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Financing the dream

Discussion in 'General Yachting Discussion' started by k9medic, Dec 16, 2012.

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  1. k9medic, Dec 16, 2012
    #1
    k9medic

    k9medic New Member

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    <--- new guy here (obviously).

    Like many, I am searching for the optimum balance between boat and money. I have been evaluating many different vessels ranging in price from the mid 30's to around $75K USD.

    A portion (if not 90%) of this vessel will need to be financed and it appears that there is a great variation in what the lenders are willing to offer. What is reasonable and customary in the larger boat venue? I currently have a 23ft. twin engine bowrider that I paid cash for so I have no idea where to start. I know that when I bought my current boat, I was offered 10 years at 2.75% (purchase of $38,000)

    For what it's worth, I'm looking at 1990 or newer and 40-55ft in length.

    Thanks for the input.
  2. RER, Dec 16, 2012
    #2
    RER

    RER Senior Member

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    Rates currently range approx from 4.5% to 5.5% for fixed rate loans. $50K to $75K can cost a little more than advertised rates with most marine finance companies... advertised rates are usually for $100K and up, 20 year old boat or newer. Don't count on more than 80% LTV - you'll likely need 20% down. Newer boats will allow longer terms.

    These days the borrowers credit must be golden. The lender has to like your your financial statement after the down payment is subtracted from your credits and the payment is added to your debts.

    It's to your benefit to get pre-qualified. You'll be in a much stronger position when making an offer. Good luck.
  3. Ormond Bert54, Dec 16, 2012
    #3
    Ormond Bert54

    Ormond Bert54 Senior Member

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    In that size range, it would be pretty easy to find a 1990-1995 boat that you could purchase for .... "x" and then spend 100% more over the next few years getting her into the condition you want. So, just be careful.

    If you can find a pristine perfect boat with all receipts and a continuous track record of maintenance ... fresh engines etc. ... then maybe maintenance would be normal.

    These days, if you can get the loan, you probably have excellent credit and are a good risk and have good judgment or you would already have other sizable loans for other toys!
  4. k9medic, Dec 16, 2012
    #4
    k9medic

    k9medic New Member

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    Those rates don't seem too bad. I was thinking it would be 6+%. I am approaching this cautiously and don't really want to commit to more than around $800/ month to include dock space.

    The wife and are both 800 plus credit scores and in less than 24
    months will only have a mortgage left for a monthly commitment so it sounds like we would be in good shape.

    I mentioned the price range because I know that it would be easy for me to pay 40k for a boat and then put another 30k into improvements.
  5. NYCAP123, Dec 16, 2012
    #5
    NYCAP123

    NYCAP123 Senior Member

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    When you're basing your ability to repay on another debt getting paid off I have to strongly recommend against financing 90% even if you can. (Financing a boat over 10 years old may be difficult in this price range.) Please keep in mind the continuing expenses (dockage, fuel and maintainance)and the surprise expenses (a client bought a boat not long ago. She was in beautiful condition, with very low hours. 13 days of use later he was putting in $30,000 for a new motor.) In 2008 a lot of boat owners found themselves upside-down and tied to a boat's expenses when the market's bottom fell out. 90% doesn't leave you much equity.
  6. RER, Dec 16, 2012
    #6
    RER

    RER Senior Member

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    Remember, rates are higher for smaller loans. At $40K the rate could be up around 6% ...maybe more ...and again, it's highly unlikely that 90% LTV is going to be an option.
  7. ScrumpyVixen, Dec 17, 2012
    #7
    ScrumpyVixen

    ScrumpyVixen Member

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    Agree with this. Being brutally honest, dont buy it until you can pay mostly cash for it. And then make sure you can incur a $1000 cost on a 4 to 6 monthly basis for the things can usually go wrong on older boats (on top of regular expense). Don't mean to sound mean or dramatic, but there is less "give" in dealing with mechanical and electrical issues on boats, as its hard to pull up by the side of the road when the failure occurs.
  8. k9medic, Dec 17, 2012
    #8
    k9medic

    k9medic New Member

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    I appreciate the advice. As far as financing 90% goes, I don't intend on doing so but I always like having the option of using someone else's money. As I mentioned, I paid cash for my current boat which I bought two years ago. I'd love to be able to do the same with a larger boat, but I just don't see it being possible. I'd rather have $75,000 in my bank account.

    With the exception of two car payments and a mortgage we have no other bills. I would rather wait until the cars are paid off and use that money to finance the boat. Even with the car payments and a mortgage, my debt to income ratio is very nice.

    I fully understand the concept of having to replace a motor right after purchase. About 10 years ago I was a partner in an airplane and had to put a new motor in a year after we bought it.
  9. ScrumpyVixen, Dec 17, 2012
    #9
    ScrumpyVixen

    ScrumpyVixen Member

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    Then you should be well aquainted with the aero/nautical saying "if it flies, floats or f##ks, hire it by the hour". You seem to have failed on all 3 counts!
  10. k9medic, Dec 17, 2012
    #10
    k9medic

    k9medic New Member

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    I now only fail at two of the three... I tell people I fly for a living because I can't afford to fly for fun. :D
  11. ScrumpyVixen, Dec 17, 2012
    #11
    ScrumpyVixen

    ScrumpyVixen Member

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    My flying experience is passenger only, from 57F to 1A.

    More comfortable in 1A, but you meet more interesting people at 57F. One exception was an older German gentlemen i met flying up the front from LA to NY. He was a child in Dresden and survived the Allied bombing. Quite moving to hear about it over a couple of bottles of wine.
  12. Ormond Bert54, Dec 18, 2012
    #12
    Ormond Bert54

    Ormond Bert54 Senior Member

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    I agree that you are looking at 6% on 75% loan to value deal unless you go the route of home equity line where you can do better. And it's worth noting that your estimates of what things might cost to repair on a boat should be tripled.
  13. Beau, Dec 18, 2012
    #13
    Beau

    Beau Senior Member

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    Bert's right. A $1k per foot per year is not an overestimate as a working number, until you get a couple of year's worth of actuals