Question Regarding loans

T

TimC

New Member
Jan 7, 2008
145
Florida
Boat Info
2400SCR
Engines
5.0L Mercruiser
Since I have never purchased a boat of this price I haven't had experience with financing this amount of money. I do not own a home but have good credit, earn a quality living and have few expenses except, boat, truck, rent.

For my last boat I simply called my bank I have been with for twelve years and electronically sent a standard loan app and presto it was done. Granted that was significally less money than what I'm talking about now.

I was looking to get pre-approved to see what rate I could get at the boatus finance page and my application wouldn't get filed because I did not have enough assets. It seems to me that they needed me to have the equivalent of the loan requested and more in assets.

This is confusing to me b/c this is my first experience with a loan of this size (newer 280da, 290da price)

I've done a lot of calculations and on my income and expenses I can easily afford the payments why doesn't the finance company see that when they pull my credit etc?

If I have to own assets that total the price of the boat I'm looking at I think it may be a few years before I can even go near it.

Help me out b/c I'm pretty disappointed/confused.
 
There are quite a few companies and banks that specialize in boat loans, and for a boat that size and $, you should be able to get a 15-20yr loan, which will make your payments affordable, as long as you can come up with a 15-20% down payment. I had a good experience with Essex Credit, Key Bank is also another player, as well as eboatloans.com, and even Boat US.

With a good credit score, there should be no problem in your getting a loan.

I'd check with 2 or 3 and see what the best rate you can get is.

Good luck and let me know how it goes.

Barry
 
If you have a good relationship with your existing bank, why not start there. Even if they don't do large boat loans if they're any good they should be more than willing to explain how things work. Explain your situation and questions. They should be willing to tell you how you look in the eyes of creditors, what criteria is looked at, why, and how it affects your ability to borrow. I think that would be easier than to try to get educated on this forum.
 
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I agree with Barry. Essex and Key Bank are in the boat loan business, so they probably have more experience than general lenders, like your local bank, in boat loans. Your local lender probably is more than a little nervous about reposessing a boat and selling it to get their loan money back if you default. Key Bank and Essex probably have that down to a science. Also, work with your dealer. It is in their best interest to make the deal happen and may have financing available. My dealer got me the loan with Key Bank (probably made some money off that transaction too).

I have had your same experience with lenders on a business loan. They have become so tight with their money in the last 3 years that they won't often lend unless you can pay it off with the quick sale of an asset(s) of equal value to the loan.

Also, keep in mind the interest will be tax deductable, so in reality your payment is ~75% of what it really is.
 
JuliaValentine said:
I agree with Barry. Essex and Key Bank are in the boat loan business, so they probably have more experience than general lenders, like your local bank, in boat loans. Your local lender probably is more than a little nervous about reposessing a boat and selling it to get their loan money back if you default. Key Bank and Essex probably have that down to a science. Also, work with your dealer. It is in their best interest to make the deal happen and may have financing available. My dealer got me the loan with Key Bank (probably made some money off that transaction too).

I have had your same experience with lenders on a business loan. They have become so tight with their money in the last 3 years that they won't often lend unless you can pay it off with the quick sale of an asset(s) of equal value to the loan.

Also, keep in mind the interest will be tax deductable, so in reality your payment is ~75% of what it really is.
Click to expand...
This is an example of why I suggest Tim get his financial guidance elsewhere.
 
Tim,
You sound like you are in good shape. Keep learning and asking questions, you'll get some good advise on the forum. Think like a lender. Be persistent and keep the dream alive. If you really want that boat you'll get it.
 
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The first rule about borrowing money: Pay it back.

Now some of my experiences and observations:
Local banks that don't deal in boat loans may offer you a personal loan or another of their products. That's like the zoo using the monkey cage to house the lion. You will probably not qualify for one of these short-term loans because the payment will blow your income to debt ratio. You will also pay a significantly higher interest rate. The interest may not be tax deductable (you'd have to check with your accountant on that). They will also have you deal with a bunch of party poopers bashing your idea of owning a money hole.

File a credit application with a boat dealer or Key Bank. Let me know what happens.
 
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I will echo the others on Key Bank for boat loans. Regions Bank has a boat department as well. But your best bet is a banking institution that does and has experience in boat loans. :grin:
 
does anyone have a reasonable est on current boat loan rates?
thanks
 
Those are the published rates, not the super secret rates. In Oct, I was offered 7.0% from the first lender, then found 6.5% by another lender. I told the first lender to give me the 6.5%, and it was a done deal. Now that the fed lowered interest rates by 1.25% you can likely haggle a little off those 6.39 - 6.82% rates.
 
Don't forget about the double super secret rates!
 
I have financed my last 2 boats through Essex Credit and Key Bank. Very painless. As for the 75%....I'm not sure it calculates that way. I just have the tax guy work the interest on my "second home."
 
Woody said:
With hesitation....JuliaV how do you come up with that 75% thing?
Click to expand...

With a 20 year note, the first several years payments are primarily interest. For simplification, $1,000 payment = ~$800 interest. You reduce your gross income by $800 per month since the interest is fully deductable (assuming you itemize deductions). If you are in a 30% tax bracket, that results in 30% of the interest payment $800 toward your return (or offsetting what you owe), or $240 per month, or ~25% of your monthly payment.

Shooting for a higher interest rate to have a larger tax write off doesn't work because your offset is only 30% of the interest payment.
 
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