Financing Good Ole Boats

Older boats mean higher risk for marine lenders.


Here is a question that has puzzled me for a long time. Many financial institutions offer financing on mature vessels but have a boat age limit of 15 to 20 years. But, if a 1978 classic-plastic boat underwent a major refit in, say 1999, does that make the boat a 1999 in the eyes of the financiers? Id like to hear tales on how others may have gotten around this rule.

Dave Rhodesn
Merritt Island, Fla.

The short answer is that the financial institutions simply do not care whether the boat had a recent major overhaul. If it is old, they consider it more of a risk to finance.

According to Peggy Bodenreider, a director of the National Marine Bankers Association (NMBA), in lenders eyes, the market for a boat narrows considerably as it ages, making older boats riskier collateral. In their 30-plus years of experience in marine lending, the NMBA member lenders have found that the value of the improvements made during a refit, including rebuilt or new engines, equipment, components, and soft goods, depreciate at a much faster pace than when the boat was new. The age of the original hull has a disproportionate impact on the perception of the boats value for future buyers.

Unlike the real estate market, the boat resale market rarely adds the full cost (or even a large percentage of the cost) of refit improvements to a boats actual value, Bodenreider explained. In fact, she added, the market value increase may be insignificant, as there are still a limited number of buyers for an older boat, regardless of its condition.

Lenders have seen this play out again and again when these refurbished boats are repossessed, she said. The market for older boats, even those with considerable upgrades and improvements, is not strong enough to bring a price that justifies the risk.

There are NMBA member lenders who will finance boats as old as 30 model years, but most lenders have minimum loan amounts on older collateral of about $55,000, terms may be shortened to 10 years on the loan, and the rate is likely to be higher than for newer boats.

For more on boat financing, check out Funding the Dream (PS, May 2012) and Stick with the Pros on Loans (PS, June 2001).

Coated Lifelines

You noted in the PS Advisor in the July 2013 issue that rope versus wire lifelines are a no-no vis-a-vis the ISAF. Who is that? I had new heavy, vinyl-coated, double lifelines installed on my cutter because they look nice, seem much safer than my original, worn vinyl lifelines, and are sturdy and tighter. I was told by the boatyard that they were legal. Did I do wrong? I thought that vinyl-coated lifelines are not recommended for boats racing offshore, but I plan to stay near shore.

Lou Sanfred,
Kadey Krogen 38

ISAF is the International Sailing Federation, the world governing body for competitive sailing. Its safety standards are meant for offshore racing sailboats, but they are good guidelines for cruising boats as well.

We don’t recommend installing coated lifelines because the coating prevents easy wire inspection and it can actually encourage corrosion when moisture breaches the coating and becomes trapped. The most common places for this to happen are at end terminals.

With new coated lifeline wire, we recommend installing adhesive-lined heat-shrink tubing over the interface where the wire meets any end terminals; do this before the lifelines are exposed to moisture. Also be aware that any coating chafe (by fenders, sheets, etc.) will allow in moisture, and taping over a chafed spot can actually make things worse by trapping water.

Be sure to regularly inspect the wire where it enters the end fittings and check the fittings closely as well. We recommend replacing coated lifelines about every five years.

For more on lifeline systems and inspecting them, check out the online version of this article and stay tuned for the results of the ongoing lifeline test were conducting with the U.S. Naval Academy (PS, September 2012).

Darrell Nicholson, editor of Practical Sailor, grew up boating on Miami’s Biscayne Bay on everything from prams to Morgan ketches. Two years out of Emory University, after a brief stint as a sportswriter, he set out from Miami aboard a 60-year-old wooden William Atkin ketch named Tosca. For 10 years, he and writer-photographer Theresa Gibbons explored the Caribbean, crossed the Pacific, and cruised Southeast Asia aboard Tosca, working along the way as journalists and documenting their adventures for various travel and sailing publications, including Cruising World, Sail, Sailing, Cruising Helmsman, and Sailing World. Upon his return to land life, Darrell became the associate editor, then senior editor at Cruising World magazine, where he worked for five years. Before taking on the editor’s position at Practical Sailor, Darrell was the editor of Offshore magazine, a boating-lifestyle magazine serving the New England area. Darrell has won multiple awards from Boating Writer’s International, including the Monk Farnham award for editorial excellence. He holds a U.S. Coast Guard 100-ton Master license and has worked as a harbor pilot and skippered a variety of commercial charter boats.


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