$Owner Financing$

[flightlead404]

Originally Posted by Shanachie

You would need the boat as collateral. Y

Could you not secure the loan with some other less movable asset, like a house?

If the house is owned free and clear great, otherwise your lien would be subordinate to the first mortgage, but still harder to move a house than a boat.

[Chotu]

Every deal is unique. Maybe the buyer has their money tied up somehow into an asset like a house.

Just attach everything to the proper assets if any, then make sure seller is the lienholder on any titling that is done depending on the state. Register the lien on the boat. Make sure the seller is the loss payee on the insurance.

Not really that much different than a bank doing it.

I did a loan like this for a vehicle fairly recently. Two years later, no problems.

Have a nice airtight agreement and be ready to repossess the thing if you have to. Hopefully it will never come to that but be ready

[Rucksta]

Originally Posted by CharmCityBoater

I do not agree with this. Who are you to say someone has no business of owning a boat? You do not know their situation. Maybe they do not want to deal with a commercial bank, maybe they are retired and want to keep their $$ tied up into investments... too many variables. Just because someone cannot p[roduce the cash right away does not mean they should have the chance to own a boat. Would you say the same about someone who could not purchase a car in cash? a house?

Just my $0.02

My takeaway was sailboats demand large lumps of cash often.
Be prepared to part with it.
Just my $0.00002 boat dollars worth

[Shrew]

The problem is, there are too many variables. There is a big difference doing an 'owner finance' deal as the seller when you know the buyer. When you know the buyer has roots, like they live and work in the area, or they are a relative, or friend of friend of the family. This is different than some anonymous person walking the dock or answering a classified, or someone you just recently met.

Neither those saying 'yes', or 'no' are qualifying the buyer in their response.

[SuW]

If I were selling a boat for $500, and had no other offers, I'd consider this.

If I were selling a boat for $50K, and had no other offers, I'd drop the price until I got a cash offer.

[lestersails]

It's just gambling.
Upside is where you gain a portion on top of the sale price in interest.
Downside is that you are left with only your down payment and maybe some monthly payments.
For a $100,000 boat with 20% down and 10% interest, you would stand to make $25K in interest.
You would be risking up to $80K of your money to make $25K, So, if the chance of delinquency is north of 30%, odds are you will lose money.
Who the heck knows what the odds are? Just the fact that s/he wants you to be the bank probably increases the likelihood they are a poor credit risk. A line of credit on a home would be reasonable - why can't they do that? Don't own a home? If they don't own a home and don't have $ in the bank and don't have a good enough credit score and income to get a boat loan, their risk is unquantifiable and very likely high. As others have said, that probably means they can't afford a boat.
How would you enforce an insurance requirement? What do you think is the likelihood if the boat is severely damaged that they will pay for the repairs vs. walk away from the boat?
And how on earth would you repo the boat if they are delinquent? Hire private eyes to find it and pay some ruffians to forcibly board it and sail it home to you? And that doesn't even count the legal fees you would likely incur.
And don't forget the N of 1 problem here. If a business does a hundred of these deals and loses money on some of them, they are still profitable and sleep well at night. You will either have a 100% or a 0% success rate. Can you sleep at night with that?
Bankers make money because they have engineered the legal system in their favor. You have few of those advantages.

[sinnerman]

Financing occurs when there is no other way to sell a high dollar asset without financing being offered.

Cars/airplanes/houses.

First, it requires a legal avenue where the "buyer" does not own the asset until it is paid off (lein/ holding the title/ registering the lien on the asset with whatever governmental agency titles the asset.)

Since boats are the least regulated of assets, this presents a problem.

Next you have to have insurance of the asset against loss/ theft/damage with you the seller listed as the recipient of the monies if there is a claim. Since there is no legal requirement to have insurance on a boat, (unlike with a car), this presents its own problems.

Finally, there is the maintenance of the asset in good resalable condition until the loan is paid off. Boats that are poorly maintained, or are not cared for deteriorate quickly.

And of course if it all goes south, how do you legally repossess the asset, especially if it is on a "cruise" somewhere.

As an example, in postings on this site, you will find comments about owners who purchased boats for " cruising" were told by the banks that the boats are are not allowed to leave the country...

If your boat is in good condition, you should be able to sell it within a reasonable amount of time without having to provide "owner financing", if you are patient enough..

cheers

[windcastle1]

If after all of the above reasons to not let a stranger do seller financing and you still want to do it then get at the very least get a credit report. This will give you a snapshot into their payment history. Also remember if the boat is not documented it becomes very difficult to repossess in another state. Lastly a down payment of at least 20% at a the very minimum. I would also hide a tracker like an Apple Air tag or a Spot tracker. I use a Spot tracker on our boat but it does cost $15 a month but IMHO it’s worth it. Since it’s satellite based it works everywhere.

[Orin]

Something to note here that I think most people skipped is the WHY of it.

I was set up to do owner financing on one boat purchase before finally being able to get a loan thru a local credit union.

In this case the boat being 2004 is nearly 20 years old. After it crosses that cut-off most major banks I’ve talked to won’t loan money in the boat. If the case is that they’re well qualified but the banks won’t loan money on the boat it’s a different story than if the person is poorly qualified and the banks won’t loan money to that individual. With some caveats like not having a credit history I don’t think makes you less qualified like the banks seem to think.

[CaptWho]

A friend's son decided it was okay to owner-finance his small boat. After a few months the payments stopped coming. He went to where the boat had been kept and the new "owner" had sailed off into the blue (green).
A few months later, this friend (who lived in a completely different city from his son) was down near the anchorage and spotted his son's boat anchored there. He called his son and they dingied out to the boat, There was nobody on board so they simply took it back.

[Pete7]

Originally Posted by Shanachie

My judgment: A 2004 320 is worth 60-70k. If you don't have ready access to that amount of cash, or at least a line of credit for it, you have no business owning a boat valued that much.

My thoughts too, the buyer should be looking for $20k yachts instead.

Surprised at the 24% interest rate quoted for buying a used car. Our local Ford dealer is offering 13% and the banks about 9% but it's all going a bit wobbly this side of the pond as the Government puts up interest rates to bring inflation down.

Pete

[DShant]

People have covered most of the salient points here but largely in a negative fashion. Having been on both sides of these deals I will say that you can finance a sale and make more money than a cash sale and get it sold where you otherwise wouldn't. You do however need to cover your ass.

First of all it is best to know the buyer or have a friend who knows the buyer or get some background on them through the grapevine or whatever. If you can't do that you need to get a credit check and understand their financial position. You can ask for financials and list of debts etc. whatever you want. You are making them a loan and don't have to if you don't get comfortable with them.


Secondly you need to get a ships mortgage on a documented boat. This is relatively easy there are many forms available on the internet and they are easy to do up. You can use a lawyer or a title company or boat closer. There are many of these in locations where there are lots of boats


Get the biggest down payment you can. This is important because you want them to have money at risk and to worry about the boat. If you get like 5% it is too small and they will feel like they can walk away any time with minimal loss


Make the loan recourse. That is make sure you can go after them personally for the loan not just take back the boat. This is important so they feel like they need to keep the boat in good condition.



Put a tracker on the boat so you know where it is



And finally make sure they get good insurance with you named and you get to see the policy and approve it every renewal. You need to look carefully at that insurance and make sure that it covers every loss and that he is in compliance as much as possible. Every insurance company tries to weasel out of paying by citing various reasons the owner voided the policy so you need to be careful with this.



You should also get an automatic debit of their account for the monthly payments so you don't have to chase down late payments


Sit back and relax. If you have to take the boat back after receiving say 20 - 30% of its value it is bad but not the end of the world. You can fix it and sell it again.

[DShant]

As to why someone needs/wants seller financing there are many reasons. Some of them are - buyer is from out of state or country, - they have income that is unverifiable or assets outside the banks jurisdiction, - they don't have all the documentation, - the boat is too old for the banks, - boat has a wooden hull etc etc. Banks are really picky these days.



Think of a rich Canadian who spends six months a year in the US but has assets and income in Canada. Many self employed people also can't qualify.
I sold my last boat to a buyer that was very wealthy but in the middle of some big projects and didn't want to go through a bank, probably wouldn't have qualified. He kept it for two years then sold it and paid me off. I made more than I would have selling it for cash. Sold it for more than I paid for it

[DShant]

Pete7 " Our local Ford dealer is offering 13% "



You guys are getting screwed! In the US the local Ford dealer is still offering 1 - 4% loans on new cars. I have even seen some 0% on certain models. You can check all car manufacturers here



https://cars.usnews.com/cars-trucks/...als/ford-deals

[SuW]

Originally Posted by DShant

As to why someone needs/wants seller financing there are many reasons. Some of them are - buyer is from out of state or country, - they have income that is unverifiable or assets outside the banks jurisdiction, - they don't have all the documentation, - the boat is too old for the banks, - boat has a wooden hull etc etc. Banks are really picky these days.

Think of a rich Canadian who spends six months a year in the US but has assets and income in Canada. Many self employed people also can't qualify.
I sold my last boat to a buyer that was very wealthy but in the middle of some big projects and didn't want to go through a bank, probably wouldn't have qualified. He kept it for two years then sold it and paid me off. I made more than I would have selling it for cash. Sold it for more than I paid for it

Nah. Assets and income in Canada can be converted to USD at the touch of a phone screen.

Most Canadians who spend time in the US have US dollar accounts with their home bank. (They typically moan constantly about the exchange rate, and compare the prices in the two countries, if not three, if you include Mexico.) Many of them keep appreciable assets in US dollar investment accounts as well.

Very wealthy? Buying a 20 year-old boat? Possible but very, very unlikely.