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Purchasing a boat requires an investment. You can finance the purchase with an unsecured or secured boat loan to save on interest costs and reduce your monthly payments.
Borrowers can take out loans from banks, credit unions and lenders specializing in marine financing such as members of the National Marine Lenders Association. Use a boat loan calculator to determine what the potential monthly payments will look like.
Banks
There are a variety of banks that offer boat loans. These lenders often have specialized lending staff that understands boats and can provide competitive loan terms and rates. They may also be able to help you find financing for a specific type of boat or to meet your financial goals. Typically, a bank will run a credit check before issuing funds. This is a necessary step to ensure the loan will be repaid on time and in full. During this process, lenders will review your debt-to-income ratio to determine whether you can afford the new loan payment.
Whether the lender offers secured or unsecured loan options will be important to consider, as well as repayment terms. Secured loans use the boat as collateral and can be repossessed in the event of non-payment. This makes them a safer option for the lender, and they might have lower interest rates and longer repayment terms than unsecured personal loans.
Borrowers should be prepared for other costs associated with boat ownership, including storage, maintenance, fuel and insurance. These expenses can add up quickly, so it’s critical to make sure the loan payments along with all other monthly costs are manageable within your budget. The good news is that consistent, on-time loan payments can improve your credit score and demonstrate responsible financial behavior.
Credit Unions
While it is possible to buy a boat outright with cash, it’s often more financially advantageous to finance a portion of its cost. Getting your financing through a bank, credit union or online lender could save you money. Credit unions, in particular, may not have the same high fees that a dealership might charge.
Boat loans can be secured or unsecured, meaning you don’t have to put up any collateral to qualify. Typically, however, you’ll be required to satisfy a 20000 loan minimum credit score requirement for a loan. Depending on your lender, you might be able to borrow up to 80% of the purchase price for new boats, and as much as 105% of the cost for used boats.
In addition to a loan, you’ll need a marine vessel insurance policy. These policies typically include liability, uninsured boater, medical payment, comprehensive and collision coverages. Some insurers even offer specialized coverage for boaters. You can find the best policy for you by comparing quotes from multiple providers. Having pre-approved financing from a lender will help you know your purchasing power and give you confidence when shopping for your new boat. It can also be a plus when negotiating with private sellers or dealers who may offer you a better deal if they know you have financing already in place.
Online Lenders
Buying a boat is a big investment, so you’ll want to shop around to find the best financing available. Some online lenders offer loan terms and rates that may be competitive with other options. Some lenders also let you prequalify without a hard credit inquiry, which can save time and allow you to compare offers.
Secured boat loans work similarly to other secured personal loans, and require a lender-approved appraisal and marine survey report before the loan can be finalized. These factors are necessary to ensure the watercraft is worth what you’re paying for it. If you don’t pay back the loan, the lender can repossess your boat.
You can also seek financing through your bank or a local credit union. Many banks offer in-person service and a variety of lending products, including boat loans. However, these types of loans typically have higher credit standards than other types of personal loans and may take longer to process.
If you’re buying a new or used boat, you may be required to make a down payment of between 10% and 20% of the watercraft’s purchasing price. You’ll need to submit a full application and provide details about the boat, such as the make, model, year and value. You’ll also need to verify your income and employment information, which could result in a hard credit inquiry.
Boat Dealerships
When you’re in the market for a new boat, it is important to consider all the associated expenses, including loan payments, registration, insurance, maintenance, gas, docking fees and storage. Having a firm understanding of your budget will help you find the right boat and loan. Before applying for a loan, be sure to check your credit score, and take steps to improve it if necessary, to increase the likelihood of approval.
Typically, lenders will require a minimum credit score of 680 or higher to secure a boat loan, although there are exceptions for borrowers with a score lower than that. The loan terms for boat loans can range from a few years to up to 15 years, depending on the lender and the borrower’s creditworthiness.
The loan terms will also affect the total cost of the boat and your monthly payments. It’s a good idea to use a boat loan calculator before making any final decisions. This online tool will help you estimate the monthly loan payment based on the purchase price of the boat, the loan term and the interest rate. It is also a great way to calculate your total debt. A payment calculator will not include the costs of insurance and other premiums, which are additional expenses that you should factor into your budget.