How Banks & Ins determine boat value?

[dmreece]

I have read some of the threads that discuss the different online aides for determining boat value - NADA, BUC, SoldBoats.com, etc. There are varying opinions about the accuracy (inflated/deflated) of these services. But banks and insurance companies will do this with more resolve. They will not (or should not) lend or insure for more than the boats present value. So the question is what method or service do they use and is it available online for the average buyer?

If this has already been discussed in a previous thread, I appreciate your patience and ask for a link to the thread.

Thx,
-dr

[VK540]

Originally Posted by dmreece

I have read some of the threads that discuss the different online aides for determining boat value - NADA, BUC, SoldBoats.com, etc. There are varying opinions about the accuracy (inflated/deflated) of these services. But banks and insurance companies will do this with more resolve. They will not (or should not) lend or insure for more than the boats present value. So the question is what method or service do they use and is it available online for the average buyer?

If this has already been discussed in a previous thread, I appreciate your patience and ask for a link to the thread.

Thx,
-dr

I recently had the same questions for insurance companies in Canada and the answer I received was that if the boat was 15 years or less of age, I could insure it for replacement value. Basically that meant i could pay a premium of my choice which was a percentage of the amount I wanted to insure. If the age exceeded 15 years then I could only insure it for the actual purchase price if the boat had a recent survey and was valued at the purchase price. If I paid more than the estimated value then that was too bad for me! I did meet with the banks to discuss an out of country purchase and the ones I dealt with weren't interested in doing that deal. I would have had to purchase the boat, get it registered in Canada then finance it. Hope this helps? I would suggest calling the banks and insurance companies for firm answers to your questions.

[kd3pc]

most of the banks in our area use soldboats and some form of in house verification...few banks use NADA and BUC for anything over 25' as they are just accurate. A lot of brokers, especially powerboat and runabouts swear by NADA and BUC. Not sailboat brokers, though...so if you are going to use these as guides, you may be quite surprised.

When I say in house verification that is where the details come in, some will simply not loan on a boat older than XX years. Others, who know their market (what a concept) will lend on older boats that historically after have held their value and have a market that would allow the bank to recover their money if need be, in the event of default.

Wooden boats are a game of their own, and one should ask the bank long before purchase if expecting a loan. The bank may well dictate fastener type, surveyor on site to check planking and repairs, etc, etc.

These same banks all have very good relationships with the dealers in the area, they know many brokers and surveyors (at least the established and reliable ones) and can call upon them at a moments notice.

In the last two years, these same banks have restated their policies, and most never did get in to 0% down stuff. They are all now lending to only qualified people on boats that they can value accurately.

I.E. NO wood boats, age less than 15 years, FICO better than 680, 20% down, means to repay, and a stable or graduating experience level in boats similar to the one being purchased, current survey and sea trial that show the boat's current value at or below loan requested.

Insurance, except for progressive and the like, will have similar policies to those of the bank. You will have to be very careful, have a good agent (or both) if you desire stated value or special requirements. Again expect to show experience in the boat size you are buying, or things may get a little tough.

Given the current glut of boats on the market, neither bank nor insurance company wants to deal with a default, and most boat loans are recourse loans....so if you walk, they can come after you for the difference. BTW, this year the deficiency can be taxed as income (like it used to be some years back) by the IRS, and of course it will clobber your FICO..

[dmreece]

Thanks for your input. I find it really interesting that www.essexcredit.com uses NADAGuides. If you go to their boat page there is a link in the lower left that is for boat valuation and on that page they indicate that they have partnered with NADAGuides.com. There is no differentiation between power or sail.

[Minnewaska]

Financing values are only important if you are attempting to maximize the debt. Despite media rhetoric, banks can't earn profit without making loans and they want to be able to lend you money. But it takes 10 to 20 good loans to make up for one bad loan. The truth is, regardless of method, if the bank is squawking, so should you. Especially if you check with more than one and get the same answer.

Insurance is another matter, as you want to be sure your assets are protected. However, keep in mind that you will put a lot of uninsured dollars into your boat over time: marinas, repairs, etc. Your value will also typically decline over time, as will your coverage. I'm not sure how relevant being fully insured really is.

P.S. On both matters, I strongly suggest working with relatively locally based banks and insurance agents. They will know and care more about you than the national companies and are more likely to grant legitimate exceptions if truly warranted.