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How Do Boat Loans Work

Online Boat Sales Team

How does marine financing work for a boat loan?

Do you have additional questions? Maybe you are even ready to apply? Let us introduce the White River Online Boat Sales Team. As part of White River Financial Services, the Online Boat Sales Team can help TRACKER customers to easily apply for great finance options, and even shop for a TRACKER boat at dealerships nearby. Theyre here to help at any stage of your shopping process!

How Much Can I Borrow

How much you can borrow generally depends on the price of your boat. Typically, you can fund 90% to 100% of the value of your boat. Minimum loan amounts can start anywhere from $2,000 to $15,000, depending on the lender.

Dont forget the down payment

Like car loans and mortgages, boat loans often require a down payment. Generally, youre required to cover at least 10% of the cost. But lenders tend to favor applicants that can front at least 20% of the boats cost. To avoid over-borrowing, we recommend saving up as much as you can for a down payment so you dont need to borrow as much. The less you borrow, the less interest youll pay.

Remember: Boats are more like cars than houses. Once you make a purchase, your vessel will begin to depreciate. If you borrow a large amount with a lengthy term, you may end up paying more in the long run than its really worth.

Required Down Payment For A Used Boat Loan:

As you discovered above, most lenders will require at least 10% down on a used boat loan. There are a few exceptions to this rule based on my experience.

Insiders Tip: Credit Unions Some credit unions will do a no money down boat loan and will extend the term 5 to 8 years with good competitive rates.

Capt. Matt

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Can I Use A Personal Loan Instead Of A Boat Loan

You can get your money faster without collateral and a down payment by applying for an unsecured personal loan. Generally, you need good credit and an income over $24,000 a year to qualify.

These come with similar rates as boat loans, though loan amounts usually max out around $100,000 and terms dont run longer than seven years.

Keep in mind that not every personal loan provider will allow you to use your funds to purchase a boat. Be clear when submitting your application that you intend on financing a boat to avoid a surprise rejection.

Are secured loans an option for a boat?

If you cant qualify for a loan without collateral, consider backing it with another asset like your home by taking out a secured loan. Typically, secured loans have lower APRs than unsecured loans and easier-to-meet requirements.

How To Finance A Boat

How Does Boat Financing Work

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If you dream of sunny days spent captaining a boat of your own, you may also be wondering how to finance a boat. With more than 12 million registered boats in the U.S., you are not alone. Boat loans make it possible for many boat owners to purchase vessels they could not otherwise afford.

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What Do Lenders Look For In A Borrower

Making yourself a good candidate for lenders will go a long way in getting you low-cost financing for your big purchase.

  • Steady source of income. You need to show you have enough regular income to afford monthly repayments after bills and debt obligations.
  • Low debt-to-income ratio. Your current debts will also play a role. Lenders want to make sure you wont be overextending yourself and putting yourself at risk of default when you borrow a boat loan.
  • Liquid assets. Lenders often want to see that you can still handle payments should your employment or income situation change drastically.
  • Good to excellent credit. Lenders look for borrowers with good to excellent credit because it shows a history of paying your bills on time.
  • Experienced boat owner. Experience with a boat isnt a must, but it may make a lender more confident. Having had a boat in the past means you likely know the ropes.

What Financing Options Are Available For Boats

Here are some of the ways you can finance your boat:

Bank or credit union: If you’re comfortable with your current bank or credit union, it makes sense to learn what they have to offer in the way of boat loans. Once approved, the lender will either give you a check for the amount financed or send it directly to the dealer. Boat loans through banks and credit unions are secured, with the boat serving as collateral.

If you shop for a boat through a dealership, your dealer should know how to finance a boat and tell you about marine financing. The National Marine Lenders Association lists qualified lenders . While rate shopping, make sure to ask your dealer which marine lender it recommends. Like banks and credit unions, marine lenders consider the boat as collateral.

Online lenders: You will find that the interest rates charged on personal loans vary widely, as do repayment terms. Some personal loans are secured, but many of the best personal loans are unsecured. The interest rate on an unsecured loan is likely to be higher and the repayment term shorter because you haven’t put up any collateral. However, your boat will not be repossessed if you miss payments. That said, missing payments on any loan is bad for your credit and should be avoided.

You can use the calculator below to estimate the monthly payments on a personal loan. Just enter the amount you plan to borrow and the amount of time you’d like to spend repaying the loan.

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How Long Does It Take To Get Approved For A Boat Loan

How Does Boat Finance Work?

New Boat loans can be processed and closed in a week, which is much faster and easier than real estate loans. Financing for pre-owned vessels takes longer. However, Boat Loan Specialists, working with Lenders who know the marine industry, can process paperwork faster, provide guidelines of all the things that are needed for a Boat purchase, and refer needed resources. They are, more knowledgeable, faster and easier to work with than a personal banker.

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Boat Loans: Questions To Ask Before You Apply

How does the loan fit into my budget? Monthly payments on a boat loan should fit comfortably within a budget that covers all of your needs, wants, debt payments and savings. Use our boat loan calculator to see estimated monthly payments, interest costs and total payments.

Payments toward the boat loan combined with other debt payments shouldnt exceed more than 20% of your income.

What is the true cost of boat ownership? Buying a boat isnt your only new expense. Additional costs include fuel, licenses, insurance, storage, maintenance and repairs. Boats also depreciate over time, just like a car.

Does my boat have resale value? Its smart to buy a boat that is both affordable and popular, as this can attract potential buyers if you decide to sell it and pay off your loan at any point in the future.

How You Can Compare Boat Loans

Finding the right financing for your boat is important. When you’re comparing your options, keep the following questions in mind:

  • What is the interest rate?The interest rate for this type of loan varies depending on what provider you go with, but rates for secured loans are generally low. Make sure you select a loan with a competitive interest rate that will help you save money in the long run.
  • Are there fixed repayments?Some boat loans offer fixed repayments. It’s important to think about whether you want fixed repayments or if you prefer a variable loan to take advantage of market fluctuations.
  • What is the loan limit?The limit of your boat loan also varies with providers. Have in mind a rough estimate of how much money you need to borrow and find a boat loan that meets these needs. It’s important you don’t borrow more money than you need and are able to make repayments so you don’t default.
  • How long will your loan term be?The length of your loan term tends to be longer with a boat loan, but some may extend only up to seven years. It’s still important to select a loan that gives you enough time to pay off your debt. Do your calculations and figure out how long it will take you to pay off the amount you want to borrow.
  • Is the loan secured or unsecured.?Boat loans can be secured or unsecured, so you need to consider which one is the better option for you so you can select a loan that matches up with what you want.

How much does a boat cost?

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How Long Is The Typical Boat Loan

Most Boat loans are for 15 or 20 years. Longer terms mean Lower Payments, but also more total interest paid. Because Marine Lenders extend longer terms on Boat loans than local Banks and Credit Unions, your monthly payments are likely to be much lower than you expected. Our representatives know what kind of loans lenders are looking for and can match your needs with the lenders most likely to give the lowest rate and most attractive terms.

What Is A Secured Loan And How Does It Work

Financing a Boat: How Do Boat Loans Work

Secured loans are loans that are protected by collateral. This means that when you apply for a secured loan, the lender will want to know which of your assets you plan to use to back the loan. The lender will then place a lien on that asset until the loan is repaid in full. If you default on the loan, the lender can claim the collateral and sell it to recoup the loss.

It is important to know precisely what you are promising and what you stand to lose before you take out a secured loan.

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What Types Of Collateral Are Used To Back A Secured Loan

Secured loans are usually the best way and often the only way to obtain large amounts of money. Nearly anything can be accepted as collateral, as long as it is allowed by law. Lenders prefer assets that are easy to collect and can be readily turned into cash. What you use as collateral likely will depend on whether your loan is for personal or business use. Examples of collateral include:

Boat Loans: Calculate How Much Boat Financing Could Cost You

Boat loans are available from a variety of lenders, including banks, credit unions, and online lenders.

Kat TretinaUpdated March 8, 2021

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Whether you love sailing, offshore fishing, or other water activities, you might consider buying a boat. However, boats can be expensive: Smaller vessels start at $10,000, while offshore fishing boats might cost $400,000 or more.

If you need to cover the cost of a boat or would like to refinance a boat you already own, a boat loan might be a good choice. Just keep in mind that youll likely need good credit and verifiable income to qualify.

Heres what you should know about boat loans:

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How To Finance A Boat Purchase

With warmer weather comes more time outdoors, and for those who have access to waterways, the desire to own a boat increases. But when it comes to buying a boat, what do you need to know? In this post, well explore all the aspects of boat loans and what it takes to sail home on your very own watercraft.

What Are The Fees

Financing a Boat and What Works Best

There are no prepayment penalties or an annual fee associated with a Boat Loan.

Elements boat loans include a low $140 processing fee. Refinancing of an existing Elements boat loan has an additional $200 fee.

For boats over 25 feet, there is a standard Coast Guard Recorded Mortgage requirement. This includes a fee of $500 to $750 that is paid to a third party.

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Dont Forget Boat Insurance

Oh yeah, that. In your monthly budget, you should factor in the insurance premium for your boat. Your existing auto policy might cover a grace period that allows you a day or two to switch your policy to the new ride after leaving the dealer. Not so with boats. You should have boat insurance before you leave the dealership. Proof of boating insurance is mandatory in many states, and it might be required by the lender. Some marinas even require proof of a policy for rental slips, and for you tournament anglers out there, many tournaments require coverage. There are two main options for insurance policiesa new policy, independent from any other insurance policy you have, or an umbrella policy, which is bundled with your homeowners insurance. There are minimum required coverage areas, including liability to others, medical payments, damages, wreck removal and medical expenses for towed water-skiers. Remember, you want to be sure the cost of your boat is covered, as well as any injuries to you or other boaters and any personal items you have on the boat, e.g., watersports or fishing equipment.

Loan Doesnt Get Funded When Expected:

Similar to the paperwork being delayed, not all boat loans are funded right when the paperwork is signed.

Be sure to communicate with the seller on when they will receive their money. Most will not let you take the boat until they have the money in their hand or in their account.

Again, planning a communicating is key to avoid stress and unexpected problems.

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How Do I Get A Boat Loan

Financing a boat starts with finding a lender that makes boat loans, having a conversation, and starting an application. Finding a lender that makes boat loans is not a difficult task, now that banks have discovered that most boat buyers are excellent clients for loans. However, there are a bunch of good reasons to work with a Boat loan specialist who devotes funding and staff for the purpose, rather than approaching a lender directly. We interact deeply with the customer on the application, the credit side, analysis, underwriting, and thereby take out the sting that can come with doing financing business with a bank.

S In The Process Of Boat Financing

How does marine financing work for a boat loan?

Shopping for a boat loan overlaps with the process of buying a new boat. Here are the basic steps:

  • Know and understand your financial abilities and your credit rating. Check your credit with the major credit reporting bureaus and correct any inaccuracies.

  • When you apply, be ready with tax returns and bank statements that show your financial ability to repay. Be prepared to submit those materials to speed up the review process.

  • Be aware of special use limitations. If you want to live aboard your boat, use it for commercial purposes such as charters or as a fishing guide or to cruise internationally, tell the lender. Not all lenders will loan money on a boat used for those purposes.

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    Boat Loans: Options Interest Rates And Lenders

    If it sounds simple, well, thats because it is. Most new boats are purchased with a loan, so well-established procedures are in place. As for who to take out the loan from, youll have three basic options to choose from:

  • Arranging financing through your boat dealer This is usually the best bet. Boat dealers set up boat loans every day, so youll be working with someone who knows the ropes, has established relationships with lenders, and also wants to make the entire transaction happen as quickly and seamlessly as possible. They can usually help with some recommendations for setting up insurance, too.
  • Get a loan from your bank Some buyers who have a lot of equity in their home find it advantageous to take out a home equity loan or a second mortgage, either because they may get a lower interest rate or for tax purposes. Remember, however, that this will add some time and complexity to the transaction.
  • Take out a loan with a lender specializing in marine financing Since financing a boat is a bit different than financing other things, there are some lenders who specialize in it. In fact, theres even an organization, the National Marine Lenders Association, made up of lenders who are familiar with all the ins and outs of making boat loans.
  • Financing A Boat With Tom George Yacht Group

    At Tom George Yacht Group, our goal is to simplify the financing process, secure the best financing terms for our clients and help buyers clearly understand the financing options available to them. We take an educational approach to financing with an aim towards long-term relationships.

    Our finance professionals will educate you on your options and help ensure you make the right decision for you. With an emphasis on your long-term satisfaction, Tom George Yacht Group is focused on building relationships with customers that regularly recommend TGYG to friends and family.

    If you have any questions on boat loans or financing a boat, please contact us today.

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