When purchasing a new or used boat, you may need to obtain financing. This type of loan is similar to loans for cars and homes, but the process can vary slightly.
Many factors can impact the boat loan rates, terms, and down payment requirements you’ll qualify for. These include your credit score, loan amounts, and lender restrictions.
What Is A Boat Loan?
A boat loan lets you borrow money to purchase a new or used marine vehicle. It’s similar to an auto or personal loan in that you typically have options, and rates vary by lender.
You can take out a boat loan through your financial institution (like a bank or credit union), your dealer, or an independent provider specializing in marine financing. Even organizations like the National Marine Lenders Association certify lenders as experts in marine finance.
To apply for a loan, you’ll usually need to provide information like your income, debt, credit history, the type of boat you want to buy, and its estimated value. You may also be required to make a down payment to reduce the amount you need to finance. It’s important to compare options and shop around for the best rate and terms on your loan.
How Does It Work?
By breaking down the overall cost into manageable monthly payments over a specified time, like with car finance, boat financing enables you to purchase the boat of your dreams. You can find loan options at banks, credit unions, and marine finance companies. Many lenders offer benefits to existing customers, like lower interest rates, repayment flexibility, or extended loan amounts.
Most boat loans are secured, meaning your lender places a lien on the boat as collateral if you fail to make payments. However, some lenders offer unsecured personal boat loans, which don’t require any collateral and are based solely on your credit score and finances.
It’s essential to consider the terms of your boat loan carefully before you take it out, mainly because a down payment may be required—also, budget for ownership costs, such as insurance and warranty coverage. Lastly, remember to factor boat maintenance and fuel costs into your budget.
What Are The Options For Getting A Boat Loan?
A boat loan can be an excellent option for people looking to buy a boat but may need more cash to do so outright. However, it’s crucial for those interested in taking out a loan to run the numbers and ensure the boat loan payments fit into their budget. It means factoring in other costs of owning a boat, such as maintenance, insurance, dock rental fees, storage costs, and equipment.
You must complete the typical application process to finance a boat through an outside lender. It will require your personal and financial information, including a credit score, income, and debt-to-income ratio.
Many financial institutions offer specialized marine financing for boats. Generally, these lenders have more experience working with this type of loan and may be able to offer competitive terms. They may also have a higher lending limit than your bank or credit union offers.
How Can I Get A Boat Loan?
The best place to start is with your local or national credit union, especially if you’re already an account holder. These banks typically offer competitive rates and terms on boat loans and great convenience since many provide approvals and funding the same day you apply.
Other options include working with a marine lender specialist or an online personal loan provider. The latter can also help you compare interest rates and repayment terms from several lenders to choose the right one.
When applying for a boat loan, you must undergo a credit check and provide evidence of income. In addition, you may need to add a co-borrower if your credit score needs to be higher. A co-borrower is a person who agrees to share financial responsibility for the debt and must pay the loan back if you’re unable to repay it on your own. Adding a co-borrower will increase your debt-to-income ratio, but it can make you more able to qualify for a boat loan with lower interest rates and better terms.