half the older boats out there have rebuilt engines and buyers get loans just fine. If you are only talking to one person, take it a level or two up in mgt.
Click to expand...

Branch manager took it all the way up the food chain. They will not make an exception to this policy. I have requested a list of items that disqualify a boat. The bank said that they want to give me a loan, just not a loan on this boat. Basically, go find something else to buy.
 
Bank of America, last I heard, will not lend money for a boat, new, used or in a land fill doesn't matter to them, they just wont.
 
Last edited:
Greetings,
Mr. m. Gee, do ya think the bank would have told you about any limitations that might affect approval BEFORE you spent the $1K? Ask those higher up the food chain how they feel about withholding information and why it should cost you money to find out the lending "rules".
 
RT Firefly said:
Greetings,
Mr. m. Gee, do ya think the bank would have told you about any limitations that might affect approval BEFORE you spent the $1K? Ask those higher up the food chain how they feel about withholding information and why it should cost you money to find out the lending "rules".
Click to expand...

I agree. They should have told me that there are certain boats that are not acceptable. The gal doing all of the paperwork did not know, and was told by the underwriter what questions to ask me once she was finalizing the paperwork. As far as I am concerned, the bank owes me a grand. I still want the boat, I just need to find a lender that will accept a boat of this age.
 
Marshmallow said:
Hello:
I got pre-approved for a bank loan and told the bank I was looking for a boat. They were happy with me and set a max loan amount. I was happy and then I found a boat I wanted that was way less then the max amount and told the bank about the boat. They were happy and said that I was still pre-approved. I got on a plane and went and looked at the boat and I was happy. The bank told me by phone that the boat was ok and the loan was approved, just get a survey to determine the value of the boat as it will be used for collateral on the loan.

I started to work on this and the bank called back and asked what year was the engine. The boat is a 1974, and the engine is also 1974, but it was rebuilt in 2015 and has been working just fine for the last 3 years I told the bank. The bank said thanks and hung up. About 2 hours later the bank called back and said that they could not finance this boat as the engine has been rebuilt. This was their policy. I said that was stupid. Equipment wears out and can be rebuilt by a certified mechanic to new standards. They still said sorry.

So far I have spent $1000 to travel to the boat, hotels, rental car etc. They finally told me that even after a survey, they could still say no. I said "so I could have spent another $1000 for a survey which shows that the value of the boat exceeds the value of the loan, and you could still turn me down at the last minute?" The bank said yes.

What a pain in the rear. As a consumer and a member of this bank since about 1970, this just pisses me off. This loan is not about me and my ability to pay, it is simply about a hidden policy that only the bank knows about and will not let it's customers see until you spend tons of money looking at and inspecting something, just to be told at the last second that the boat is not good enough even if it exceeds the value of the loan.

Any thoughts on this or places to finance a 1974 trawler?
Click to expand...

Ran into the same problem when purchasing current boat.
1974 is tough enough, my problem was no “Buck Book” value due to limited sales history. After the “crash” banks are very leary of lending money with no history of “book value” in my case only a few of my model were made, although by a current and long time builder. “We would love to make you a loan, would you consider a different boat?” Ended up paying cash (fortunate enough do do so).
Good luck
1974 is a pretty old boat, set aside 50% of purchase price for repairs and updates. They all look good on paper (ask me how I know)
 
Find another lending institution to finance your boat. Then go back to the bank, and tell them they're fired. While I don't think financing a depreciating asset for recreation is a good idea, I have very little use for a bank that offers loans without a clue about what's considered normal and acceptable.

Ted
 
Welcome MM. Good advice above.

A thought. Have you asked the bank for a copy of the policy. If they give it to you, then ask why they did not produce this when you were pre approved and why you should not take this issue to your attorney?
 
I am afraid the bank's attorneys will 'eat' your attorney for lunch and still be hungry.
It is not worth the effort.
 
MM,

First of all, I could argue STRONGLY not to finance toys and get into consumer debt, unless it's revenue producing and will carry itself. A sure way to postpone retirement and end up broke. Not that happens to everyone, but most people that I know that have consumer debt are broke. I know nothing about your finances and none of my business so accept my comments as being a general principle.

If you absolutely MUST finance a boat that is an absolute KILLER deal that you may only loose 10% a year on, use real estate as the collateral, get much better terms. Then shop as you wish without the bank interfering.

As for your $1000, file a small claims action, cheap and they might settle. You certainly have a case. Hiring an attorney doesn't work as it will cost you more than you'd recover.
 
Seevee said:
MM,

As for your $1000, file a small claims action, cheap and they might settle. You certainly have a case. Hiring an attorney doesn't work as it will cost you more than you'd recover.
Click to expand...

Good point. :thumb:
 
I am not surprised that the boat you picked was turned down. I am surprised it was turned down for rebuilt engines and not for being over 30 years old. The other issue that often disqualifies a loan is buying a boat to live on. Banks are afraid of the legal ramifications should the need to repossess a boat being lived on. Of course nothing stops you from buying it for recreation and then moving on it.
 
Potential borrowers assume the loan officer knows what the bank lending policy states. Besides, banks don’t give out their loan policies to customers. They are for the lenders’ use.
 
Call some boat brokers in your area who are advertising older boats. They'll know who can help you.
 
drb1025 said:
Potential borrowers assume the loan officer knows what the bank lending policy states. Besides, banks don’t give out their loan policies to customers. They are for the lenders’ use.
Click to expand...

That sounds like great customer service. Personally, I'm not a fan of banks and quit using them years ago. There's much better money elsewhere without the hassle.
 
MM, I financed my boat because I can write off the interest.
I think I pay about 7% while earning a bit over 3% in the stock market.
Basically, that means I am getting my loan at about 4%, plus writing off the interest. Now, if I sold stock to pay for the boat, capital gains tax would eat me alive.
 
A coincidence? Seems Engine age is the new "say no" for lenders and insurance companies. Back in September my insurance company dropped me. Reason age of the engines or proof I had re-powered within the last 12 months.
 
OldDan1943 said:
... Now, if I sold stock to pay for the boat, capital gains tax would eat me alive.
Click to expand...

Probably because most of the gain would be imaginary due to inflation. And in California, capital gains are also taxed at normal rates.
 
There's a guy who advertises all the time in boating mags but I don't recall his name but I think it's Max somebody. I think it's for Sterling but I could be wrong,.
 
“rebuilt in 2015“

Bank may be doing you a favor. Rebuilt can mean a lot of things to a lot of people. An engine can be rebuilt to better than new........OR NOT. Depends on who is doing it and what they decide to replace or re machine. I’ll bet that the bank or someone within has been burnt too many times with “rebuilt” engines.
 
OldDan1943 said:
MM, I financed my boat because I can write off the interest.
I think I pay about 7% while earning a bit over 3% in the stock market.
Basically, that means I am getting my loan at about 4%, plus writing off the interest. Now, if I sold stock to pay for the boat, capital gains tax would eat me alive.
Click to expand...

Not sure this works anymore under the new tax laws. If you're writing off the interest as mortgage interest on a second home, I believe this has been done away with.

Tator
 
There really is no point trying to get a bank to admit a mistake, and less to get them to compensate you for any mistake this side of a lawsuit. Any decision they make can be justified by them on the basis of adjusting overall portfolio credit risk due to changes in the markets, or the lunar cycle if that's what they care to use to justify themselves.
 
Seevee said:
MM,

First of all, I could argue STRONGLY not to finance toys and get into consumer debt, unless it's revenue producing and will carry itself. A sure way to postpone retirement and end up broke. Not that happens to everyone, but most people that I know that have consumer debt are broke. I know nothing about your finances and none of my business so accept my comments as being a general principle.

If you absolutely MUST finance a boat that is an absolute KILLER deal that you may only loose 10% a year on, use real estate as the collateral, get much better terms. Then shop as you wish without the bank interfering.
Click to expand...

That is an approach that I'm sure works well for you. I have a loan at 3%, and investments which make far greater than that. When the loan is paid, I'll still have the principal. Or, I could spend years saving it until I have two few years left and in too poor health to enjoy the pile of money I give away at my death.

Why would I take interest generating principal and invest it in a depreciating item? That doesn't make a lot of sense either.
 
Easting said:
“rebuilt in 2015“

Bank may be doing you a favor. Rebuilt can mean a lot of things to a lot of people. An engine can be rebuilt to better than new........OR NOT. Depends on who is doing it and what they decide to replace or re machine. I’ll bet that the bank or someone within has been burnt too many times with “rebuilt” engines.
Click to expand...

I agree. On a 45 year old “rebuilt” boat there will be both lending and insurance issues. Much of it has to do with net worth and surveyed value. Has your insurer said they would insure the vessel? This could be the next roadblock. Asking for more money on a newer survey acceptable vessel may be worth considering.

If losing your 1000$ is a large problem, maybe boating is currently not wise. That is chump change compared to boating expenditures you will encounter over the next few years of water fun.
 
I would generally not recommend local banks for boat financing. Go to an experienced boat lender.
 
BandB said:
I would generally not recommend local banks for boat financing. Go to an experienced boat lender.
Click to expand...

Or, pick a bank that will give you the money, local or in Zambia. Just a thought. Which you can generally locate by asking them for the money.
 
Greetings,
Mr. s. Re: Post #27. It's not the $1000 IMO, it's the fact that the PO proceeded with the deal based on faulty/incomplete advice from the bank and that money is out of HIS pocket, NOT the banks.

I fully agree $1K is chump change in the greater scheme of the boating world.
 
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