Why let banks have all the fun?
 

Seriously!?!? I've been looking into seller-financing on a boat I'd like to purchase, and I'm not really seeing ANY need for a "real" bank. Banks set sky-high interest rates to cover their sky-high overhead. Banks set rules about lending based on generalizations with little to no market knowledge...for instance "a boat must be less than 10 years old", Why? it's likely because a boats value cannot be accurately assessed beyond that by unknowledgeable bankers...

I've been working in e-commerce for a dozen years, and I'd like to get some opinions on making a website that focuses on connecting able-sellers and smart buyers - who will conduct transactions without the "aid" of fricken loan-shark banks.

Could readilly available seller-financing slow the speed of boat depreciation once a boat is "driven off the lot"?

Would readilly available seller-financing hinder new boat sales / profitability, or just force efficiency?

Could readilly available seller-financing bring new people into the market place that a bank might not traditionally support?

With the right documentation and 3rd party vendors available on the site, perhaps we could / should cut the banks out??

Thoughts? Dave911

I think that's a great idea. All the new car dealers are financing anybody with a pulse. A lot of good people that pay there bills got stung in this economy. Didn't deep impact builder finance some boats awhile back?

Maybe a new loan site is not even needed. Perhaps a sticky on OSO to share "how-to"? If I was able, and selling a boat, I'd think about advertising "Financing your new-to-you boat? I will finance qualified parties saving you THOUSANDS!".

Something in the classifieds for owner financed boats or cars and trucks could work.

I would think that somehow any owner financed deal would end badly. Too much can go wrong and change in five or ten years, as someone who in house finances tools and equipment there is no way I would ever do this for a boat.

Example guy wrecks boat, he let insurance lapse. Guy dies, gets divorced, fired, disabled etc. Not worth the risk in my opinion.

Not to mention people looking to scam, identity theft, do the deal, then move boat to another state re-title in new name and sell. Idiot holding the note will have little chance to locate the boat for prepossessing. No body to send the police after, as the people they thought they did the deal on with, will have no idea their identity was even stolen.


Very bad idea. There is a reason why overhead is so high, and that is balanced out on tens of thousands of deals, with one or a few deals, loss mitigation could never be met.

I think its a great idea, or the beginning of one. Something that may be worth looking into would be a "collection only" type company, we use them in auto finance, and some will even advance the seller a portion of the loan amount, once that initial advance is paid by the seller, the finance or collection company advance a large % of the balance (80%-85% with the companies I deal with). It's obviously more entailed then this but could potentially earn some large money in the marine industry.
The collection company acts as the bank, holds the lien and also handles repossession, garnishment and legalities if necessary. It would probably require a large overhead as well, but could work in some variation. Anybody wanna invest a couple million? :lolhit:

As I just purchesed a new boat and have yet to sell my old one I would be very interested in learning more about owner finacing type deals, have had a few interesetd people ask about it just not sure of the legalities, etc on the matter

Bad idea for the reasons others have listed, not to mention many other problems you can run into down the road going that route.

Credit Union... Far better than any bank you can find.

why are credit unions better..? I have no experience with them.

Because they don't pay any federal income tax.

Absolutely! Less red tape and better rates. :drink:

When I occasionally buy cars from private parties, even when I have the cash, I typically finance through my credit union...which helps ensure all documentation is in place, then I pay off the bank loan. Quick, easy, and worry free. I think Credit Unions are not for profit ventures, too. I use Wescom CU. Dave911

So do you use them just for loans or for general banking as well..?

I use mine for general baking as well, most have all the bells and whistles that any bank would have. Im actually a member at four credit unions!

Careful. Many credit unions are NOT FDIC insured. So IF they fold the fed is NOT there to guarantee your savings. FDIC covers up to $100k (or so).

FDIC is 250k now.

Most Credit unions have their own association that insures much like the FDIC. It is thru CUNA Mutual in Madison WI. They have done very well over the years in keeping the credit unions solvent when they run into an issue by helping the struggling CU get purchased by a stronger entity.

It is VERY rare that the actual customer will ever see a loss. (in most states, The credit union is required to have the insurance and bonds etc in order to get their charter.)

Anytime you make a loan, rather it be through a bank, CU or private party, due dillagence is the key, and have a good repo company when things go bad...

I know a great repo company, OK selfish plug!!!!!

I know a great repo company, OK selfish plug!!!!![/QUOTE]

I know a great repo company myself...I take it you are in the business also..?

Does age come into place with a credit union??If a guy wanted to buy a boat with seller becoming the bank.Credit,home ownerwith a perminant residence,insured until payed off,lein on title with a nice chunk down!Why not!:rolleyes:

if i were going to even consider owner financing a boat...or anything substantial.....i would consider the options in financing and insurance. if the boat is leased/rent to own, or some form there of...it can be insured by the finance co. (the seller) and the fee for said insurance could be figured into the payment being mad eby the buyer. a lease also typically involves a healthy down payment (not that a loan doesnt, especially these days with most banks tightening the perverbial purse strings)

imo it could be done. but of course, as in all things involving money and or property changing hands, one would need to consult a reputable lawyer, check state legislature, and do his homework on the rights of those who seek to lease/finance physical property and those who wish to purchase/lease said property.

I cannot believe anybody would even consider self financing anybody else for a boat. If it was a smart thing to do, then boat dealerships would do it.
Too much risk with little to no reward. The only people that would be interested are those that cannot get a loan through a bank. Banks spread their risk.
Also, you need to own the boat outright to do this legally.
There are companies that can arrange a lease from one individual to another.

I think any boat under 100k whould work protect yourself from default #1!

I agree, way too much risk. When a bank gets one boat back with no engines, drives, and the interior is trashed it hurts.....it hurts but they have income from other sources. However for this to happen to a private party, it just might bankrupt you, and the buyer walks away with no marks on their credit report.

Now, if you are like me there are only a few people in your life that you would let BORROW your boat....think about that. A friend asks to use your boat for the day. Tow it, launch it, drive it, whatever. Think of the thoughts that go through your head! Now, imagine a stranger asking to borrow your boat!!! Sorry, it is more than insurance. Isurance rarely covers neglect!

Banks are tighter, no question. But if you have good creadit and will jump through their hoops boats loans are still available.

My CU boat loan rules-

15 years old or newer
max 80% of NADA value financing
720 Credit score
35% debt to income ratio with boat loan
Notorized engines and drives serial # on loan
Trailer must be part of loan for performance boats
They pick the shortest term they think you can handle, they do not allow you to finance out 15 years for $200 a month

Banks made these rules based on the loses they took, make no mistake the banks lost big time just a few years ago. My CU told me if they had set these finanacing rules 10 years ago, 99% of the boats they repoed would have never had loans!

If they make 1/2 the payments they are covered banks do not loose end of story!If you can private finance to a local who has the income do it or you won't sell it!Thats how people are selling there houses in the past 4 yrs!:drink:

Loans, mortgage, general banking, misc discounts etc... Mine is insured as well. As of last week they were still doing boat loans 100% of nada 15yrs.

I know a great repo company myself...I take it you are in the business also..?[/QUOTE]

Last 25+ years, Sold my company 3 years ago, but they messed it up. So much for retirement!

Last 25+ years, Sold my company 3 years ago, but they messed it up. So much for retirement![/QUOTE]

Cool I just purchased my company 2 years ago I own a American Lenders Service Co franchise

Money is also safe in a CU whereas it is not in a Bank. ie, If an arrest is made on a person with suspicion of money in their account tied to a crime that money can be siezed or frozen in a Bank but not in a CU. Even with a Federal conviction and restitution order, money in a CU can not be touched in connection to the criminal.

I learned the hard way but now I only deal with CU. :grinser010:

Let's not confuse the issue. While a seller agreeing to financing the sale of his/her boat is an act of desperation, and the buyer also assumes additional risks, the idea of a marketplace for these kinds of transactions could be a money maker.

I'd have to disagree with both those statements.
I see no additional risk on the buyers end of the transaction, the seller is taking quite a gamble.
And, I don't really see a market potential unless the seller sold his rights to the note to a 3rd party for less than the value of the principle. Then the 3 party will reap a return on both the interest and the additional monies from buying a promissory note at less than face value. It would be a great capital gain over time but comes with considerable risk.

Just my .02

See ya,
Kelly

A nice advantage to owner financing is not having to jump through the red tape and hoops that most banks put you through as a buyer. It also helps the buyer if on paper it appears they can not afford the boat but in reality they can. People that are in a cash business can really appreciate that. It helps the seller because it is a quicker easier way to sell and the seller can set the interest rate and the seller can and should be named as additionally insured on the insurance policy and also have it set up so that if the buyer cancels the insurance you have to notify the seller just like the banks do.

I don't remember if this was the original poster of a similar thread or a different member.
I was in the same situation as a seller of a wake/ski boat.
I contacted my attorney for my pool construction business and here's a link to his thoughts.

Don't forget to install a "Go Jak" as well. It makes locating the property MUCH easier should a default occur. Just think of it as very reasonable "insurance".

There is also "lender" insurance policies available, but this may not be cost effective for just one loan.

Depending on the risk taker you are as an individual, Loaning money can be a much better return than just investing it in stocks or a savings account. Lets face it, is the stock market any less of a risk?

Way to many issues with this. I can go with USAA and get up to 99k for 5-7% interest depending on years financed. As a seller I have to worry about getting my money monthly and going back on the buyer if something goes wrong. A bank has a hard enough time re-claiming property and they have more money and lawyers than we do to do it for them. Plus if I sell I want the money no and wait 5-10 years. Bad idea. On property or something I can see a rent to own, but houses are stationary and are less likely to be damaged or stolen, also boats depreciate so fast. bad bad bad idea.

Would people be interested in doing this if a third party handled the lien, collected on the account and handled repossesion of the boat if neccesary? For instance "Joe" sells his boat to "Bob" for $25000, Bob collects $5000 down. Joe takes a loan from Bob for $20000, but it is handled by "3rd party inc." Bob recieves a percentage of each monthly payment (including a portion of the interest), 80% as an example, 3rd party inc. keeps 20% for servicing the account, they handle the paperwork, collecting from Joe if neccesary and repo if it comes to that. This is making it simple but is this something that is marketable in your opinion?
The $20000, would break down to $405.53 monthly at 8%, Bob would recieve 19,464, and 3rd party inc. would collect the balance in this example.

I think you do have to be careful in this aspect. A bank has no personal ties to the property like an old owner. He knows his boat and he now knows where you live. If hes slick with paperwork and has a lawyer pal there could be a potential for nice scam. Its just way to personal for me, as a seller i have the constant threat of the buyer saying this is broke and this wasnt what I thought I bought, on and on. When I sell and the property leaves my driveway its no longer mine I dont want to worry about it, even if somebody left the driveway and came back 5mins later, sorry its now yours, new terms will be dictated.

And on credit unions, the one I work with PEN FED what a royal pain in the ace, red tape like a mofo. But they do have the cheapest rates. They are such a pain I have cut off the loan application process in midstride and gone elsewhere. USAA is a close second and beats just about everybody.

This I imagine would be aimed more at people with cash incomes, or boats that don't neccesarily meet traditional lending criteria. If someone is boat shopping with a 700-800 credit score, this would not even be a consideration.

why pay somebody to handle it, and lose money? I want my money now, chances are I am selling the boat because I need another one and need the cash or I simply need the cash period. And you cant do this if you have lien on your boat to start with. just bad bad bad idea.