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.
Other Alternatives To Boat Financing
If you really want a boat but choose not to finance your boat purchase, you still have other options, including rental, joining a boat club, or saving up on your own.
Boat Rental: In many cases, a marina will offer boat rentals by the hour or by the day, allowing you to enjoy all the thrill of boat ownership with none of the long-term responsibility. There are also peer-to-peer rental groups like Boatsetter, that offer an AirBnB flair to the process.
Boat Club: With little more than a membership fee and monthly dues, a boat club is a great way to have access to multiple types of boats anytime you want.
Save Up: It may feel like you have a long way to go, but saving for the boat you want is a sure-fire way to ensure you dont end up underwater in a boat loan. To start, look at creating a Sinking Fund, which will allow you to set aside money each month toward this goal while continuing to pay down debt or save toward other projects at the same time.
Are you looking to buy a boat? Or do you want to start saving for that dream yacht? Regardless of your goals, our team at Spero is here to help! We can help you in any number of ways. When youre ready, just let one of our member service representatives at any Spero branch know!
How To Find A Boat Loan
If you are trying to find a boat loan, you should be aware that different sources can mean different things for how you structure your boat loan.
There are some different places that you can find a loan and they all have different pros and cons. Just because someone has reached out to you with an offer does not mean that they are the best place for you to get a boat loan through that source.
Here are some of the main ways that you can find a boat loan, but keep in mind these may not be your only options either.
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What Are Typical Boat Loan Terms
Most often, you can expect boat loan terms to include a repayment period of 15 to 20 years. Down payments may range from 10% to 30%, depending on the amount borrowed, and typically the boat is considered collateral for the loan. Boat loans often start out as low as $5,000 with some lenders offering financing up to $4 million.
Keep in mind that the terms involved with the average boat loan will vary based on a number of factors. These include whether the boat is new, used, or being refinanced how old the boat is how much you plan to borrow and whether the boat is for full- or part-time use.
The Bottom Line On Boat Loan Terms
If youre financing the purchase of a boat, keep in mind that your options vary along with your financial picture. As with any other loan, those who come bearing good credit and a decent chunk of disposable income will find more favorable boat loan terms than those with less-than-perfect credit and a tighter budget. In general, financing a luxury item like a boat may be subject to higher underwriting standards than a car or home.
A few things to be aware of:
- Simply getting approved for a loan and being able to make a down payment does not necessarily mean that you will be able to keep up with the obligation long term. Make sure you consult your budget and be realistic.
- When shopping for a loan, be sure to check your credit, pay down other debt and get prequalified so that you know the exact amount for which youll get approved.
- Dont get in over your head. Its tempting to buy a boat, but the better option is to make sure that you can afford the payments before giving into that temptation.
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How Did We Choose The Best Boat Loans
Personal Finance Insider’s goal is to help smart people make the best decisions with their money. We combed through the fine print of many boat loans and lenders so that you don’t have to. We considered the factors that are the most important to boaters, including:
- The type of boats financed: We searched for lenders that offered loans for the most shapes and sizes of boats, from houseboats to sport boats.
- Interest rates: We compared the starting points of interest rates from many banks, and compared ranges where available.
- Few or no fees: We looked for lenders that offered boat loans with the fewest amount of fees on each loan.
- Loan amounts: We chose lenders with the widest variety of loan amounts available to help everyone find a loan for their boat-buying budget.
- Widespread availability: Lenders we considered have loans available in almost all 50 states, if not all.
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.
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Can I Get A Boat Loan With Bad Credit
Yes, you can get a bad credit boat loan. While other lenders have a minimum credit score requirement of 720, Southeast Financial does not have minimum credit score requirements. Instead, we consider qualifications on a wide range of factors, including how much you want to borrow and what you are buying.
Your Current Financial Status And Long
Before you take out a used boat loan, get prequalified. By doing so, youll know exactly how much youll get approved for and have a good idea of the types of used boats you can buy. When you apply, the lender will evaluate your credit score, debt-to-income ratio and net worth. How stable you are in your job and homeownership will play a role in whether you are approved for a used boat loan.
In addition to evaluating your current financial status, youll want to think about your long-term goals before investing in a boat. For example, buying a used boat today may mean you have to work an extra year or two before retiring.
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Online Boat Sales Team
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 SUN TRACKER customers to easily apply for great finance options, and even shop for a SUN TRACKER pontoon at dealerships nearby. Theyre here to help at any stage of your shopping process!
What Is The Best Place To Get A Boat Loan
You have two options on how to search for a boat loan: in person at a boat dealership, or online.
If you’re looking to buy a loan from another individual also called a private party purchase searching for an online boat loan is likely your best bet. Online lenders will often allow borrowers to purchase boats from either a private individual or through a dealership. It’s a more flexible option that may open the possibilities to include more affordable, used boats.
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Best For Quick Funding: Lightstream
- Minimum credit score: None, but good credit recommended
- Loan terms : 24 to 84 months
For borrowers looking for fast funding for a boat loan, LightStream is a great option. The lender offers same-day approval and even same-day funding in some cases.
Funds deposited as soon as same-day
Rate Beat program
No fees or collateral required
Available for buying or refinancing a boat
Offered in all 50 states
Loans cap out at $100,000
Maximum rates can be high
As part of the Truist bank family, LightStreamalong with SunTrust and BB& Tprovides a variety of banking products and services to customers across the country. This bank operates in all 50 states, offering loans on new, used, and refinanced boats to qualified applicants ages 18 and over.
We chose LightStream as best for quick funding because this bank offers not only same-day approvals but same-day funding in many cases. You can choose your own funding date once approved for your boat loan, even if its the same day you applied.
Boat loans through LightStream are offered from $5,000 to $100,000 with repayment terms ranging from 24 to 84 months. Current interest rates range from 4.29% to 11.89% APR with a 0.50% auto-pay discount. They also offer a Rate Beat program, which promises to offer a rate thats 0.10% lower than the rate offered by a competing lender within the last business day.
S In The Process Of Boat Financing
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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Financing Options For Boat Buyers
Like other major discretionary buys, funding a boat purchase often requires financial resources beyond cash on hand. Banks, credit unions and other traditional lenders furnish payment options for boat buyers, who rely on various forms of financing to get the job done. People with cash savings may choose to put the boat on a credit card to secure points. Buyers with a strong credit score might consider a personal loan. Homeowners with significant equity might consider a home equity loan. Boat buyers also turn to dedicated financing from maritime lenders, specializing in marine craft credit.
Buyers with good credit references tap collateral loans to pay for boats, in much the same way cars are funded. Once approved, funds are issued and the boat itself serves as collateral for the loan. Failure to make timely payments can result in repossession, allowing lenders to seize and sell boats to recoup their losses.
Another form of funding with versatile applications uses the equity in your home to guarantee repayment. Home equity loans and lines of credit can be used for various purchases, including recreational watercraft. In order to initiate equity credit, most lenders require a current appraisal. In addition, home equity lines carry closing costs similar to conventional mortgages. Because the loans are backed by real property, however, interest rates are lower than those associated with other forms of funding.
Can I Finance A Pre
Used boats can be financed and most times a Boat Loan Specialists terms are the same as on a New Boat. Used boats need a Survey or an Appraisal, to assess its fair market value. A Title examination will be needed to make sure there are no outstanding liens. A Boat loan specialist can help guide you through the process of Financing a pre-owned Boat in many ways they will act as your Fiduciary and Concierge.
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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 Many Years Can I Finance A New Boat
Though often compared to auto loans, boat loans greatly differ in the terms offered. When it comes to financing a new boat, you usually do so for as long as 20 years, which is longer than terms for auto loans and even some home mortgages. Essentially, you can finance a new boat for a long time.
Whether you should accept a lengthy loan term depends on several factors, such as what you can afford for a monthly payment and what interest rates you qualify for. Ensure you can truly afford your loan on top of the other costs of boat ownership, such as storage and maintenance. The cost to upkeep your boat will likely be about 10% of your boat’s price each year.
If you double your loan term, a lender may only be willing to offer a slightly higher rate or require a larger down payment. Additionally, the longer your loan term, the more you’ll pay in total interest, so if you want to keep the long-term costs of your loan down, you may want to select a shorter term. Since My Financing USA doesn’t offer any loans with prepayment penalties, you may choose to split the difference and finance for a longer term to keep your payments low while paying the loan off early to save on the interest.
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Can I Finance My Fish Finder Chart Plotter Radar And Other Fishing Electronics
Financing is not only for the price of the Boat. Tangible assets can often be rolled into a Boat loan, including Marine electronics, trolling motor or Anchoring packages and Bottom paint. Note that labor to install the Electronics or perform commissioning tasks for new boats cannot be Financed.
-Tom Smith is President of Sterling Associates, a Financial Services Firm headquartered in Massachusetts that provides Financing, Insurance and Coast Guard Documentation services for all types of boats. Let Sterling get you, On The Water!!!
Consumer Boat Buying Guide
Homes and cars represent some of the most expensive single-item purchases individuals make during their lifetimes, but spending doesn’t always cease at the shoreline. Boats add to the cost of living for water sports enthusiasts, who eagerly take-on the cost of ownership. And though boat buying is born of passion for the open water, a prudent approach makes the most of recreational budgets and ensures affordability.
As you prepare to take the plunge, due diligence guarantees a smooth transition to boat ownership. From choosing the best boat for your needs to securing reasonable financing, weigh your options carefully before making commitments.
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Where To Get A Boat Loan
Online lenders typically offer unsecured boat loans only. These lenders may be able to approve and fund loans more quickly than other lenders. Online lenders also offer pre-qualification, which shows you what loan amount and rate you could get without affecting your credit.
Some tailor their loan products to borrowers with good or excellent credit , while others accept lower credit scores and focus more on factors like your monthly cash flow, education and where you work.
Youre more likely to find secured loans from banks. Banks may sometimes offer perks to existing customers, like discounts and favorable loan terms. If your bank offers boat loans, it may be a good place to start.
loans from marine lending specialists
Boat loans from marine lenders have similar rates and repayment terms to personal loans. One advantage might be the ability to work with a specialist who understands the boating business, according to the National Marine Lenders Association.
These loans must be secured by the boat and require down payments from 10% to 20% of the purchase price. A bank may require a down payment or make it optional.
What Is The Typical Down Payment For A Boat
The size of the down payment required will depend on the age, price, and type of vessel as well as on your credit profile. Expect to pay 15 to 20 percent down payment on most Center Console or Sportfishing Boats. A Boat loan specialist can help you with programs available through various manufacturers that could allow you to qualify for a lower down payment. They can also help you find lenders that offer lower interest rates for higher down payments.
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