Boat Financial Options
There are various options that you have when buying a loan to finance your boat. It is important to work with an affordable option which will best meet and satisfy your need. The options are highlighted and explained below:
Personal loan from a bank-it is advisable to approach your bank for credit to finance your boat if your credit score is good. It is important to visit many banks and get to know their rates. In most cases, borrowers are supposed to put down 10 to 15 percent of the money that they will borrow. In terms of rates, you can inquire from the bank whether they will reduce the amount if you increase the amount that you put down. In most cases, many lenders will accept interest reduction proposal because the long duration has decreased.
Work with your boat dealer- Due to the fact that most dealers have a lot of information about boat financing options and processes, it is advisable that you work with them to enable you get your loan fast. The dealer handles all the work needed and you’re able to concentrate on other important issues. The dealer may also you offer certain incentives such as no amount to be put down or reduced introductory rate. The key downside of using this option though is that the dealer may be expensive.
Home equity loan-this choice is popular because you can subtract the rate you pay on your mortgage from your federal taxes. You will only be able to borrow a good amount if your loan has much equity. It is important to shop for a buyer with the best interest rate when using this option.
Credit cards- Though this option is expensive, it can be used as a last resort when buying your boat loan.
What lenders consider before offering you your boat loan
There are various factors that various lenders will put into consideration before offering you a boat loan. These are as follows:
Your net worth- High net worth individuals is popular to many financial institutions because the latter can sell other products to them apart from the boat loan. Examples of products that can be sold to such individuals include mortgages, second home, auto loans, RV etc. The lender may also want to understand whether you’ve other loans that you’re servicing.
Management of credit-Lenders may want to understand whether you have borrowed a similar amount before and how you serviced it. Some lenders may require that a borrower has a reserve amount of at least a year to enable them repay the loan in case the financial situation of the client changes.
Stability and consistency- A good history of employment history with your current employer, your primary residence and your profession are also factors that are considered before offered a boat loan.
Credit scores-When you’re applying for a boat loan, your FICO score should be between 700 and 800.The FICO score are important because they determine the amount to be put down.
Advantages of working with boat dealers
As highlighted and explained above, there are various options that are available to a buyer when they want to purchase their boat through a loan. One of these options is use a boat dealer. There are various perks that you will enjoy if you select a boat dealer. These are as follows:
Lower down payments-As an incentive to attract many people, some dealers may ask the borrower not to put any amount down. However, the amount that you may be asked to put down may depend on various factors including your age, the kind of boat you want to buy and your credit history.
Faster credit decisions-The process of getting a boat loan is always faster when you use dealers because they understand what should be done to enable the buyer get a loan quickly.
Extras –The boat dealers may enable you finance boat extras including your electronics and insurance.
Where you can get boat loans from
You may want to acquire a new boat but lack funds to purchase it. In case you’re in this situation, one of the options that you have is to buy it through a loan. There are various banks and other financial institutions that offer people loans to utilize in buying their boats. These include: Credit Unions, boat dealers, financial service companies, banks and boat brokers.
Banks- there are local, regional and national banks that offer credit services to buy boats. It is important to check whether your bank offers a credit service for purchasing of boats. You need to inquire about their interest rate and compare it with what other banks charge. You should also inquire whether you can negotiate about the interest rate.
Financial service companies-These companies work closely with local, regional and national lenders. It is important to inquire about the products that they offer and their rate.
Credit Unions-These are the best institutions where you can get a boat loan from at a competitive rate.
There are various factors that you need to consider before choosing the best lender. These are as follows:
Interest charged- It is important to compare the interest that is charged on boat loans offered by various lenders. You need to choose those that are affordable.
Client service-You need to consider the client service offered by the various lenders. It is important to choose a lender who offers high quality client care services.
Reputation of the lender-The lender’s reputation is a reflection of the quality of service that they offer. To get a clue of the reputation of the lender, it is important to check what the past clients say about the lender. If the past client have positive reviews about the lender, it is important to understand that that is the best lender.
Rating- How the lender is rated by industry regulators is important because it gives you a clue about the lender’s reputation. Look at what Better Business Bureau (BBB) say about the lender. What score have they given the lender? Is it A++?
How to find the best boat lender
Getting the best boat lender
It is important to conduct some background research to find the best lender of a boat loan. Applying the relevant keywords, you can find the best lender found within your locality. It is important to analyse the kind of services offered by the lender and determine whether they have the service that you require. If they have the loan that you need, look at how they charge in terms of interest rates and other costs of processing the loan.
Ask friends, colleagues and relatives who have bought their boats through loans on where they got the loans from. You can ask them about the quality of service offered by the lender and the interest rate that they charge on their loans.
Due to the mushrooming of firms that offer boat loans, there is likelihood that some of them are bogus. It is important to conduct a thorough check to determine whether you’re dealing with a genuine company. Check on their websites on what the past clients are saying about the quality of their service. If clients are complaining about the company, it is important to shun it.
In order to get the best mortgage company that will offer you the best quality service as per your need, it is important to check your credit score. The scores that you have will determine the amount of credit that you will get and the amount that you will put down before you get the loan. If your scores are above 800, you will get the best boat loan at a competitive interest rate. In case you find errors in your credit report, it is important to write to the concerned credit bureau and ask it to erase or rectify the mistakes.
Ask about the programs offered
It is important to inquire about the boat loan programs offered by the various companies. This enables you to select a boat loan program that suits your needs.
Find the type of loan you need
There are various loan terms that are available. These include fixed rate, fixed term and simple interest loans. Choose a program that suits your situation.
In case you want to buy a small boat, you can take advantage of your home equity line of credit (HELOC) to buy your vessel. You can work out a program of clearing the loan before the interest rate goes up.
Comparison of rates
In case you want to buy a new boat, the interest rate may be low depending on whether you want to service the loan for a long time or not. The amount of rate charged will also depend on other factors for instance the amount that you put down and the boat model. In case you boat model is more than 20 years, you will be required to put a huge amount down and you will pay the loan within a short period of time.
Get the facts right
You should never be cheated by adverts but always ensure that you get the factual information from the lenders concerned.
It is advisable to request for a pre-approval to enable you save time.
Because a boat is regarded as a second home, it can benefit from interest deduction if it has a berth, galley and head. It is important to buy a boat with these features so that you enjoy this benefit.
Get it surveyed
It is important to have the boat well surveyed by an experienced marine surveyor so that you don’t incur repair charges after you have bought it.
Closing costs inquiry
There are various closing costs involved when processing this loan. The costs include sales tax, processing fee, title registration etc. You need to inquire from your lender on what is required from you in terms of closing costs.
Calculate your monthly payment
This will enable you determine how much you can afford on each month.