A Dealer's Perspective- Trade Ins

Captains Cat":2zni5w5a said:
Lucky Day":2zni5w5a said:
Does anyone know if consumer boat loans were securitized?
Click to expand...

Say What? What do you mean? If, do you mean the titles were "encumbered by leins", certainly.

Chalrie
Click to expand...

Hello Charlie,

This is an example of "securitization."

Securitization, in its most basic form, is a method of financing assets. Rather than selling those assets "whole," the assets are combined into a pool, and then that pool is split into shares. Those shares are sold to investors who share the risk and reward of the performance of those assets. It can be viewed as being similar to a corporation selling, or "spinning off," a profitable business unit into a separate entity. They trade their ownership of that unit, and all the profit and loss that might come in the future, for cash right now. A very basic example would be as follows. XYZ Bank loans 10 people $100,000 a piece, which they will use to buy homes. XYZ has invested in the success and/or failure of those 10 home buyers- if the buyers make their payments and pay off the loans, XYZ makes a profit. Looking at it another way, XYZ has taken the risk that some borrowers won't repay the loan. In exchange for taking that risk, the borrowers pay XYZ a premium in addition to the interest on the money they borrow.

As to the question about whether this applies to boat loans...I don't know.

/david
 
I work in the finance industry (energy project finance, all technologies, all sizes). Based on where I worked previously before setting up my own energy consulting practice I have had an opportunity to see a good bit of securitization and it is fair to say that there have been securitization structures applied to a very broad range of assets. That said, I have not heard of a pure boat loan securitization although they might have ocurred. There have been securitizations of consumer loans and I would strongly suspect that some of these consumer loans likely involved boats as part of a broad mix of types of consumer loans. Generally, for securitizations of things like autos, rail cars, and loans relating to assets like that which have frequently been done in securitizations limited to a single asset class, there have to be large numbers of such assets and the values have to be easily and readily assignable to the assets by an appraiser. That process would be difficult if not impossible with boats. Hope that helps.

Jim
 
Back
Top