Financing options for an older boat

Hello all,

I looked at a boat today. I liked it. A lot. I want to marry it and have it's babies. Thing is, I don't have enough saved up to buy it outright just yet. I'm willing to finance the small portion I'm lacking, and would be able to pay it off comfortably in a few years. Seems easy enough, right? Well, there's a hitch. The boat is 34 years old.

So far I've tried SunTrust, Sterling, my own credit union, and Essex credit. They all said the boat was too old. Sterling practically hung up on me.

Does anyone have any suggestions for other lenders to try, or other avenues I may not have considered?

If this doesn't work out right now, oh well. I can always just default back to the original plan, and keep saving for a couple more years. If I can make it work though, I'd sure like to.

EDIT: I forgot to mention, I'll be selling the dirt house.

EDIT: Boat US is 1990 and newer only.

Thanks!

Home equity loan line of credit?

Following

I am going to be following this as 34 isn't old for a well taken care of boat.

Northern Spy said:

Home equity loan line of credit?

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I'll be selling the dirt castle.

bshillam said:

I am going to be following this as 34 isn't old for a well taken care of boat.

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I haven't had a survey done or anything, but she certainly seems to be in excellent shape. She looks like she was built two years ago.

Wayfarer said:

I'll be selling the dirt castle.

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In 2017, I bought an extremely well maintained 1974 boat. My broker referred me to a bank located <key point follows> in an area with a LOT of boats.

When I explained that I would but the boat, with or without her help, the deal progressed nicely.

Choose a knowledgeable bank and make it clear that it is in their interest.

When we bought our boat it was 29 years old. Maybe there is a break point at 30 years old. We went through Cindy Lewis at Sterling. No problems with getting a loan. There are 2 Sterling loan companies. Maybe you were talking to the other Sterling. PM me for her phone number. I do know that finance companies don’t want to finance a live aboard so I would buy the boat before you sell your house.

Unfortunately for you and other buyers, lenders have gotten extremely strict after the 2017 hurricane season. They are no longer financing anything older than 1996 (some won't finance anything older than 2000), they aren't financing steel hulls, they are requiring larger down payments, and terms have been severely shortened.

This information is all based on personal experience over the last 9 months or so while trying to buy the boat we've been living on. (And a steel hull we put an offer on on a whim).

ETA: you might also try this broker.

Excel Credit Inc.

RV, Boat & Aircraft Financing

505 Wekiva Springs Rd #200

Longwood, FL 32779

Direct: 407-712-2803

Office: 800-337-7774 Ext. 2803

Fax: 407-862-2298 or 407-862-6586

marci@excelcredit.com

www.excelcredit.com

Excellent, thank you TC. I’ll try them in the morning.

Comodave made an excellent point as well. I wouldn't mention the liveaboard thing until the boat is bought and you obtain insurance.

ETA: Have you tried owner financing on the part you're lacking? If you have 75% of the funds for a downpayment, maybe they'll work with you on terms for the rest.

Wayfarer said:

I'll be selling the dirt castle.

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Yes, but if the amount you need isn't that dramatic as you imply, you can still use the equity to purchase it and then clear it at closing. The HELOC will be part of dealing with the liens and is no problem provided you have equity to borrow against. Also, the rates and fees are likely to be equal or better to what you'll find elsewhere.

Northern Spy said:

Home equity loan line of credit?

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Could always use that, buy boat then sell house and pay out loan.

First, your broker should know the seller's situation + the boat + comps well enough so that your offering price & the seller's bottom line are in proximity. No sense in trying to finance a piece of a boat when you could negotiate it out. That said, in conjunction with, or in lieu of owner financing, do you have items of value to trade? Back c. 1990 one of my offspring with 3 children decided she couldn't live without a particular male idiot with 2 kids, so instant blended family. They needed a big van, pronto, but little $$$. I reminded offspring she owned a (16'?) Hobie Cat, & suggested someone at the car dealership might have a hankering for that. I know nothing of the deal itself, except that she drove off the lot with a monstrous vehicle. Van is long gone, but unfortunately, nearly 30 years later my idiot SIL is still around.

I think your go to resource should be the selling broker if you did not engage a buyers broker. If he wants to earn his commission, he will find a lender for you.

Also, Yachtworld allegedly will find you loan quotes with this link. https://www.yachtworld.com/boat-loans/index.jsp?

toocoys said:

Comodave made an excellent point as well. I wouldn't mention the liveaboard thing until the boat is bought and you obtain insurance.

ETA: Have you tried owner financing on the part you're lacking? If you have 75% of the funds for a downpayment, maybe they'll work with you on terms for the rest.

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I'll have 75% when the house is sold, but if I need to finance first, sell later, that may not work. Still an interesting thought, and one I'll definitely keep in mind.

Civilitas said:

Yes, but if the amount you need isn't that dramatic as you imply, you can still use the equity to purchase it and then clear it at closing. The HELOC will be part of dealing with the liens and is no problem provided you have equity to borrow against. Also, the rates and fees are likely to be equal or better to what you'll find elsewhere.

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Simi 60 said:

Could always use that, buy boat then sell house and pay out loan.

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Sorry, I had to sleep on it to understand what you guys meant, and that's not a bad option.

Imp said:

First, your broker should know the seller's situation + the boat + comps well enough so that your offering price & the seller's bottom line are in proximity. No sense in trying to finance a piece of a boat when you could negotiate it out. That said, in conjunction with, or in lieu of owner financing, do you have items of value to trade?...nearly 30 years later my idiot SIL is still around.

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Lol, sorry about the SIL situation. I don't have anything obvious to trade, but I'll keep that tool in my box in case I think of something.

Donsan said:

I think your go to resource should be the selling broker if you did not engage a buyers broker. If he wants to earn his commission, he will find a lender for you.

Also, Yachtworld allegedly will find you loan quotes with this link. https://www.yachtworld.com/boat-loans/index.jsp?

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The seller's broker and I discussed the financial lay of the land, and he said he may have some lenders that can help. Hopefully I'll hear back from him in the next day or two. Thanks for the Yachtworld link. Makes sense that they'd want to help this fool and his money part company.

I did some research around the PNW and came up with about the same info on anything older than 30 years.. Until I stumbled on this.

Pamela Anderson <PAnderson@bannerbank.com>

Good Morning Ron,

I work at the Belltown Branch, I wanted to touch base with you regarding your below questions.

Banner will lend on boats that are in the age range you are looking at, we do not have a max age we will not go over. We base our decision more so on the valuation of the collateral (survey).

The documented vessel loan at the amount that you would be financing is a 15 year loan, fixed rate, fully amortized loan with an APR of 6.32% (this rate includes a discount for having auto pay from a banner bank account if you choose not to you can add .25% to the rate). There is an account we offer here at Banner called the Banners Best Checking (I can send you some information on that if you would like) that would give you a .25% discount on the loan, along with many other benefits. There is a $350 loan fee and you as the borrower will be responsible for the sales tax, fees, appraisal, etc. The bank requires 20% down and will finance max 80% LTV

Let me know if you have any questions and have a wonderful day.

Best,

Pamela Anderson


Hope this helps
Ron R.

Have you looked into a Personal Line of Credit??

Quite honestly, if you're selling your house and the entire equity is covering 75% of a 34-year-old boat, then either this boat is a borderline yacht, or you might not be ready.

A 34 year old boat is going to require some significant investment in maintenance. If you're down to your last dollar (which I assume you are if you're looking for financing options for the last 25%), then how are you going to cover the inevitable refit??

An update: I was able to find financing through my own credit union. Apparently the person I initially spoke to didn't know much about their boat loan program, but it turns out that they'll lend for a boat of any age, as long as the survey checks out and can verify it's worth at least as much as they'll be lending.

It's a three year loan at 5.5% that I'll be able to pay off at exactly the same comfortable pace that I was already saving. So as far as I'm concerned, instead of chucking that money into a savings account to hand to a broker in three years, I can just throw it at the bank now and start cruising.

RonR said:

I did some research around the PNW and came up with about the same info on anything older than 30 years.. Until I stumbled on this.Hope this helps
Ron R.

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Thank you for the leg work Ron! I think I've got it covered !

Shrew said:

Have you looked into a Personal Line of Credit??

Quite honestly, if you're selling your house and the entire equity is covering 75% of a 34-year-old boat, then either this boat is a borderline yacht, or you might not be ready.

A 34 year old boat is going to require some significant investment in maintenance. If you're down to your last dollar (which I assume you are if you're looking for financing options for the last 25%), then how are you going to cover the inevitable refit??

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Some of the reasons the numbers are lining up the way they are:
I live in a really cheap part of the country, so house prices are a pittance compared to most. The boat is old, and I haven't had it surveyed yet, but the damn thing looks practically new. I know that there will be maintenance costs, which will inevitably be more than I was expecting, but I don't believe there will be a significant refit needed. If it turns out that she does require more work that I'm anticipating, then I may very well have to pump the brakes and wait a few more years. I'll be disappointed, but I'm fully prepared to walk away if I need to. That was the original plan after all.
Also, I do have a fair amount of reserve cash that I'm trying not to dip into. I want to keep that flush for all of my other regular costs, and as a safety net.

Thank you for the reality check. I appreciate you looking out for me!

We originally purchased our boat on a 3-yr owner contract (with a substantial down payment). After 36 months, the contract was set to increase the monthly payment from $1000/mo to $1500/mo. Needless to say we started looking for more traditional financing.

Like you, we ran into dead end after dead end. In the 34th month we figured as a last resort maybe we should talk to our local bank (Kitsap Bank in Port Townsend) where we had our personal and business accounts. They did it! And in impressive fashion.

Moral of our story is don't forget your local bank...

Is this the aluminum boat you are smitten with?

Ted

Keep in mind that you can write off the interest of the boat loan as mortgage interest. Depending on your taxable income, that can mitigate the cost of the interest.

O C Diver said:

Is this the aluminum boat you are smitten with?

Ted

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Might be

dhays said:

Keep in mind that you can write off the interest of the boat loan as mortgage interest. Depending on your taxable income, that can mitigate the cost of the interest.

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Roger that. I'd probably still be under the standard deduction, but it's worth keeping in mind.

Atta boy!
Only time and you can tell, but I am guessing this will turn out to be a good choice.

Well this is good news, and that info re:Banner Bank is useful and may be interesting to a lot of people. Heck, I’d go tempted to open an account there now against future needs.

Civilitas said:

Well this is good news, and that info re:Banner Bank is useful and may be interesting to a lot of people. Heck, I’d go tempted to open an account there now against future needs.

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I did speak with someone at Banner, and it was all going well until they mentioned that they'd only work with me if I lived in, or was moving to one of the four states they operate in, CA, OR, WA, and ID.

Hope it all works out Dave. Within reason, seizing an opportunity when it presents is smart, and borrowing to do it is too. If you`ve given it a good looking over,with your experience,survey is likely to come out ok. Keep us posted.

Try a lender that loan on commercial fishing vessels in your area. Fishermen still finance wood boats more that 50 years old. Find a commercial fishing magazine and look in the back pages. Or call brokers that list commercial boats for lenders.
There are lenders of last resort that advertise in newspapers and pubs, but their interest rates are high.

Wayfarer said:

An update: I was able to find financing through my own credit union. Apparently the person I initially spoke to didn't know much about their boat loan program, but it turns out that they'll lend for a boat of any age, as long as the survey checks out and can verify it's worth at least as much as they'll be lending.

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FWIW... Our credit union offered better rates, so we thought to refinance... but they insisted on a $500 deductible. Our insurance broker said a deductible less than 2% of value was pretty much impossible...

After analysis, we assumed the credit union program was aimed at small trailer boats...

-Chris

I thought I might post an update to this. After researching and number crunching and much muttering and thinking out loud, I've come to the conclusion that I won't be able to use that three year credit union loan after all. Long story short, I'd have to sell my house before proceeding. That could take a while. At this point, I'm looking for an avenue to finance most of the boat over a longer period of time to keep my monthly payments down, and then when I sell the house, pay down a big chunk of it. I honestly don't think it will take long to sell the place, but I guess I shouldn't plan on things going quickly and perfectly.

So, the search for financing continues. I'm hopeful about some forward progress I'm making with a local bank here in Central NY. The woman I'm working with might actually be more excited about this whole purchase than I am.

Apparently she's looking into a 'ship mortgage' as opposed to a regular old boat loan. From what I can tell, it's basically just a secured loan. The boat itself will be collateral, and if I default, they can repossess it, sell it, and come after me for whatever I owe that the sale didn't cover. I sort of assumed that would be the case anyway, so as long as the interest rate is decent, I don't see why I wouldn't take that route.

Does anyone here have any experience with a 'ship mortgage?' Apparently anything over 26 feet and 5 gross tons qualifies.