Obtaining good boat financing that best suits your budget is often the final step to getting the boat of your dreams. Whether you are buying a new or used boat, understanding how boat financing works will save you precious amounts of time and money and get you on the waters faster.
Remember that it is about you enjoying your boat. The seemingly tedious process of buying a boat should not make you lose sight of that purpose.
Boat financing is not as daunting as it seems. In fact, you will find that there are many lending institutions that specialize in boat loans. Even your own bank may happy to offer financing for your boat purchase.
So how do you go about getting financing for your boat? There are several key steps to take to a successful boat loan.
Where to get the loan.
When choosing a lender, get one that has a specialty in boat financing. Fortunately, the boating industry has spawned an array of dealers, banks, credit unions and financial service companies that can offer boaters boat financing arrangements. Getting a boat-savvy lender is particularly important when you buy a used boat because they are very familiar with the requisites involved in the boat purchase and could actually save you from the nightmare of buying a boat with no clear title.
You could start by checking the affiliations of the lending organizations. In the US, for instance, the National Marine Bankers Association (NMBA) is an organization that provides education and support to the marine lending community. Thus, NMBA members are more likely to understand boat loans and best serve your needs.
The bank is your first bet to getting a boat loan. They would usually be able to provide you with reasonable loan rates based on your financial standing. If you are a member of a credit union, check if they offer boat loans. You may be able to get attractive rates as a member.
Various financial service companies also welcome boat loan applications. These firms usually have broad access to finance programs as well as extended mechanical warranties and titling or documentation services.
Another good source for your boat loan is your boat dealer. Dealers would either have an in-house financing program or existing partnerships with banks or financials service companies. Your dealer's finance manager should be able to help with the application procedures for your boat loan.
There are many advantages to financing your boat through the dealer:
§ they usually have several finance sources
§ they have access to extended warranty programs that can be included in your financing
§ they may offer special finance programs on certain brands or models that can be very advantageous to you, such as ninety days to the first payment, no interest for several months, or lower rates for a limited time
Before finalizing your boat financing application, study all options available to you. Get in touch with several lenders and find out who can give you the best deal. Take a look at their interest rates, required down payment and loan terms. Keep in mind that a longer-term loan of say 15 to 20 years may provide you lighter installments but a shorter-term loan would actually cost you less over the long haul.
How to get the loan.
Obviously, the borrower must be creditworthy before they are approved of boat financing. Prospective borrowers, therefore, are advised to check their credit history and settle delinquent accounts before applying for a new loan.
Lenders also consider job stability, salary, disposable income and the ratio of installment debt to income. Lenders will look at your debt to income ratio to ensure that your monthly loan payments for home, second mortgage, car, student loans and boats will not total more than 30 percent of your adjusted gross income.
When considering the amount of the loan, think beyond the actual purchase price. Consider adding a few hundred dollars more to cover for additional expenses that you are likely to incur for other concerns such as accessories, service fees, insurance, among others.
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Boat financing
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