The NADA Marine Guide, published by NADA Appraisal Guides, is now offering more accurate values for its listings of new non-current boats, though at least one bank - Bank of the West - says it will not accept the adjustments.
The addition of new language, designed to give truer values for new non-currents, comes in response to the issue of banks devaluing these boats as a result of consulting used listings in the NADA Marine Guide, according to the National Marine Manufacturers Association, the Marine Retailers Association of America and the National Marine Bankers Association.
"This new language should help ensure that lending institutions will more accurately apply proper value on loans being made on new non-current boats," says MRAA president Phil Keeter. "NADA's response to this critical situation on consumer loan values should help dealers continue to move aged inventory and is greatly appreciated."
When determining the value of new non-current boats, banks have only been willing to finance them at used prices that are much less than new non-current prices. As a result, boat dealers and buyers have been unable to secure proper financing, deterring those who are qualified from purchasing new non-current boats.
The new language reads: " 'Brand New,' Non-Current - The average retail value does not represent 'brand new' non-current year vehicles. Recent market research shows that 'brand new' non-current models can increase the used value of an identical model by 6 percent to 12 percent." The inclusion of the new language can be found in the January-April edition of the 2010 NADA Marine Guide released in December.
Shortly after the announcement, Bank of the West sent a bulletin to its dealers saying it would not accept the NADA adjustments on "brand-new" non-current boats. A spokesman for NADA could not be reached for comment.
Bank of the West, however, is making its own adjustments, according to NMMA president Thom Dammrich. "They are making adjustments. They're using their own methodology for those adjustments," he says. "They've been adding 10 percent, which is within the range suggested by NADA, to the base book in their advance for quite some time."
NMBA president Karen Trostle says most lenders look at more than one piece of data when deciding values. Bank of the West's announcement is not a cause for alarm.
"Most lenders will look at that as a guide, but utilize their own internal process of evaluating the value, based upon trends," she says. "[The addition of the language] is an important step because there is so much product out there that is non-current and it certainly isn't new and it certainly isn't used. It is a term that needs to be looked at and calculated."
This article originally appeared in the March 2010 issue.