Banks Are All Revved Up For Boat Rv Lending
Bank of the West in San Francisco will exit indirect auto lending and instead focus on financing purchases of boats and recreational vehicles.
The decision may seem counterintuitive, as auto-loan originations hit a near-record high of $159 billion in the third quarter, according to the Federal Reserve Bank of New York. Richard Fairbank, chairman and CEO of Capital One Financial, said on Oct. 24 that we continue to see a growth opportunity in indirect auto lending.
But the $91 billion-asset Bank of the West is hardly alone in opting to exit a business line that is seen as intensely competitive. Several regional banks, including TCF Financial in Detroit and Regions Financial in Birmingham, Ala., have decided to scale back or get out of indirect auto, citing shrinking returns and limited opportunities for cross-selling.
Bank of the West, a unit of Frances BNP, will stop making indirect car loans this month, Michael Pereira, the head of personal finance, said in an emailed statement.
He declined to say why it was leaving the business, but a company spokesperson told the trade publication Powersports Finance last week that Bank of the Wests personal finance team will refocus resources on its RV/marine loan business.
The shift is not without risks if the economy weakens, consumers are likely to curtail spending on big-ticket items such as powersports equipment and RVs.
A number of other regional and community banks are also becoming more bullish on marine and RV lending.
Are Boat Loans Simple Interest
Most boat loans are simple interest loans. However, you will want to check the terms being offered. Simple interest loans charge interest daily rather than monthly. With a simple interest loan you should be able pay the loan off faster, if you choose. If you pay more than the minimum monthly payment each month, the additional amount should go toward the principal.
Are Boats Expensive To Maintain
Boats can be a costly investment. You will want to prepare mentally and financially for maintenance costs. Properly maintaining a boat is not something you will want to shortcut. Some of the most expensive components when it comes to maintaining boats are:Mooring costsInsuranceLicenses
You will also have some other costs after you buy the boat that makes it an expensive item to own. Some of them are fuel, labor, accessories, storage, and registering the boat. Keep in mind that most states and countries require registering the boat and have a license to drive it.
A boat needs to be properly maintained. You should always follow the manufacturers guidelines when it comes to servicing the boat. The guidelines will tell you how often things need to be serviced and how often you should replace the parts. Not following the guidelines can cause the boat to deteriorate quickly and may void your warranty if you have one.
For annual maintenance on the boat, you can expect to spend about 10% of the purchasing price. They can be a lot of money, especially if you bought a large boat or a boat with more expensive materials.
Maintenance can vary, but the typical costs include:Cleaning from top to bottomReplacing oilWinterizationAddressing any electrical or other issues
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Can I Lease A Boat
You can lease a boat, but this can be cost-prohibitive depending on what type of boat you rent and for how long. In some cases, a long-term lease on a boat could end up costing you more than buying a boat. If youre thinking about leasing a boat, consider an alternative like chartering or boat sharing.
How To Apply For A Boat Loan
Its often easier to find a loan before you begin shopping for a boat this lets you move quickly once you find a boat youd like to purchase and reduces the chance of it selling while you arrange for your loan.
Getting preapproved or pre-qualified for a boat loan lets you know how much you have to spend and can make shopping for one easier.
Many lenders offer to preapprove or pre-qualify you for a boat loan so you know how much money you may be able to spend. If you like the terms, you can start shopping and get officially approved after you find a boat youd like to purchase.
As part of the formal application, the lender may require additional information and will likely conduct a hard check of your credit. A hard credit inquiry may temporarily reduce your credit score by a few points.
Lenders may require you to submit your personal information, including your full legal name, address, Social Security number, birthdate and contact details. They may also require your employer’s contact information, your last two to three pay stubs and your last set of tax returns to help prove that you have a stable income.
If youre using a loan specifically for purchasing a boat, you may need to make a down payment. Be sure to consider how much you can afford upfront when comparing loans and shopping for a boat.
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Navy Federal Credit Union
The maximum period that this union can offer is a 15-year loan. You can choose from personal watercraft and used or new boats. Military members can avail of a rate discount as long as they submit a direct deposit. Credit union membership is usually given to armed forces in all branches as well as their families.
Is It Smart To Finance A Boat
Financing a boat could be the right choice if you have good credit, qualify for reasonable terms, and are confident you will be able to make the payments on time. However, if you have fair to bad credit, it may be smarter to work on your credit before making the purchase or pay cash if you are able to.
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How To Refinance A Boat Loan
Many lenders that offer boat loans also allow you to refinance a boat loan with them. You may want to do this if they can offer you cheaper rates, for example, or if you need to lower your monthly payment by extending your loan over a longer term.
Here are the general steps you need to follow to refinance a boat loan:
- Shop for rates. Check your rates with as many boat refinance lenders as you can. The more you consider, the better your odds of finding a better boat loan.
- Apply for the new boat loan. When you find a lender, complete your application for a new boat loan.
- Keep an eye on the money transfer. If approved, your new lender may pay your old lender directly, or they might send you a check or direct deposit to repay the old loan.
- Retitle the boat. Your old lender should release the lien on your boat, and your new one should file a new lien until the loan is paid off. Make sure its titled correctly by checking with your states boat registration department, whether thats the department of motor vehicles or the fish and wildlife agency.
- Pay off the new loan. Sign up for automatic payments on your new loan until its paid off.
Where To Find A Boat Loan
How long you can finance a boat may also depend on where you find financing. Here are some of the main venues where youll be able to find boat loans:
Dealer financing. About 80% of new boat financing deals take place through dealerships, according to Jim Coburn, a principal at Coburn Consulting Company and member of the Michigan Boating Industries Association. Banks have relationships with dealerships and dealerships have the customers, he said. They refer the boat loan customers to the banks.
Banks, credit unions and online lenders. Much of the remaining 20% of U.S. boat loans takes place directly through the lenders themselves. In researching rates from top boat lenders, we found APRs as low as 4.29% at online lender LightStream, a division of SunTrust Bank, and 4.29% at Essex Credit, a division of Bank of the West, as of publication. You also may be able to find competitive rates at credit unions or your own bank that may offer discounts to existing customers.
Shop around. If you do decide to buy a used boat, its important to make sure youre paying what the boat is worth. Consult an industry resource, such as NADAGuides to research values and prices in your area. Used or new, as youre determining which financing path works best for you, its crucial that you comparison-shop to compare rates and boat loan terms from a variety of lenders.
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Best Boat Loans In 202: Finance Your Boat
Boat loans can be unsecured or secured by the boat. Compare financing options from online lenders, banks and credit unions.
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Setting sail on your own boat is a priceless experience. But unless youve saved a lot of cash, youll need a boat loan to make your dreams a reality.
Here are lenders that offer boat loans, plus information on how to finance a boat with a personal loan including unsecured and secured loan options. Learn where to find boat loans and factors to consider before applying.
Setting sail on your own boat is a priceless experience. But unless youve saved a lot of cash, youll need a boat loan to make your dreams a reality.
Here are lenders that offer boat loans, plus information on how to finance a boat with a personal loan including unsecured and secured loan options. Learn where to find boat loans and factors to consider before applying.
The Bankrate Guide To Choosing The Best Boat Loan
Why trust Bankrate?
At Bankrate, our mission is to empower you to make smarter financial decisions. With over 40 years of experience comparing and surveying financial institutions, we are able to identify the most important details for our readers. Our award-winning editorial team follows guidelines to ensure content is not influenced by advertisers or partnerships, and our content is edited and reassessed frequently to ensure accuracy.
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Down Payment May Be Required
Boat loan lenders often want to see a down payment, generally between 10% and 20%, depending on factors including the lender and the cost of the boat. Some lenders offer 0%-down loans but keep in mind that making a down payment can hedge against the boats depreciation, or loss of value over time, and help prevent a situation where you owe more on your boat loan than the boat is worth. A down payment may also lower your monthly payment and reduce the total amount of interest you pay on the boat loan.
How To Get A Boat Loan
To get boat financing directly from a lender, youll need to apply for a loan. Most loan applications are online and require you to submit personal information like your name, address, contact information and Social Security number. You may also need to submit proof of identity, employment and income.
If youre applying for a secured loan, youll want to have information about the boat on hand, including the builder or manufacturer, model, model year and purchase price.
Once you submit your application, youll wait for an approval decision. If youre approved, you may need to visit the bank or credit union to close the loan and receive funds. Unsecured personal loans, especially from an online lender, can typically be closed online and funded the same or next business day.
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Use A Boat Loan Calculator
The LendingTree boat loan calculator helps you determine your monthly payment using the loan amount, interest rate and loan term. Additionally, the calculator breaks down monthly payments by year, helping you plan ahead. Should you find that your estimated payment is a bit tight for your budget, the tool allows you to adjust the loan amount and/or boat loan term to find what best fits your needs. When its time to buy, you may fill out a single LendingTree form and receive up to five possible boat loan offers from lenders based on your creditworthiness.
Can You Refinance A Boat Loan
If you aren’t happy with your current boat loan or you couldnt qualify for the best rates and terms at the time you took out the loan, you may be able to refinance it.
When refinancing a boat loan, watch for fees that can cancel out the money you save from reducing your interest rate.
Before looking into boat loan refinancing, check with your current lender to ensure you won’t be charged prepayment penalties. A loan that includes prepayment penalties may not be worth refinancing the additional costs could offset any savings you’d get with a new loan, even with lower interest rates and fewer fees.
You may be able to save a great deal of money by refinancing a boat loan if you can qualify for lower interest rates than you currently pay. If your credit is worse now than it was when you purchased the boat or if you plan to sell the boat in the near future, it may not be worth the hassle to refinance.
When shopping for a boat refinance loan, watch out for loan origination fees or other costs that could cancel out the lower APR. Look for a loan that helps you reach your goal of making smaller monthly payments or paying off your boat sooner.
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How We Chose The Best Boat Loans
We researched more than a dozen boat loans before choosing the top six. We reviewed the boat loans based on the types of loans they offer, loan terms, borrower qualifications, total costs, and types of boats they finance. We also considered the companys reputation and customer reviews.
All of our choices had affordable rates, reasonable terms, and are available to a variety of buyers. They also offer financing for multiple types of boats and have good customer reviews.
shutterjack / Getty Images
Best Boat Loans Of 2022
- Best for Bad Credit: Southeast Financial
- Best Unsecured Loan: LightStream
- Best Commercial Loan: Coastal Financial
Essex Credit is our choice for best overall boat loan because it offers multiple types of loans, including loans for borrowers who plan to use the boat for recreation or as a residence. It has a simple online application process and specializes in long-term loans from five to 20 years for borrowers with good credit, defined as a minimum FICO score of 700.
Loans have fixed rates starting at 4.74% and no prepayment penalties. However, there are loan processing fees that vary depending on the type of loan. Additional fees that you will incur when purchasing a boat include taxes, title, registration, and licensing fees. These can be rolled into the loan as long as your loan-to-value ratio meets their guidelines.
Essex performs a credit review within one to three business days of when you apply for a boat loan online, but funding times vary based on the vessel and loan type.
Essex Credit will not provide loans for boats manufactured after 2002 or for those that go over 99 mph.
Essex Credit is a division of Bank of the West and has been in business since 1981. In addition to new loans, the company offers refinancing options, as well as RV loans.
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Multiple types of boat loans
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Long history in the marine industry
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Live-aboard loans which not all lenders offer
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Loans unavailable for boats manufactured before 2002
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Some negative customer reviews
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Why Bank Of The West Wealth Management
We take a holistic view of your full financial picture.
Each client is unique in their lifestyle, their approach to investing and the impact they want to make on the world. Through a dedicated wealth advisor, our team integrates banking, brokerage and fiduciary servicesacross your personal and business financial life.
Serving you locally, with global capabilities.
With a global perspective that is free from domestic bias, we make connections other banks cannot between the global landscape and local markets.
Our bold stance on sustainability for positive impact.
We help clients achieve their vision for change by customizing a purpose-driven investment solution to reflect their personal valuescombining purpose with performance.
We take a holistic view of your full financial picture.
We take a holistic view of your full financial picture.
Each client is unique in their lifestyle, their approach to investing and the impact they want to make on the world. Through a dedicated wealth advisor, our team integrates banking, brokerage and fiduciary servicesacross your personal and business financial life.
Serving you locally, with global capabilities.
Serving you locally, with global capabilities.
With a global perspective that is free from domestic bias, we make connections other banks cannot between the global landscape and local markets.
Our bold stance on sustainability for positive impact.
Our bold stance on sustainability for positive impact.
Can I Get A Loan For A Used Boat
You can get a loan for a used boat, but there are some limitations. The lender usually requires that the boat be no older than a certain age, and most lenders wont finance a boat that was built before 2000 or 2001. However, some will finance boats of any age and price range, but you may end up paying a higher rate and making a larger down payment.
Different lenders have varying requirements when it comes to financing used boats. Some require an inspection and an appraisal while others will only finance up to 85% LTV and expect a down payment.
Financing a used boat is usually more affordable than financing a new boat, but its important to know the condition of the boat so you dont end up with unexpected repair costs.
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