Financing for a first time boat buyer

[Freemills]

I'm applying for a boat loan for a 1986 motor yacht. This will be my first boat purchase and I'm planning on using it as a liveaboard. I'm looking for some good advice on financing.

I've heard that financing and/or getting insurance may be more difficult for liveaboards than recreational boats. And because of that, I've been told NOT to reveal my liveaboard plans until after getting the loan.

However, if I report that I'm buying the boat only for recreational purposes, will that affect my ability to get a loan? In that case, the loan company would assume I'm still paying my high rent in addition to paying off the loan. But in reality, paying off the boat loan would be no problem once I stop paying my apartment rent. Help! I'm stuck in a catch 22.

Thanks for any advice you can offer.

[a64pilot]

Gut feeling is it's going to be tough to get much of a loan for that old of a boat to begin with, assuming it is the collateral for the loan, without being hosed on interest.
I have been told by a few professionals to avoid the term live aboard myself. So when we leave this May, we will be on an extended cruise, not living aboard.
Semantics I know, but they seem important.
I think you need to have a residence when you purchase the boat, gut feeling is however not disclosing may have you in default of the loan and invalidate insurence

[Pete7]

Given your location I would check that you can get a live aboard berth before buying.

You might be better with an ordinary loan from the bank rather than one aimed at purchasing a yacht which tend to be for new or nearly new this side of the pond.

You can only ask.

Pete

[skipmac]

You might be the exception but in my experience, to get a boat loan (and as A64 points out, even more difficult on an older boat), you need to have a great credit rating or lots of collateral (besides the boat) or both. Bottom line, banks will loan you money to buy a boat if you already have the money to buy the boat without the loan.

[john61ct]

Establish a legal residence address, cost of rent nothing if your story is respectable, or very low.

You need one anyway for the other bureaucracies, sooner you start the better, while still at the old one. Not a known commercial maildrop for credit or police purposes, they can cross-references, best is home of a trusted friend, family member etc.

Not saying you'll get the loan, but remove one obstacle.

[RickG]

I was never asked by the lender or the insurance company our planned use for our boat. The marina did ask and is happy collecting $100 per month liveaboard fee.

Cheers, RickG

[MV Wanderlust]

We went through the same thing last year, getting a loan for a 1986 model year. There are loan brokers out there who will pair you with the best company for your needs. Many lending institutions will only loan 80% of the assessed value or accepted offer, whichever is lower, for a boat that age so you might want to prepare for that. It's not quite like buying a house.

We'll be taking off on an "extended cruise" ourselves in a very few years.

Good luck in your purchase.

[haiqu]

Save longer and buy it cash. You'll be in a better negotiating position and that alone will save money.

[skipmac]

Originally Posted by haiqu

Save longer and buy it cash. You'll be in a better negotiating position and that alone will save money.

If a buyer gets bank financing before buying the boat, then to the seller it's still a cash deal. Unless you ask the seller to owner finance or make an offer contingent on getting a bank loan a sale is always a cash deal to the seller.

[Freemills]

Thanks everyone for the sage advice. This is all very helpful.

[RickG]

The first boat we bought was in the British Virgin Islands and is kept in the US Virgin Islands. Getting secure debt was ridiculous as lenders were not interesting in that geography. We would have had to close in Puerto Rico.

Solution? SunTrust's Lightstream unsecured debt - lightstream.com. I got a significant loan, they will provide up to $100K, with not much more than filling out an online form with a credit check and employment verification. They advertise super low rates, but our rate was 4.34%.

Cheers, RickG