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View Full Version : DONZI Boat Loan fiasco



slendzion
09-07-2005, 10:01 AM
Ok, trying to get financing thru an out of state bank to purchase a 91 Donzi and they say a survey is necessary, they need to have "Gap" insurance (this insures them for full loan balance payback in the event of a total loss?) and they low balled the loan amount on the boat!. Is it me or does this seem normal, I know they go by blue book values but on my other boats they've only required an appraisal value to back up the loan value. Any banking suggestions will help.
Thanks

Woodsy
09-07-2005, 10:30 AM
It seems to me that the bank doesn't agree with the value as stated by the purchase price. They are concerned that in the event of a total loss the insurance will not pay off the loan amount. Most banks I know of want a survey if the boat is 10yrs old or older and if the loan amount is greater than 80% of the value....

Woodsy

DonziJon
09-07-2005, 10:40 AM
Ok, trying to get financing thru an out of state bank to purchase a 91 Donzi and they say a survey is necessary, they need to have "Gap" insurance (this insures them for full loan balance payback in the event of a total loss?) and they low balled the loan amount on the boat!. Is it me or does this seem normal, I know they go by blue book values but on my other boats they've only required an appraisal value to back up the loan value. Any banking suggestions will help.
Thanks

A few years ago, I had a 1980 32' Sailboat which was sitting in my yard "For Sale". It was valued at about 35K. There was NO mortgage. It was paid for. I wanted an "Agreed Value" insurance policy (Vs. "Actual Cash Value" ) to cover the boat while it sat in the yard waiting to be sold. It would NOT be going in the water. The insurance Company that I had had for 10 years said they NOW wanted a "Survey" because the boat was Over 10 years old.. I had the survey done for about $280. That was 15 years ago. I believe the "Boats over 10 years Old" thing is a common requirement. The insurance company required Me to have a "Licensed" Marine Surveyor to do the job.

On the other hand, my current Donzii is 20 years old (No Mortgage) and the insurance Has Not required a survey since I bought it 9 years ago. Go figure.

McGary911
09-07-2005, 11:44 AM
Depending on your situation, it may be much easier to take out a small home equity loan. Property value increases have given people some nice "found equity" over the past few years. I have a home eq line of credit with my bank which came with a little checkbook. They don't care if i spend it on my crystal meth habit.....it's backed by my condo. Another plus is that i can write off the interest on my taxes. Try doing that on a boat loan (for a small donzi -- bigger boat with a shower and head, you can write off the interest).

Insurance - now that's another story.....

The Hedgehog
09-07-2005, 01:23 PM
Without divulging credit information! It would be helpful for me to know what exactly what kind of Donzi you are trying to finance and the size of the bank (ie community, regional or national). Please do not mention the bank's name.

I work as a consultant in the banking industry. Lending policies often differ greatly from bank to bank. Being able to get financing on more specialized boats often depends on your banking relationship and the flexibility of the specific bank. Your sitution is not uncommon. This is why it often pays to have a good banking relationship with a community bank.

slendzion
09-07-2005, 01:32 PM
Without divulging credit information! It would be helpful for me to know what exactly what kind of Donzi you are trying to finance and the size of the bank (ie community, regional or national). Please do not mention the bank's name.

I work as a consultant in the banking industry. Lending policies often differ greatly from bank to bank. Being able to get financing on more specialized boats often depends on your banking relationship and the flexibility of the specific bank. Your sitution is not uncommon. This is why it often pays to have a good banking relationship with a community bank.
22' 91 Classic w/454 and the loan was thru a regioal bank I believe.

18FOOTER
09-07-2005, 01:39 PM
Michigan State Law does not allow anyone in the auto industry (including lenders) to "require" Gap insurance. However, I do beleive it's a smart idea if you owe more than an item is worth. It has saved many of my auto customers an awful lot of money. Your boat lender may be pushing the "limits"

The Hedgehog
09-07-2005, 02:46 PM
You are talking about something that books between $9,000 to $10,000. Heck with with really good credit some banks would do it almost unsecured. Some larger banks have pretty rigid policies that handcuff their lenders. They may have been burned by boat loans and require surveys on all boat loans over a certain age. I see many policies that do not mention age or surveys but require NADA or an equivalent. If you have good credit and a lender with some authority they should be able to override or get an exception. If you have poor credit they might just be running you through the ringer in hopes that you will go away. Some lenders don't like to say no.

If you have a credit score above 675 and a debt to income less than 33%, then you should be able to find a lender. If your score is over 700 then you definately need to look elsewhere. Try to see if the lender will tell you the score. If not you can pull your own credit report from a number of agencies. If want to talk in more detail on that subject send me a pm.

As far as banks are concerned, smaller community banks tend to be more flexible. Be careful not to go visit a bunch of banks at once. Too many inquiries will drive your credit score down. Once you do find a banker to help you out then give them some more of your business. Deposit accounts and lay-up loans like home equity lines are good relationship builders. If you need to call upon them again they will remember.

As far as insurance, I don't know about Michigan law but I never see any gap insurance these days. I have been in about 50 different banks in the last two years. If it is a huge issue then I can ask my compliance dept. The norm is replacement. And yes you will be the one with some exposure.

blackhawk
09-07-2005, 03:03 PM
Ok, trying to get financing thru an out of state bank to purchase a 91 Donzi and they say a survey is necessary, they need to have "Gap" insurance (this insures them for full loan balance payback in the event of a total loss?) and they low balled the loan amount on the boat!. Is it me or does this seem normal, I know they go by blue book values but on my other boats they've only required an appraisal value to back up the loan value. Any banking suggestions will help.
Thanks

My suggestion is try a local bank. When I bought my last boat I called 5th 3rd to check rates. They were good so I asked her to fax me a loan app. She said we can do it over the phone. 60 seconds later I was approved. She had me book out the boat on NADA and fax it to her along with the VIN. She just put the money in my checking acct! Too easy! :D

slendzion
09-07-2005, 03:13 PM
Be careful not to go visit a bunch of banks at once. Too many inquiries will drive your credit score down.:shocking::shocking:
You mean they penalize you for shopping around?????? DOESN'T SEEM RIGHT!!
Anyway, I've contacted my LOCAL bank to see what my equity options are. Thanks for the advice, to all the above responses above as well.

The Hedgehog
09-07-2005, 03:52 PM
Be careful not to go visit a bunch of banks at once. Too many inquiries will drive your credit score down.:shocking::shocking:
You mean they penalize you for shopping around?????? DOESN'T SEEM RIGHT!!
Anyway, I've contacted my LOCAL bank to see what my equity options are. Thanks for the advice, to all the above responses above as well.


Credit reports have some crazy algorithms that cause a bunch of inquiries to create a look of despair. Two or three in succession is okay but after that it starts to effect your score. LOCAL banks are the way to go. The situation that Blackhawk mentioned is more of the norm.

blackhawk
09-07-2005, 05:18 PM
Your score will go down only if they actually pull your credit. Like Louisville Boater said a few is okay but you definitely don't want 9 or 10 recent inquiries. Ask questions and get answers before giving them your SS number!

harbormaster
09-08-2005, 09:24 AM
Do not use Lending Tree! I made that mistake about 5 years ago when seeing what kind of rate I could get. A bunch of lenders each pulled my credit and knocked the crap out of my credit score!!