Financing sources dry up

[Timm]

Heard yesterday from the local (Northern California) Newcoast Financial guy that Key Bank is no longer writing boat loans. They are the ones that were always willing to underwrite loans on 1979 and older boats.

According to the rep, Key was the last bank that would even consider loaning money on the older boats.

Bad news for those of us that are trying to sell that vintage boat.

Anyone have contradictions to his announcement?

 

[TopHattandTails]

Its true. Key exited the market last fall. That's why that cancelled their MIBS party at the Lauderdale show. There is a new new guy that used to run the Key boat division out of Palm Beach now. Not sure what their appetite is on vintages. I know he's got quite a sales force and also has a base in CA. PM for contact info.
Also, try contacting the larger brokers (e.g. Marine Max or Skipper Bud's). They usually have referral networks that could possibly point you (or your buyer) in the right direction.

 

[SeaEric]

Thats old news Timm. Key got out 4 months ago. Its true, they were the "go to" source for the older boats. With a pulse and a credit score you were good to go with Key.

Now 'days, its a bit harder to get a boat loan, but still do-able. You have to shop around. The money is out there for older, quality boats. You must have good credit, verifiable income, and a real down payment in the deal.

The big banks are running scared having suffered big losses. I think its funny that they still want the new boats as collateral-the ones still on the steep slope of depreciating value-rather that older quality boats that have reached a plateau in value.

Look for your loan from a well established marine lender/service company. They will likely have a "boutique" lender, with a geographic lending area, that will do an older boat on a case by case basis.

If you need a suggestion of who to go to, send me a PM. I may be able to point you in a direction.

 

[Timm]

Thanks for the replies.

I am actually an owner trying to sell my '78 and had hoped to be able to use Key (currently holds my paper) for potential buyers. Not any longer.

 

[spindrift]

Eric is correct in his assessment that money is still available. Yes, credit and income verification are key as well as a solid downpayment. One real problem now is that some of the low sales number on Hatts are going to drive the amount banks well advance downward. For example, there are now a number of comps on 1980 to 1986 53 MYs that pop up on Yachtworld sold (which lenders have access to) in the 175 to 225 range. I understand that these may not be primo boats ( I did see a couple of these sold boats and they looked decent) but you can't explain that to the bank. They look at recent reported sales to arrive at market value.

Thus I can only conclude that some of the high asking prices of the 1980s boats on Yachtworld are so far off the actual market, it is just a waste of everyone's time.

Spin

 

[Passages]

A few years ago I would have have been looking for something in the low 200's with about 25% down and the rest financed.

I've now reset my sites to half that amount with zero financed.

I believe this is a good strategy in todays climate.

Let's see, invest in a used boat and lose 25% per year OR Invest in the market and lose 30% a year. May a well buy the boat and have some fun.

 

[Genesis]

If your boat is priced at the current market (based on actual sales, not hype asking prices) and the buyer has 20-25% to put on the table with an all-in DTI under 36% (including the boat loan), you can get financed.

Much of what's on YW right now is priced 25% over current market and is sitting inventory - it has no relationship to actual lendable values, which are some 50% below asking prices (or more).

The sad reality is that these boats are in fact depreciating at an accelerating rate as they are SITTING instead of being used and the sunk costs including deferred maintenance start to rack up FAST.

Beware with the belief that this is not happening with new boats. It is, but to a lesser degree - so far. I am already seeing signs of extreme distress in this area with regards to floor planning and similar for smaller boats, and it is only a matter of time before it reaches into the midsize boat (30-50ish foot) marketplace.

The "anyone with a pulse" financing never should have happened and unreasonably propped prices on BOTH ends (new and used); that is the paper that is exploding in lenders faces and any business plan or belief that rests on this sort of lending returning is a fool's bet. I will gladly take the other side of that wager with odds from anyone.

It will be fifty years before those mistakes are made again, just like it was the last time.

 

[saltshaker]

If you have a substantial (30% or more) down payment, the boat is priced right for this market, it passes survey and you are well qualified, then there is money available. Problem is there are fewer and fewer lenders willing to finance these old boats so your rate and terms won't be great. Home equity rates are still very low. If your in a good position in your home, then that's where I would look for financing. My HELOC is 1.99% and I know 2.24% is obtainable from several banks.