Boat Loans – Where and How To Apply For a Loan
You may be yearning for a new boat to explore the open seas. But, the price tag may have you anchored and intimidated.
Luckily, you can find boats that cost less than a brand new car and have a monthly payment as low as $250!
Are you still intimidated? Don’t be, a great boat loan can put you in the captain’s chair and ready to head off on your first maiden’s voyage.
Boat Loans
In the past, it was difficult to get a boat loan. Today there are so many options the difficult part is choosing what lender you want to sail with.
Auto loan lenders have discovered that boat buyers make for excellent clients. Some have even developed businesses that specialize in boat loans with easy loan application processes.
Many boat loan specialists belong to the National Marine Lenders Association. Their motto is, “We make boating affordable!”
Types Of Lenders
Your boat loan can vary depending on what bank or marine lender you use. This is why it is always important for you to compare rates and terms. This will help to ensure that you always get the best boat loan that you can.
There are four types of lenders that you can go through. These lenders include marine dealership lenders, banks, financial service companies, and credit unions.
The first step that you should always make is your new boat dealership.
They have access to dozens of banks and financial institutions that provide the best boat loan rates. They usually don’t require any down payments for boats. Many marine dealerships also have boat-savvy people who can answer all of your payment option questions.
Most marine and boat dealerships also great tools available like boat loan calculators and easy online boat trade-in appraisal tools.
The second stop, if you can’t get a loan at the marine dealerships, is your bank.
Banks often provide boat loans. They usually need ten to fifteen percent on a down payment for recreational vehicle loans. Many banks have loan-savvy people who can answer all of your boat loan rates and credit approval questions.
Down payments on boats are based on the boat type, age, price, and your credit history.
Financial service companies are often marine lending experts. Many of these companies belong to the National Marine Lenders Association. And their services are sometimes found advertised in boating publications.
Credit unions often provide competitive boat loans and attractive boat loan rates but again require a significant down payment. If you are a member, you should make sure that you contact them to find out what they offer.
Types of boat loans
Lenders offer a variety of loans. Always make sure that you ask the lender questions about each model. This way, you can the best and more informed decision.
There are fixed-rate and fixed term simple interest loans. These loans are the most popular among buyers.
Fixed loans offer the same monthly rate for the duration of the loan. These loans pay off all interest and principal obligations. And by the end, the complete boat loan is paid off.
There are variable rate loans. These loans have floating index rates that are based on different indexes. Variable-rate loans have low introductory rates.
Variable-rate loans have an adjustable period. The rate payments can change daily or at a preset later date, which might be months or years, which can change the entire loan amount.
There are also balloon payment loans. With these loans, the entire balance is paid off at the end of a stated loan term.
If you have a lot of equity in your house, you will be able to qualify for a great home equity loan that you can put towards your boat. This is an excellent form of loan because it allows you to deduct the interest from taxes.
A credit card is an option, but we strongly advise against it because of the annual percentage rate unless you can pay it off quickly.
Boat loans from dealers and brokers
Brokers and dealers can be a great help when it comes to acquiring a boat loan.
Dealers are always more than happy to help because they also stand to benefit. Dealers want to make the sale, and sometimes, they even get a cut from the loan as a new customer finder fee from the bank.
It is a great decision to use a dealer because they do all the work. Dealers come with extra benefits such as better and more competitive rates and sometimes no down payment.
Dealers operate differently from one another. Many dealers use Finance Managers who help with the loan process. Some dealers use outside loan service companies. Others can refer you to a trusted bank or financial service company they work with.
Dealers often have unique relationships with boat manufacturers. These relationships come with many perks that can benefit the buyer. These relationships offer dealers special new boat loan rates and finance programs for their customers.
The financial program options available differ depending on individual boats and your personal credit history.
Programs that may be available through a dealer include:
- Extended warranty
- Delayed monthly payments
- No down payment
- No interest for several months
- Limited time lower rates
- Quick and easy loan approval
Using a dealer is no guarantee, and can provide stormy seas as well.
Dealers often have limited interest rates and lending options when someone has bad credit than banks have. These rates can accumulate with time making it more expensive for the buyer. But, you also get lots of the benefits listed above.
Boat brokers are another great resource to use when buying a boat.
Brokers know the ins and outs of the boat business. They help the buyer to find and complete the sale for the perfect boat. This means that many brokers often know about programs and resources that can help to find the best boat financing.
The application process
The application process can vary. It can include filling out a lot of paperwork or simply giving your information over the phone.
The process in which you apply is determined by the amount of money you want to borrow. The more money you want to borrow, the more details need to be provided.
Some boat loans require income verification, depending on personal credit scores. To verify one’s income tax returns and a personal financial statement is needed. Tax returns should be from the past two years.
When applying for a boat loan, it’s important to have a lot of information about the new or used boat on hand. You should know the make, model, and power of the boat. You should know about the equipment upgrades and additional accessories.
When applying for a loan, you should know the total purchase cost and your monthly budget for the boat. The total cost includes the sales tax and the documentation expenses.
Finalizing the boat loan
In order to finalize a loan, the lender will need to make sure that you and the boat meet their requirements.
There are many personal requirements to meet to match the loan. You need a strong credit history, an income that meets the monthly obligations, including the loan, and stable personal net worth. And your down payment and your budget amount have to meet their guidelines and your credit profile.
The boat must also meet certain requirements for the loan. The boat selling price should reflect realistic market value. Sometimes the lender will need a marine survey conducted by a marine professional.
If you meet the requirements, you will need to fill out the proper paperwork. The dealer, lender, or financial company will often assist you. This process takes between twenty and thirty minutes.
A third party may hold a deed to protect both parties.
Personal boat loans
Going with a personal loan or using a personal line of credit provides many great benefits for financing a boat.
Personal boat loans are different from secure loans in that the boat won’t be used as collateral. These unsecured loans are based on your credit history and income.
Personal loans can be used to pay the required down payment for the boat to a bank or to completely finance the boat.
When the loan is approved, the entire amount of the loan is taken from your savings account or bank account. This way, you can negotiate with the dealer on the powerboat without needing to take out a loan.
These loans have very high competitive interest rates and flexible repayment terms. Like traditional loans, they also allow you to pay off the loan early or to make extra payments toward the principal.
Make sure your boat is insured
Boat policies insure you in the case of injuries, property damage, and replacement. When your boat is not in the water, it’s covered by your auto policy.
There are a lot of companies that offer boat and pontoon boat insurance depending on your province or state.
Financing through marine specialists
Financing your boat through a marine lending specialist can provide many benefits. Many of these specialists are members of the National Marine Lenders Association, also known as the NMLA.
Marine lenders offer a variety of programs and payment options. These lenders offer financing options with down payments in the ten to twenty percent range. They also offer programs that may allow you to qualify for less to even zero-down, extended service plans, as well as life insurance coverage.
Marine industry professionals know boats and their buyers better than anyone else. By going through a professional, you can often qualify for a boat loan in 24 hours. You may also receive an extended-term on the loan with lower monthly payments.
Marine professionals can assist your boating needs beyond the boat itself. For example, they can help you finance optional equipment.
With the help of these marine professionals, you can get better with all the right equipment.
Ready to set sail?
Now that you know about boat loans and how easy it is compared to purchasing a house from Interlake Real Estate. The next step is to get a quote for the boat you want.
For further information, feel free to email our helpful staff with any marine questions or comments that you may have.
And prepare to set sail, your maiden voyage is just a quick loan approval away!