A LITTLE BIT ABOUT U.S. COAST GUARD DOCUMENTATION

The term "secured lending" suggests its meaning. It provides that the Lender has certain rights and remedies that reduce his implied risk in making the loan. In this type of loan, the Borrower grants the Lender a right of possession to some property of value in the event that the terms and conditions of the Promissory Note are not met by the Borrower. In marine lending, it is the actual boat being purchased which is secured as "collateral". One of the many factors that affect interest rate on a secured loan is the lender's ability to "secure" interest in the collateral. The stronger the method of recording, the lower the Lender's rate is likely to be.

As consumer lending began its vast expansion in the American economy in the sixties and seventies, Lenders sought ways to make loans on high ticket items such as private airplanes and pleasure boats. The existing models for recording a security interest in the property being purchased were home mortgages, and automobile loans. Real property deed recordation systems based on "ancient" law were effective for recording secruity interest in home purchasing, and all 50 states had automobile titling systems allowing reciprocal enforcement of Lender interest in autos as collateral.

Today, there are still only 33 states that have boat titles, and in the seventies, when consumer marine lending really began, fewer than half the states had boat title systems. Lenders turned to the U.S. Shipping Code and the Preferred Ship Mortgage Act of 1920 as a vehicle by which security interest in the vessel could be perfected. Having roots in 300-year-old Admiralty Law, and shipping instruments known as "bottomry bonds", the Federal laws provide for a system administered by the U.S. Department of Transportation, United States Coast Guard in which vessels are registered and mortgaged. This is called U.S. Coast Guard Vessel Documentation.

Marine Lenders are particularly fond of this method of recordation, since the Coast Guard "Abstract of Title" is an inviolable public recording of any and all legal engagements of the vessel. In addition, under the umbrella of Maritime Administration treaties throughout the world, a Preferred Ship Mortgage is enforceable not only in all 50 states, but in most foreign waters. And the Owner's Certificate of Documentation identifies the vessel as a Flag Vessel of the U.S. Fleet entitled to all the rights and courtesies of any U.S. vessel on the high seas. It also serves as the vessel's legal identification in foreign ports. Not only does this provide a level of security above all others for the Lender, but it actually enhances the value of the vessel somewhat due to the clarity of title. For these reasons, most marine Lenders say, "If it can be Documented, it should be!"

MARINE FINANCING INTEREST RATES

SMALL BOATS (up to approximately 27 feet)
LOAN AMOUNT($)	CUSTOMER RATE	MIN. DOWN PAYMENT	TERM (YRS)
10K - 14,999	8.99 - 9.49%	10% down	10 years
15K - 19,999	8.25 - 9.49%	10% down	10-12 years
20K - 39,999	7.25 - 7.99%	10% down	12-15 years
40K - 75,000	6.99 - 7.75%	10% down	15 years

CRUISERS, YACHTS, SAILBOATS
LOAN AMOUNT($)	CUSTOMER RATE	MIN. DOWN PAYMENT	TERM (YRS)
40K - 99,999	6.99 - 7.25%	10% down	15 years
50K - 99,999	6.25 - 6.50%	15-20% down	15 years
100K-199,999	5.95 - 6.25%	15-20% down	20 years
200K-2million	5.75 - 5.99%	20% down	20 years

HOUSEBOATS
LOAN AMOUNT($)	CUSTOMER RATE	MIN. DOWN PAYMENT	TERM (YRS)
40K - 74,999	6.99-7.25%	10-15% down	15 years
75K-199,999	5.99-6.49%	15-20% down	15 years
50K-99,999	6.18-6.45%	20-25% down	15 years
200K-1million	5.75-5.99%	20-25% down	20 years

For more information on these subjects, and on anything else pertaining to marine borrowing, please contact us directly at
770-932-2048 or click here.