Need advice: seller-financed classic boat purchase
01-18-2012, 09:51 PM
#1
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Need advice: seller-financed classic boat purchase
Searched a lot, but couldn't find what I need so here goes...
I'm looking at a rare, early 90's power boat. One of my dream boats. The negotiated price is $25k cash.
The owner is a cool, gear-head and he's OK financing the boat, but I need to make an offer that works. I am trading up houses in the next 6-12 months, so I need my limited cash-ish for the down.
Would $250 per month for for 10 years be fair (nothing down)? That's about $3k per year, or $30k. Would like to include early payoff terms, but like the flexibility to go as long as I want. I have 800 credit score, NO debt, NO credit card bills, NO car loans, and I pull in a mid-level Marketing exec salary.
Whatever we do come up with... does he keep the title and I keep the boat and the contract to force him to convey when payment in full made? Do we use a third party to "hold" title? I'd imagine I'll need to keep insurance on boat to limit his / my liability?
What else do I need to think about here? Advice from the knowlegeable, experienced, previously-burned is welcome.
Thanks much!
Dave911
I'm looking at a rare, early 90's power boat. One of my dream boats. The negotiated price is $25k cash.
The owner is a cool, gear-head and he's OK financing the boat, but I need to make an offer that works. I am trading up houses in the next 6-12 months, so I need my limited cash-ish for the down.
Would $250 per month for for 10 years be fair (nothing down)? That's about $3k per year, or $30k. Would like to include early payoff terms, but like the flexibility to go as long as I want. I have 800 credit score, NO debt, NO credit card bills, NO car loans, and I pull in a mid-level Marketing exec salary.
Whatever we do come up with... does he keep the title and I keep the boat and the contract to force him to convey when payment in full made? Do we use a third party to "hold" title? I'd imagine I'll need to keep insurance on boat to limit his / my liability?
What else do I need to think about here? Advice from the knowlegeable, experienced, previously-burned is welcome.
Thanks much!
Dave911
01-18-2012, 10:07 PM
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I'll doubt he'll go 10 yrs with you but never hurts to ask I guess. I would also think he'll want 20% down but again...
With zero down, probably 60 months at 500/mo which is 7.5% return for him (5057.) if you carry it out the full term. I would think he would also prefer an early payoff if you can do that to save some interest expense.
Your credit/debt background sounds excellent, have an attorney draw up a solid contract.
With zero down, probably 60 months at 500/mo which is 7.5% return for him (5057.) if you carry it out the full term. I would think he would also prefer an early payoff if you can do that to save some interest expense.
Your credit/debt background sounds excellent, have an attorney draw up a solid contract.
01-18-2012, 10:17 PM
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01-18-2012, 10:20 PM
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I'll doubt he'll go 10 yrs with you but never hurts to ask I guess. I would also think he'll want 20% down but again...
With zero down, probably 60 months at 500/mo which is 7.5% return for him (5057.) if you carry it out the full term. I would think he would also prefer an early payoff if you can do that to save some interest expense.
Your credit/debt background sounds excellent, have an attorney draw up a solid contract.
With zero down, probably 60 months at 500/mo which is 7.5% return for him (5057.) if you carry it out the full term. I would think he would also prefer an early payoff if you can do that to save some interest expense.
Your credit/debt background sounds excellent, have an attorney draw up a solid contract.
01-18-2012, 10:29 PM
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01-19-2012, 03:32 PM
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Although I've never owner financed a sale of one of our toys I almost did once, but the buyer couldn't even come up with the down payment.
He told me his Dad was financing him his down payment and I stopped the deal.
Here's what my attorney (real estate/contractual law) came up with.
10 to 20% down (my choice was 20), title transfer, seller is 1st lien holder(moves liability away from me in the event of a suit), buyer pays 10% apr on his choice of payments up to 84 months, and buyer keeps a comprehensive insurance policy with me as a certificate holder (insurance company will contact me if he defaults) and they have a agreed value policy. He was then going to work up a simple interest amortization schedule payed on the timeline of payments.
I hope this helps.
See ya,
Kelly
He told me his Dad was financing him his down payment and I stopped the deal.
Here's what my attorney (real estate/contractual law) came up with.
10 to 20% down (my choice was 20), title transfer, seller is 1st lien holder(moves liability away from me in the event of a suit), buyer pays 10% apr on his choice of payments up to 84 months, and buyer keeps a comprehensive insurance policy with me as a certificate holder (insurance company will contact me if he defaults) and they have a agreed value policy. He was then going to work up a simple interest amortization schedule payed on the timeline of payments.
I hope this helps.
See ya,
Kelly
01-19-2012, 03:40 PM
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I would think he's going to want a minimum of $5k down just so he isn't giving you a quasi warranty in the process (if you break something major in the first year, you could just hand him the keys back to his busted boat). That said, everything else seems reasonable.
01-19-2012, 06:56 PM
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Excellent feedback! Title transfer / 1st lien holder makes good sense...Interesting thought about the seller requiring $5k down to avoid being a "quasi" warranty. I feel armed with the right info. OSO rules!
01-20-2012, 01:22 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
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
