In a social year Away, many people clearly felt it was a good time to buy a boat. According to the National Marine Manufacturers Association, new powerboat sales rose 12% in 2020, reaching their highest level in 13 years. But with the average price of a new aluminum boat package at $ 36,000, many buyers needed a loan.
A personal loan – which can be used to buy anything – is an option to secure a boat purchase. There are other options as well, including obtaining a marine loan with a secured boat as collateral. Here’s a look at what it takes to get a loan to buy a boat and how to find one that works best for you.
How can you get a boat loan?
Financing a boat is the same Buy car. You can walk into a showroom, pick up what you want, qualify for a loan and in many cases, will leave soon with the boat.
A buyer with Outstanding credit John Hammond, president of the National Marine Lenders Association, says “the spot got too much clearance and left the dealership with the boat on the same day”.
There are three primary ways of obtaining financing:
Loan secured through a dealer. A boat dealer can partner with a specific loan company for all purchases or you can choose between a few of them. One of the main benefits of working with the dealer includes the possibility of a special financing deal through the boat builder, such as a lower interest rate for the introductory period. You may be able to include an extended warranty in your financing.
Secure the loan directly with a lender. As you would with an auto loan, you can contact a lender before purchasing and acquiring the boat. Publicizing for a loan Depending on the price of the boat you are likely to buy. You can get a fixed-rate installment loan for a specified number of years, take out a variable-rate loan, or select one Outstanding payment When you are ready to sell the boat it will be time for you to arrive. Secured boat loans are available from banks, credit unions and online lenders. Some lenders have teams that specialize in maritime sales, and you can also look for online boat loan brokers.
“Historically, lenders have always wanted collateral when making big-dollar loans,” says Todd Nelson, senior vice president of online lender Lightstream. “That way if a borrower can’t pay, they can recover the asset and sell it to compensate for their loss on the loan.”
If you take out a home equity loan or use money from A, you can get secured financing without a boat as collateral Home equity line, Or if you obtain a personal loan that is backed by items of value, such as securities.
“Most of those boat loans are secured as collateral or by another financial source, such as a home equity loan,” says Hammond.
Unsecured Financing. If you have a high credit score and a strong income, a personal loan can be an ideal way to buy a boat. All you will need is approval for a loan that can cover the cost of the boat. With a secured loan, lenders will have the limitations, make, and model of the year that they use for collateral.
“Unsecured lenders are underwriting the borrower, not the collateral,” says Nelson. “This makes the application and funding process easier, as unsecured loans can be used to purchase a boat from any vendor.”
Follow these 4 steps when applying for a boat loan
Make sure your credit and finances are strong. For an unsecured loan you will need a decent credit score to get at least 660 FICO score – Boat, for example, says Nelson. The lender will also check your income, debt-to-income ratio and possibly your net worth. If you are getting a secured loan then you may need to come up with a down payment. Make sure you can bear the additional costs that come with the boat, such as insurance, a travel trailer, gas and maintenance, such as winterization.
Decide what type of boat you need. There are many types and sizes of boats, ranging from modest fishing boats to million-dollar boats. “Know what you’re using it for,” Hammond says. “Are you going fishing with it, water skiing or cruising around the lake?” You will then want to see how much you can afford and whether it makes sense to get a pre-owned boat instead of a new one.
Compare loan offers. If you have a strong credit score of at least 700, then you should expect to get the best available interest rate; If your score is less than 700 then your rate may be higher. Rates generally improve as the loan size increases and the loan period expires. For a secured loan, you may be asked to provide a down payment of 10% or more, and the repayment period can last up to 20 years for larger loans. Boat loan interest rates are usually in single digits.
“Make sure you’re getting the right product that you want and shop around for rates,” says Hammond.
Interest rates can vary depending on the type of boat. For example, sailboats, powerboats and boats with wooden hulls can all have different words. In addition, lenders may offer marine loans only for new boats, or may also finance those who are only a few years old.
“If you plan to spend less than $ 100,000 on a boat, an unsecured loan will be easier and provide more flexibility, as the borrower can buy the boat from any seller anywhere,” Nelson says. “Larger loan amounts may require collateral, so a secured loan may be the only option available for larger boats.”
Finalize the loan. If you apply for an unsecured loan online and get the funds deposited in your account immediately then closing the loan can be quick and uneven. If you are working with a dealer, this may be more than a traditional closing where you sign papers with the dealer’s financial representative. If there is an additional closing cost, be sure to check.
“Nelson says,” pursue your research to feel empowered and confident in your choice. “With good credit, you can shop around and choose the loan that meets your needs with the best rates.”