Buying a sailboat is a lot like buying a house. Paperwork, signing, notarizing, crying, hoping, last minute corrections…waiting…waiting. When I decided to buy a boat as my home I first thought that I could get a home loan for about $50k. That would get me a nice sailboat, right? Nope. Doesn’t work that way. The banks are smart and don’t just throw money at people who want don’t want to keep up with the Jones’. Here’s a little summary of my financial escapade:
First attempt at a loan: the credit union (and Chase)
My initial inquiry for a loan was at my bank Chase…almost immediately they responded with “we don’t really do those types of loans”. So I went to a local credit union and asked for a loan. At that point I think I was only looking for $15k. My credit score was over 700, and I was feeling pretty positive. I remember, the bank was in between buildings and had a temporary office in a trailer. Surely they’d give me money. That only took their underwriters about 2 minutes to say “no”. Well, that was devastating. What do I do now? Where will I live? This is horrible. This will never work out. My job is the problem. My student loans are the problem. WHY IS THE WORLD AGAINST ME???? The very patient banker gave me some suggestions which would help me get approved if I’d like to try again in a couple of months. But paperwork and facing the reality of my financial history scares me, so I just complained about how awful America is for forcing me to go to college and take out huge loans (not 100% true, but I was mad).
After the crazy settled…I kept on with the hunt. And after a number of fruitless craigslist boat viewings, I found a yacht broker. *Gasp*…that’s not avant garde and off the grid at all!! Yachts are for rich snobs and sailboats found in a whimsical fashion are for people like me….I’m arty damn it!! Actually, this was the BEST decision I made. My broker Jason explained everything, found the boats, showed the boats, asked the questions, inspected the boats, and so on. As we found another boat, he referred me to a bank which specializes in boat loans…for the entire country…it’s pretty much the only one that will loan for a liveaboard.
Second attempt at a loan: Essex Credit
I gave them a call…all excited to take out a big loan. I believe this attempt was for the 40ft Irwin sailboat…which I insisted would be mine. Here we go again, almost a year after the first try. The last credit inquiry should have fallen off by now. My credit score was about 730-740. All my bills are paid on time. This is going to happen. I’ll be sailing in no time! Before he even ran my credit we had a very “here’s how it works” conversation. Since the boat was a 1981 , I’d need 30% down. Ouch. Don’t have it, why run it? Back to the drawing board. Again. Say goodbye to the Irwin…which in hindsight I’m happy about…it was named the Eagles Nest, you know, Hitlers secret mountainside hideaway???
With this information I was able to have a goal for the potential down payment and realistically know what boats I should consider. Enter the motorboat option. I was reluctant…but let’s be serious; I have only taken 6 sailing courses, never sailed alone, I’m not exactly a princess but I’d like some nice things in my home. I’m not traveling the globe, I just want a nice option for a home close to my job. I got a little carried away after following a bunch of sailor blogs and watching the sailing lifestyle channels on youtube. My goal right now is simple : lower my overhead so I can pay down/off my student loans, own something rather than keep renting, have my own space, and learn! Throw in some trips to Catalina and we’re golden!
The actual loan
I had finally found a boat, a Searay. I think we settled around $29k. I sold my car to help with the 30% down. I was all ready to go. I got approved…Hooray!!! It would be tight, but I had enough to squeak by. This boat fell through after the survey came back showing the boat needed about 17K of work . Down in the dumps again. I was determined though. We quickly found a similar but newer express cruiser; a Bayliner Ciera in the same price range. Sweet! All I have to do is change the details of the loan and I’m set. Sort of. When the lender decides on what they will give you for your loan, they actually research the boat. They don’t just give you what you and the buyer have agreed on. The lender looks up what the boat is really worth and what similar boat have been sold for. My initial loan was for $29k. They would only give me $25k for this boat. The Bayliner cost more than the market value because the seller had installed new canvas and eisenglass, and some electronics. This is something to be aware of. Upgrades will not factor into your lenders decision. I had that feeling again; the panic, dismay, why does the world hate me….blah blah blah. But, since the boat was under 20 years old, I did not need the 30% down! Yay! I just had to pay the difference out of pocket, which I had since I was planning on having to front more for the 30% down. Does that make sense?
On a boat over 20 years old, the lender required 30% down.
On a boat under 20 year old, I would just get the loan for what they deem it to be worth and make up the difference out of pocket.
Also, the liveaboard thing. If you qualify the loan as a liveaboard purchase, they will not loan less than $30k I believe. So I have a pleasure boat.
I’ll get into the next wave of paperwork next time.
Thanks for stopping by!
See you at sea!!