Marine Financing

[divert00]

I am close to trading my current Hatt for another and need financing. I have used Key Bank for last two, but they seem to have exited or are severely distracted in this financial mess. Any good/bad experience with some of the other major marine financiers?

[SeaEric]

Older than 1980, you're screwed. The banks don't want the older boats as collateral.

Give Trident Funding a call. In 15 years of sending them customers, they have always been fair and honest.

I have recently had 2 other marine finance companies disappoint me in transactions.

If you want the names of who I would recommend that you avoid, send me a PM.

[OBXTucker]

That's got to be frustrating from a seller and broker standpoint. Unless this turns around fast, it's going to extinguish some great businesses and bring used boat prices to their knees....

There's got to be a market/opportunity here that finance companies (or a new start-up) will seize.

Eric, are boat builders doing any financing?

[holtcl]

At the Annapolis boat show, found some financing for older boats. Generally they were favoring Hatteras, Viking, and Bertram, and will use the boat as collateral. Up to 20 years, at 6.25%. 10-15% down payment. I'm sure this would assume a qualified buyer, and each one of these probably has variation in terms, this is the general picture I was given.

1. Scott Financial Services (ScottLoans.com) Lisa DiDomenico 410-263-3367; 410-994-9096; lisa.didomenico@scottloans.com

2. Offshore Financial (www.offshorefinancial.com) Michele Barron 800-443-8656; 410-990-1122; mbarron@offshorefinancial.com

3. Trident Funding Corporation (www.TridentFunding.com) Jane M. Tayman 410-268-8684; 443-336-8499 jtayman@tridentfunding.com

Mike

[SeaEric]

Current banking definitions seem to be:

Older boat = Back to and including 1980 model year ie 30 years old. Past that it would be very limited and on a case by case basis. A few local, small "boutique" bank lenders may consider older collateral for a local borrower.

Qualified buyer = 720+ credit score, Prove that you have no real need to borrow the money, and can prove you have healthy income stream.

[Genesis]

That would be called "sound lending" Eric.... funny how we got away from it.

[nyrussell]

Current banking definitions seem to be:

Older boat = Back to and including 1980 model year ie 30 years old. Past that it would be very limited and on a case by case basis. A few local, small "boutique" bank lenders may consider older collateral for a local borrower.

Qualified buyer = 720+ credit score, Prove that you have no real need to borrow the money, and can prove you have healthy income stream.

Hmmm prove no real need to buy... Funny, I thought people needed homes. prove you have a healthy income stream... Anyone have a crystal ball to see the future. Or a no trade/fire clause?

[Genesis]

Guys, sound lending means never lending unsecured more than one has in excess capital.

For an older boat with an uncertain "foreclosure sale" value this means at least 20% down (and more likely 30-50%) with total DTI across all debt owed of no more than 36%, with sufficient reserves to be able to make six months of payments across the entire lot.

If you qual on those terms I bet you can get financed.

If you ask a bank to dig into excess capital to meet that definition you can expect to pay through the nose for the money (e.g. on a 10 year mortgage 10 year forward swaps + 500bp - or more.)

If you want something more "reasonable" to you, say, 10y swaps + 200bp, then you need to not invade excess capital.

This isn't boat-market specific - it is the definition of sound lending.

What people relied on for the last several years was absolutely unsustainable BS and never should have happened. It is why our economy blew up and until it is excised from the markets why our economy will continue to blow up. The same thing applies to houses - the standard should be 20% down, 28% front end ratio (PITI) and 36% back end (DTI). Meet that and you should be able to finance at 10y swaps + 200bp or thereabouts, as that's a safe loan. Fail to do so and the price should go up - a LOT.

Yeah, I know the marine folks (and housing folks) don't like this. So what? Math is, whether you like it or not.

Complaining that the unsustainable practices of the past are gone is like complaining that you can't rob banks any more because now they have guards with guns, and didn't before. Sorry, but you find no sympathy from me with that argument.

[fissioneng]

I had a good transaction with Sterling Associates in the summer of 2007.

http://www.boatbanker.com/

I have also used Scott in the past.

[krush]

Does using "200 basis points" instead of 2% make people talking about money sound smarter? LOL, I never really understood the point of it.