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A lot of rules to finance my boat . Is this standard?

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A lot of rules to finance my boat . Is this standard?

Old 01-09-2020, 10:09 AM
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Default A lot of rules to finance my boat . Is this standard?

Financing a new boat and have a few pages asking me to sign that I will not use the boat for other than personal and family purposes . No passengers for hire . I will repair boat or they will and I'll be charged . Are all these normal for a boat finance ? What If I wanted to charter down the road ?
Old 01-09-2020, 10:19 AM
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Originally Posted by Djrek View Post
Financing a new boat and have a few pages asking me to sign that I will not use the boat for other than personal and family purposes . No passengers for hire . I will repair boat or they will and I'll be charged . Are all these normal for a boat finance ? What If I wanted to charter down the road ?
There are alot of new high risk activities going on these days. The "Sharing " economy of Air B&B and boat share like Boat bound are different risk groups than a traditional family boat. And yes charters are still a different risk pool. So I'd say it's the new normal to exclude that stuff.
Old 01-09-2020, 10:30 AM
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Most security instruments , including car loans and mortgages have similar covenants.
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Old 01-09-2020, 10:51 AM
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Originally Posted by Djrek View Post
Financing a new boat and have a few pages asking me to sign that I will not use the boat for other than personal and family purposes . No passengers for hire . I will repair boat or they will and I'll be charged . Are all these normal for a boat finance ? What If I wanted to charter down the road ?
if you plan to have passengers for hire or charter it, some lenders will allow but charge a higher interest rate. some lenders don't care and will say do as you please. just like home mortgages, lender wants to make sure that you will maintain the boat and keep it seaworthy.

ps. if you want to charter, the boat must be US built or have a waiver. the lender would need to sign off on the waiver. you'd also have to make sure you can get insurance for passengers for hire. some insurance companies are very strict about past owner-operator experience of a boat that is a similar size.
Old 01-09-2020, 11:04 AM
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Originally Posted by mystery View Post
if you plan to have passengers for hire or charter it, some lenders will allow but charge a higher interest rate. some lenders don't care and will say do as you please. just like home mortgages, lender wants to make sure that you will maintain the boat and keep it seaworthy.

ps. if you want to charter, the boat must be US built or have a waiver. the lender would need to sign off on the waiver. you'd also have to make sure you can get insurance for passengers for hire. some insurance companies are very strict about past owner-operator experience of a boat that is a similar size.
What about doing tournaments . I'm going to join a bass club and dont want to be limited. Does every boat place have these rules ? Bass pro etc?
Old 01-09-2020, 11:09 AM
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How would tournaments or club fishing not be personal use?
Old 01-09-2020, 11:13 AM
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Originally Posted by Djrek View Post
What about doing tournaments . I'm going to join a bass club and dont want to be limited. Does every boat place have these rules ? Bass pro etc?
Forgiveness is easier to ask for then permission. Don’t overthink yourself......
Old 01-09-2020, 11:18 AM
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Just do like everyone else and keep on signing.
Old 01-09-2020, 11:20 AM
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My last 2 mortgages had restrictions that the home was to be used as my primary residence, yes I read the contracts. I bet your had this also.

I asked my attorney about what if down the road I wanted to convert it to a rental. His off the record response was just don't do it in the next 12 months.

Keep your payments on time and a lender won't ask any questions. If you miss payments and they start to investigate as show you were using the boat as a business from he start you could have issues.
Old 01-09-2020, 11:42 AM
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Originally Posted by VTXrider View Post
Keep your payments on time and a lender won't ask any questions. If you miss payments and they start to investigate as show you were using the boat as a business from he start you could have issues.
The other possible bad outcome (from a bank's point of view) is that you carry passengers for hire without changing your policy to reflect that activity. You have a big loss (property damage, not liability), and your underwriter denies the claim because you violated policy provisions. So now you have a severely damaged boat with no insurance $$$ to pay for repairs. You can't pay for the repairs and they now have worthless collateral. They don't want to be in that position.
Old 01-09-2020, 11:46 AM
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Originally Posted by 74lbSteve View Post
The other possible bad outcome (from a bank's point of view) is that you carry passengers for hire without changing your policy to reflect that activity. You have a big loss (property damage, not liability), and your underwriter denies the claim because you violated policy provisions. So now you have a severely damaged boat with no insurance $$$ to pay for repairs. You can't pay for the repairs and they now have worthless collateral. They don't want to be in that position.
so all the boat dealers have this contract?
Old 01-09-2020, 11:48 AM
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Originally Posted by 74lbSteve View Post
The other possible bad outcome (from a bank's point of view) is that you carry passengers for hire without changing your policy to reflect that activity. You have a big loss (property damage, not liability), and your underwriter denies the claim because you violated policy provisions. So now you have a severely damaged boat with no insurance $$$ to pay for repairs. You can't pay for the repairs and they now have worthless collateral. They don't want to be in that position.
Not to mention you have a loss of life (or several) operating as an illegal charter outside of the bounds of the policy...

If you're entering tournaments with a few buddies, who happen to be paying their fair share for expenses... no worries. If you're charging anglers a fee to take them out and put them on the fish during tournaments, then you are running a charter and need the proper licenses and insurance.
Old 01-09-2020, 11:53 AM
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Originally Posted by Djrek View Post
so all the boat dealers have this contract?
Not the dealer, the finance company.
Old 01-09-2020, 12:21 PM
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Originally Posted by 74lbSteve View Post
The other possible bad outcome (from a bank's point of view) is that you carry passengers for hire without changing your policy to reflect that activity. You have a big loss (property damage, not liability), and your underwriter denies the claim because you violated policy provisions. So now you have a severely damaged boat with no insurance $$$ to pay for repairs. You can't pay for the repairs and they now have worthless collateral. They don't want to be in that position.
and many lenders ask for proof of insurance so if they see your policy is now a commercial policy or allows charters, they will catch wind
Old 01-09-2020, 12:25 PM
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everything is always fine until u get sued and it is proven that its use is not as it was originally intended. gives carrier an easy way out of contract.
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Old 01-09-2020, 12:28 PM
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I thought maybe some day far down the road chartering would be nice, not now . But tournament fishing I would like to do. So with the finance contract that would be fine ?
Old 01-09-2020, 12:33 PM
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Originally Posted by Djrek View Post
I thought maybe some day far down the road chartering would be nice, not now . But tournament fishing I would like to do. So with the finance contract that would be fine ?
your general question has been answered. nobody can tell you if tournament fishing is allowed without reading the contract.

the worst thing a lender can typically do is accelerate the note as you’re in default of the terms. This means they demand payment in full or face repossession. Again, without reading the agreement nobody can answer your specific question.

What I am describing is how my FI operates. We lend in in Florida and use a national vendor for notes and security agreements. They are almost all the same.
Old 01-09-2020, 12:33 PM
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Originally Posted by Djrek View Post
I thought maybe some day far down the road chartering would be nice, not now . But tournament fishing I would like to do. So with the finance contract that would be fine ?

Yes, you entering yourself and even some expense sharing friends for tournaments is fine on the personal use policy. Again, if you are charging a fee to take anglers out for tournaments, you would then be operating a charter operation.

I would ask the insurance company if they carry, or can get underwritten, commercial policies, so that if a few years down the line you want to charter, switching over might be seamless with a good history.
Old 01-09-2020, 12:45 PM
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Don’t overthink things. Don’t use the boat for business purposes. Seems pretty standard for fine print for a loan. Anything else should be fine.

If you decide to charter one day, worry about it then. That will entail a lot more than what the terms of your loan say if you’re still paying for the boat. At the very minimum you’re going to need an entirely different insurance policy as a standard one isn’t going to cover using the boat as a charter.
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Old 01-09-2020, 01:13 PM
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Originally Posted by Djrek View Post
I thought maybe some day far down the road chartering would be nice, not now . But tournament fishing I would like to do. So with the finance contract that would be fine ?

If you want to stay within the contract, then some day far down the road, you can refinance or pay off the note.
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