Getting Financed

Getting Financed

Question: How do I get financing for the boat?

Mary McCoid wrote:

Yacht financing is available in the 80 to 90% range (10-20% down).

Banks look for a +/- 40% "debt-income" ratio. No more than 40% of your income should be encumbered. Does all of your regular debt, payments for car, rent, credit, etc. = less than 40% of your gross income?

Many banks will not finance liveaboards. Do not mention it in your initial applications.

Insurance will run $1500-1800/year for a 100K boat (lot of variables!).

Minimum down payment is 20% for a term of 15 years. The collateral for the loan is the sailboat, so we can finance 80% of the value of the boat.

If your credit is good to excellent and your debt to income ratio is 38% or less (it sounds like it is) you have only to complete an application and provide two years of the first two pages of your 1040's (and supporting schedules) as income verification and we can get you pre-approved. Our interest rate ranges from 9.50% to 9.75%.

Here's a look at a monthly payment based upon buying a boat for $80,000. Financing $64,000 for 15 years at 9.75% leaves a monthly payment of $677.99. Totally within your guidelines.

Our loans offer no prepayment penalty, and no loan fees. Sales tax and coast guard documentation are your only closing costs.

We don't believe you need a co-signer.

Please call Essex Insurance at (800) 767-7115, they can fill you in on the insurance needs.

I'll be glad to fax or mail an application to you...no strings attached. No application fees either.

Looking forward to serving you!

What I decided:

Well, I didn't have a whole lot of choice here. I have very good credit, but I've never borrowed this kind of money before. Unfortunately, most financial institutions rejected me right off the bat. One guy even told me that if I owned a home and was already in debt, then his bank would have no trouble loaning additional money to me!!!

Anyway, I decided to go with a company called The CIT Group (unfortunately, they are no longer financing boats). The people there were VERY friendly, and they were willing to play "what if" games with me. For example, when I first started this quest, I didn't know how much boat I could afford. They asked me how much I wanted to borrow, and then they "made up" a boat for me that cost the same amount of money. They ran this fictitious boat through the system with my credit rating, and it came back approved. This gave me an idea for how much money I could spend on a "real" boat.

When I found the Hans Christian, it was more than I had been pre-approved for on the "imaginary" boat. Within a half hour, though, The CIT Group had approved me for the extra amount! Unfortunately, the CIT Group is no longer financing boat loans, so you'll have to find a lender on your own. When you do, PLEASE drop me a note describing your experience, and I'll post it to this page.


	If you're planning on cruising, the best advice is to PAY OFF YOUR BOAT before leaving. The insurance required by a bank for full-time cruising can be very, very expensive! So get that boat paid off before setting sail!