Financing requirements, other than $$$

[jjcarr1]

So looking around at boats, I'm considering financing or paying cash. Question I have about financing is what additional requirements should I expect other than income/debt related?

I assume that I'd be required to maintain full insurance rather than liability, but do lenders also require sailing certifications, years of experience, etc...?

Trying to get a full picture of the long-term costs and hastle of cash vs financing.

[5BTM]

Pawn brokers won't touch they, which is a good indication of value of boats.

You better have collateral.

[jjcarr1]

Originally Posted by 5BTM

Pawn brokers won't touch they, which is a good indication of value of boats.

You better have collateral.

That doesn't seem to be the case as loans secured against the boat seem to be the most common.

[barnakiel]

I think to own is just your solvency / credit data and the insurance sure thing.


Other paperwork only if you intend to drive. But you can as well hire a licensed operator (aka skipper and crew).


Imagine buying a house with other people's money. Same same. Credit rating and the insurance that would pay money to the bank should the house catch fire.


Buy cash. It is cheaper.



b.

[trswem]

I actually just had a conversation with a lender. The bank I spoke with had a marine division. For loans greater than $100M, they needed income verification in the form of tax returns and paystubs, they needed full insurance, and a survey from a certified surveyor. Nothing else was required.

[jjcarr1]

Originally Posted by barnakiel

Buy cash. It is cheaper.
b.

Usually but not always. If I can get a 6% loan and my investments make 10%, then it's actually more cost effective to get the loan. Assuming 10% continues, which isn't certain.

[jjcarr1]

Originally Posted by trswem

I actually just had a conversation with a lender. The bank I spoke with had a marine division. For loans greater than $100M, they needed income verification in the form of tax returns and paystubs, they needed full insurance, and a survey from a certified surveyor. Nothing else was required.

No ASA/certs experience requirements? Or is that something they need for the insurance?

[grantmc]

Originally Posted by jjcarr1

So looking around at boats, I'm considering financing or paying cash. Question I have about financing is what additional requirements should I expect other than income/debt related?
I assume that I'd be required to maintain full insurance rather than liability, but do lenders also require sailing certifications, years of experience, etc...?
Trying to get a full picture of the long-term costs and hassle of cash vs financing.

The clarity you're seeking isn't going to be had without providing far more information. For example, boat type, condition, age, size and details, boat's usage, value, budget, location, prospective marinas, your own and families needs etc etc.

Appreciate you're trying, I guess, to gather a few rules of thumb, but without filling in some of those blanks it's impossible to even give generalities. For example where the vessel will likely be moored and whether for commercial or pleasure use makes huge differences.

In respect to certifications and experience of the prospective owner, the majority of insurance companies will ask for details. For some companies the more qualified/experienced the owner the lesser the premium or even decline insuring. The insurance company will typically require a copy of a recent survey. It's not uncommon for insurance companies to then provide cover, but stipulate survey items be corrected asap, and once sorted a follow up survey.

And if it's intended the boat remains in a cyclone locale year round, you might have to consider self insurance. And that typically doesn't work well with a financier's requirements.

Another factor that I notice with some people buying their first serious cruising boat is that they don't really know what they will need and what will need changing about their new boat. And as a result, 2 or 3 years down the track, they'll have spent a heap of money and hundreds of hours making the yacht to their own preferences, particularly as they gain experience. Very difficult to budget for such items, even when you are experienced. There are just so many 'nice to have' gadgets and gizmos. And this isn't just specific to the boat, it's about the things that make life on boat and on the water more interesting.

Just as an example, maybe you take up diving. Well there's are a whole heap of gear and stuff that would make that more fun. You might decide you need a compressor, well where you going to stow it, your soft fabric dinghy might need replacing with a hard one so you can anchor in those cool reefs. You might decide to build a swim platform on the transom ... it never ends if you're considering living a nomadic life on a boat.

[trswem]

Originally Posted by jjcarr1

No ASA/certs experience requirements? Or is that something they need for the insurance?

That very well may come into play with insurance, I hadn't gone that far down the road yet. The lender was super straight forward. Terms were great too, 30yrs at 6.25% for well qualified buyers. For loans under $100M they would do 15 years at 7.25%. If you're in the Pacific NW I can send you the info.