We now have the ability to work directally with lenders to get the best possible terms for our customers. This means that we can negotiate with the lender on behalf of clients with "B" and "C" rated credit to secure an acceptable boat loan.

This also means that we have the ability to "give back" loan points to the buyer in order to close a sale! This is a powerful tool that few if any brokers can offer their clients. Imagine receiving thousands of dollars off your loan. That's what Randal Burg Yacht and Ship can offer potential buyers.

WHAT HAS YOUR BROKER DONE FOR YOU LATELY??

FINANCING YOUR BOAT PURCHASE
YOU CAN GET YOUR BOAT PURCHASE FINANCED! HERE IS RANDALL BURGS’ GUIDE TO FINANCING YOUR NEXT BOAT PURCHASE!

There are more options today then ever to finance your next boat purchase. While banks have tightened up their loan requirements, other avenues have become easier.

A Randall Burg Yacht and Ship representative will be glad to address these or other issues related to the purchase of a boat from us.

PERSONAL FINANCES AND YOUR TAXES.
The 1st step is to get your finances in order. Banks usually require a FICO score above 700 and three years current tax returns. Make sure your taxes are current.

Address any negatives in your credit report. This will improve yor debt to income ratio.

You can improve your FICO score by paying off credit card debt and by increasing the limits on your cards.

LOAN BROKERS AND BROKER FEES:
Under no condition should you pay a loan broker a pre-loan fee. Brokers are paid a commission by the lending institute. Be sure to check the commission the broker is earning. Most brokers are compensated by how much interest they can get from the Buyer.

Broker advice: CAREFULLY REVIEW ALL THE LOAN DOCUMENTS!!

AGE AND CONDITION OF THE VESSEL:
Most banks limit their boat loans to boats less then 20 years old. This is unfortunate since there are some amazing well maintained boats built prior to 1990!! This means that buying a pre- 1990 Spindrift, Ocean Sport Fisher, Hatteras, Luhrs, Californian, Chris-Craft, Sea Ray, Formula, Carver, Defever, etc., may require a broader search for a boat loan.

Most banks are not interested in financing a “Fixer” or a boat with an extensive “to-to” survey list. Many banks will finance a boat with an extensive “to-do” list but may require the Buyer to fix all the items within a finite period.

Brokers advice: Buy a boat that has been well maintained with minimal deferred maintenance. Banks may consider an older boat that has been well maintained. And in “Yacht Club” condition.

BUYERS BOATING EXPERIENCE:
Most banks look at the Buyers boating experience and background as part of the loan process. Do as much boating on family and friends boats. Take a class on boat handling . Charter boats. Start with a small boat charters and move up to a boat the size of the boat you are interested in purchasing. This shows the lender that you have the boating experience in a similar size boat.

Broker advice: Many banks will not finance a buyer that is moving up to a much larger boat. I have overcome this obstacle by writing into the purchase contract that the Seller and/or a captain will supply the Buyer with 10-20 hours of training on the boat..

Brokers advice: If you have taken a Coast Guard Boating Safety class TELL YOUR BANKER! Not only will this ease the loan process but many insurance companies will reduce your boat insurance by as much as 10%!!

Brokers advice: Write into the purchase contract that the Buyer will complete a Coast Guard safety Class.

SEA TRIAL AND SURVEY OF VESSEL:
All banks and insurance companies require the boat to have a comprehensive survey. This is money well spent!
There are three kinds of surveys: Insurance survey, In-Shore survey, Offshore survey.

INSURANCE SURVEY:
This is the easiest survey and is usually for renewing the existing insurance policy. THIS IS NOT A PURCHASE SURVEY.

IN-SHORE AND COASTAL SURVEY:
This is the most performed survey for and will be fine for most vessels purchase. It consists of a comprehensive equipment listing, hull number confirmation, general testing os all systems onboars, an out-of-the water check of the hull and running gear and bottom paint, and a list of items that need to be addressed. This will also establish the market value and the replacement value of the vessel.

OFFSHORE SURVEY:
This is the most comprehensive and time consuming survey and is appropriate for boat buyers that are planning on going offshore and cruising with their vessel. This is also the most expensive survey . This survey may also include hull moisture tests, ultrasonic tests, scan and photos with a heat sensing camera, engine manifold temp graphs, etc. This survey is for the buyer that wants to know every possible maintenance issue.

Broker advice: Be sure to have a qualified engine mechanic survey the engine (s) and generator, This survey should include running the boat offshore and having the engine surveyor check the engine and manifold temperatures every 200 rpms, doing a full power from stop run, making sure the engine reaches rpm specs at full power, etc.

Broker advice: Make sure both the hull & equipment surveyor and the mechanical surveyor are independent of the broker or seller of the boat. NEVER USE THE SURVAYOR THE BROKER OR SELLER RECOMENDS!! Find your own surveyor or have the broker submit to you a list of no less then six surveyors for you to interview and choose from..

DOWN PAYMENT
The larger the down payment the easier it will be to secure a loan for the purchase. Banks want the buyer to have a significant investment in the boat. Some credit unions allow no down payment if the boat if yu purchase the boat for NADA value!!

TERMS:
Terms vary from 5 years fully amortized to 20 years fully amortized.

Broker advice: Try for the longest amortization. This will keep your monthly payments as low as possible.

SOURCE OF FUNDS

BANK FINANCING:
Most banks no longer do boat financing.

BOAT LOAN BROKERS:
Boat loan brokers have their own sources for loans and may one of be the best way to secure a boat loan.

CREDIT UNIONS:
Credit unions are a great source for loans under $100,000. We have a number of credit unions that are very interested in funding boat loans for their members. If you or a family member are or were in the military you have an excellent chance to get a boat loan for under $100,000 from your military credit union! Call Randall to explore these options.

EQUITY LOAN:
Home or other property equity is another excellent way to finance a boat loan. The terms are generally easier and the interest in generally lower.

BUSINESS LOAN:
You can choose to use your business Line-of-Credit to fund your boat purchase.

OWNER FINANCING:
This has become an excellent way to finance your boat purchase. Owner financing is not for every Buyer and Seller and should involve extensive “due diligence” from both the Buyer and Seller . A lawyer should be retained to write the finance agreement. We have sold a number of owner finance boats with 100% success. This is because we use an extensive in-house document that protects the interests of both the Buyer and Seller. Call Randall to discuss this option.

CHARTER CONTRACT:
The charter option is an interesting way to fund your boat purchase, but again, should involve the services of a qualified lawyer. Generally the charter contract is written so that the boat is fully paid for by the end of the charter and title is issued to the Buyer at the end of the charter. We have an excellent in-house charter agreement that protects the interests of both the Buyer and the Seller.

PARTNER:
Not for everyone. This requires a very willing and motivated Seller. Insurance and maintenance can be an issue. Again, we have an excellent in-house agreement that protects both Buyer and Sellers interests.

PROPERTY TAX PRORATION:
Be sure to budget for property tax pro-ration. The department of Boating and Waterways recommends that Brokers not get involved with this issue. Be sure that property tax pro-ration is specifically addressed in your purchase agreement.

SALES TAX:
Be sure to budget for sales tax. Many lenders will allow you to finance sales tax and include the amount in the loan. A CF registered boat (DMV) requires the Buyer to register and pay the sales tax within 30 days. A boat documented with the Coast Guard will be issues a Sales Tax bill within 12 months. Be sure to budget for this bill!!

OFFSHORE DELIVERY
This is a complex subject and a buyer should consult with a qualified maritime attorney about doing an offshore . In general terms, the State of California requires documentation showing that the boat was purchase three miles offshore. The new owner then has has 89 days to move the boat out side the country - in the case of California this is generally Mexico - for a period of 12 months.


LLC
Again, this is a complex subject and a buyer should consult with a qualified maritime attorney about purchasing a boat in an LLC or other corporation. In general terms, there is no sales tax for purchasing an LLC or other corporation. The boat must be the only item in the LLC or corporation, the LLC must have been formed just for the boat, and most important, the boat was put in the LLC many months prior to the sale (12 months or more is best for Qualifying in the State of California).

Documentation:
Be sure to use a Maritime Documentation service and add this expense to the cost of purchasing a boat - averages $350.


Give us a call to discuss you next boat and how to finance the purchase: 310 574 9449