If funding for boat loans is inching up, its good evidence that the bottom is clearly behind us. Such is a conclusion from the encouraging news out of the National Marine Bankers Association last week.
According to NMBA, reports from the industrys just-completed fall boat show circuit (which wrapped-up Sunday night in St. Petersburg, Fla.) suggest buyers are more prevalent and loans are more available. Qualifying for a new boat loan, or refinance on a current craft, is still demanding but interest rates are reasonable (reportedly 6 percent-9 percent) and marine lenders are actively competing for new customers again.
Tom Mack, South Shore Marine (Huron, Ohio) generally agrees. Weve seen fewer deals turned down, he noted. Although I must add we have very frank conversations with our buyers. For example, we make it clear if they have negative equity in a trade, the only thing that will cure that is their checkbook. We also push for 20 percent down. So, we do a lot of credit app pre-screening and its serving us well."
The picture is less encouraging on the West Coast, according to Dave Geoffrey, president of the Southern California Marine Association . For the most part, our dealers have not seen improvement in lending this year, he said. Where money may have been too loose before the crash, the pendulum swung too far the other way. Now, to see any lending improvement, loan criteria must move back to the center."
Last January or so, we seemed to move up from frozen stiff to big chill, says Joe Lewis at Mount Dora Boating Center (Fla.). Since then, we havent seen much change. For example, we always send our deals first to our big lender but when theyve rejected a good deal weve seen local banks accept them. Still, the NMBA report is good."
Speaking of smaller community banks, it appears some have recruited marine loan specialists who were let go by the larger banks when they bailed out of marine lending. In these cases, some smaller banks have become aggressive in building theyre marine portfolio. NMBA has been active in educating community banks about the value of boat loans, apparently with some success. Yes, we are seeing that happening here in Ohio, confirms Mack.
According to Scott Anderson from Merrick Lending in South Jordan, Utah, There have been easier days to get a boat loan, but there have also been more difficult times. I believe the boat loan market is heading in the right direction though. Rates are very competitive right now and I believe will continue to be through 2011. Availability is good for those who can verify income, provide down payments and have been able to put any credit problems behind them."
NMBA is convinced a new base will be established with high quality credit customers initially, then extending offerings to a wider slice of the populace as the economy and interest rates gain steam. Certain bank economists see these gains coming in 2011. While its unlikely credit will ever be as cheap or easy as prior to the financial meltdown in 08, loans for boats will move back into a preferred category reflecting historically strong borrower demographics and credit profiles. Thats good news!
For more information about marine lending, I suggest you go to the NMBA website: www.marinebankers.org.