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Need advice: seller-financed classic boat purchase

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Old 01-20-2012, 03:17 PM
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What is the likelyhood a bank would see my debt to the seller IF we keep the title in his name? I would think very unlikely...
What is the likelyhood a bank would see my debt to the seller IF the title is now in my name and he puts a lien against the boat? I would think much more likely...
I need to make the offer tonight!
Thanks, Dave

The bank won't know about the debt or the transfer either way, unless you tell them (which you're supposed to do, but that's on you). Neither method will put a mark on your credit report.
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Old 01-20-2012, 03:22 PM
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What is the likelyhood a bank would see my debt to the seller IF we keep the title in his name? I would think very unlikely...
What is the likelyhood a bank would see my debt to the seller IF the title is now in my name and he puts a lien against the boat? I would think much more likely...
I need to make the offer tonight!
Thanks, Dave
Unless he's a recorded and reporting lender/creditor the bank will not see your note recorded with the big 3 credit service company's.
This goes for both scenarios.
The lien is recorded with your state when you make an application for a title transfer. You'll receive a non-transferable title that must be signed off and released by the lien holder.
This is their security of the asset financed in the promissory note in the event of default.

One thing I'd suggest is that you ask for a simple interest schedule instead of a compound interest schedule. It'll assist you a little if you go to pay off early on the unpaid principle. A little bit more money will apply to principle to early payments.
If you think your going to take the entire time to pay it off it'll wash the same.

See ya,
Kelly
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Old 01-20-2012, 03:40 PM
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Unless he's a recorded and reporting lender/creditor the bank will not see your note recorded with the big 3 credit service company's.
This goes for both scenarios.
The lien is recorded with your state when you make an application for a title transfer. You'll receive a non-transferable title that must be signed off and released by the lien holder.
This is their security of the asset financed in the promissory note in the event of default.

One thing I'd suggest is that you ask for a simple interest schedule instead of a compound interest schedule. It'll assist you a little if you go to pay off early on the unpaid principle. A little bit more money will apply to principle to early payments.
If you think your going to take the entire time to pay it off it'll wash the same.

See ya,
Kelly
A non-amortized interest schedule (or "simple" interest schedule) also makes it easier to calculate payoff amounts and what not too.

If you want to be slick about this, don't mention it to him, but get him to sign off on a sheet that calculates interest in a simple manner and just say something generic like "the boat will be repaid in the following manner:" Bringing up the subject may give him cause to want an amortized payment structure, where you pay most of the interest upfront in the first couple of years.
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Old 01-20-2012, 04:06 PM
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Good luck. I hope the seller is an idiot and this deal works out for you.
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Old 01-20-2012, 07:04 PM
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Good luck. I hope the seller is an idiot and this deal works out for you.
I wouldn't bet the ranch on it.
You don't just let anyone roll out with your toy at this sale price without having your ducks in a row and your ass protected for the duration of the promissory note.
Simple interest notes are not out of the norm for negotiating in the right circumstances which are typically short term loans.
I do completely agree with the member that said "don't go 10 years on a used boat loan."

Good luck with your purchase.

See ya,
Kelly
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Old 01-21-2012, 01:18 AM
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Originally Posted by dave911 View Post
What is the likelyhood a bank would see my debt to the seller IF we keep the title in his name? I would think very unlikely...
What is the likelyhood a bank would see my debt to the seller IF the title is now in my name and he puts a lien against the boat? I would think much more likely...
I need to make the offer tonight!
Thanks, Dave
It won't be on your credit report either way and that is what banks look at.

I highly doubt that anyone is going to self finance for more than a few years and doubt even more that anyone would do it without a a sizeable down payment like 25-50%.
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Old 01-21-2012, 10:13 AM
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It won't be on your credit report either way and that is what banks look at.

I highly doubt that anyone is going to self finance for more than a few years and doubt even more that anyone would do it without a a sizeable down payment like 25-50%.
I guess we'll see. I can afford $5k down, and $500 a month, but my CFO (wife) is not gonna be thrilled. I'll have to remind her about the enclosed head, hot water heater, etc...
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Old 01-21-2012, 10:40 AM
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I am a tad confused you have a great credit score with what you say is no debt and you can't afford to take out a 25K loan?

If I was having to do this for a boat I would be a little concerned.

If you do get the guy to carry paper I would do something like 25K with a 20 percent down over maybe 8 years with a baloon in 5 for payoff.

This gets you the boat keeps it off the credit report and makes the seller happy because he gets his money in 5 years.

But now days you can not buy a crappy car for 25K so why would the bank be so concerned if you have one payment on a boat with a 20K balance?

I buy and sell big ticket stuff all the time and have great credit also the bank (credit union) does not even blink with me.
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Old 01-21-2012, 10:55 AM
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I am a tad confused you have a great credit score with what you say is no debt and you can't afford to take out a 25K loan?

If I was having to do this for a boat I would be a little concerned.

If you do get the guy to carry paper I would do something like 25K with a 20 percent down over maybe 8 years with a baloon in 5 for payoff.

This gets you the boat keeps it off the credit report and makes the seller happy because he gets his money in 5 years.

But now days you can not buy a crappy car for 25K so why would the bank be so concerned if you have one payment on a boat with a 20K balance?

I buy and sell big ticket stuff all the time and have great credit also the bank (credit union) does not even blink with me.
X2
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Old 01-21-2012, 11:23 AM
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I don't understand this whole thread. In your original post you say the negotiated price is $25k cash. Sounds like you already made a deal and now you want to change it. Why would seller trust you now? You don't want to put anything down?The seller would have to be a fool. A buyer could tear that boat up in one weekend, strip it, move out of state etc. (See the thread on what Dominic put the King's through on the OL).
Your wife would be upset over 5k down? How's she gonna feel if you blow a motor or drive?
You should probably reconsider this and see what your cash position is after the home purchase.
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