How to sell my boat that is financed?
Selling a boat or yacht that has a lien on it can be a very daunting process. How do I pay off my loan? How much do I owe the bank? What if I don’t have my title on hand? Off the Hook Yachts is here to explain that the boat selling process doesn't need to be complicated if you follow the below steps. We would like to explain the process using an example.
Ex. Bob owns a 2016 Sea Ray 350 SLX. He financed it for $250,000 with Bank of the West. Bob has been making payments on it for the last 5 years. He still owes $50,000 on it. Asking price is $150,000. If Bob follows our instructions below he should have a fast, seamless closing.
There are three simple steps you must follow:
- Determine how much you owe on the boat by requesting a 10-day payoff quote from your bank
- If you owe more than the asking price, determine how you are going to pay off the difference for closing
- Have ownership documents ready to transfer to buyer
Determine how much you owe on the boat
In our example, Bob has financed his boat with Bank of the West who is holding his original vessel title. He can simply call the bank and ask them what all he needs to do to get the boat paid off and to sell his boat. It is important to request a 10-day payoff quote from your bank when you are ready to sell. Each financial provider and bank are different, so it is very important to confirm the process with your bank. Once you find out your boat loan amount remaining you can proceed to the next step, determining how you are going to pay off that loan.
Determine how you are going to pay off the loan
You will need to decide how you will pay off your loan and when. Will you pay it off on your own and receive a free and clear title to transfer to the buyer? Or will you use the buyers money to pay off the remaining balance? For many sellers, paying off the boat won’t be possible without the buyers funds.
Situation 1: Bob pays off the remaining balance on his own.
Once Bob pays off the remaining balance on the boat, Bank of the West will issue him a Payoff Letter stating that the boat is free and clear of any liens. Then, between 7-10 days, Bob will receive the original title in the mail with Bank of the West signing off on the loan. Bob is now free to sell his boat directly to the buyer.
Situation 2: Bob pays off the remaining balance using the buyers money. The buyer pays Bob directly.
Bob has been advertising his boat for sale for a few weeks and finally found a buyer, Steve. Bob has been completely transparent throughout the whole selling process and tells Steve he still has a $50,000 loan on the boat that needs to be paid off before transferring ownership. Bob accompanies Steve to the bank where his boat is financed and has a bank employee explain the situation to Steve.
The bank employee provides Steve, the buyer, with a statement from the financial institution of the exact amount owing, to give reassurance that the amount owing is correct. Steve pays Bob directly the amount owed and then Bob pays the bank the funds. Once it’s been paid, the buyer can ask for an updated statement to confirm the owing debt has been cleared.
Situation 3: Steve writes two checks: one to the bank or financial institution and one to Bob.
Many banks will accept payment directly from the buyer. In this case, Steve will wire Bank of the West $50,000, and then funds Bob directly, the remainder of the deal amount which is $100,000.
Have ownership documents ready to transfer to buyer
There will be a lot of paperwork involved and it is important to have all documents signed and notarized the day of closing. If you are working with a Closing Agent, they will provide you with most of the paperwork along with your bank contact. Once you and the buyer have agreed on a closing date and the buyer has agreed to pay off the owing amount, they will expect the transfer of ownership to take place simultaneously.
WE BUY BOATS that are financed!