CARES Act Updates | December 2020
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Donald Trump in...
If you’re ready to set sail and buy the boat of your dreams, finding great boat financing can make that dream a reality. With the right information and boat financing options, you can make the right choices to help you take that step towards owning a boat today.
When started on your search for the best boat loans, there are a few considerations to keep in mind to ensure smooth sailing. Let’s take a look!
The first thing you need to know about boat financing is that it’s actually very similar to taking out a loan for a car. You can get one from either a bank, credit union, or online personal loan lender. Additionally, you can take out a new boat loan from a boat dealer or marine-specific financial services company. You’ll find no shortage of options available. You’ll request a specific loan amount based on your needs, and you’ll pay it off with interest over a fixed term.
Your credit score and history will be a big determining factor when it comes to getting approved for a boat loan. Furthermore, it will affect what interest rate you’ll be eligible for as well. It’s a good idea to check your credit to see where you stand so that you’ll know what to expect during your loan search.
Getting prequalified has the advantage of not harming your credit score since it typically requires a soft credit inquiry. Prequalification allows you to compare boat loan rates and terms that are available to you.
While boat financing is similar to auto financing, it differs in that it can be a weightier investment. After all, boats are more costly than a vehicle. Therefore, you can expect to take out a larger loan amount and possibly a longer loan term.
Aside from the actual price tag of the vessel, there are other considerations involved when determining how much the loan amount will be, such as the terms of the loan, your credit, and the down payment. The health of your credit is an important factor when lenders evaluate how risky you are as a borrower and what rates you’ll get.
A secured loan means that it is backed by some form of valuable collateral, such as a mortgage, vehicle, or the boat itself. In the case of defaulting on your boat loan, the lender can use this collateral as payment. Using collateral can help you get the best boat loan rates. An unsecured boat loan means you won’t be using any collateral to back up the loan, which is seen as riskier to lenders who will consequently offer higher interest rates.
Similar to an auto loan or even a mortgage, you’ll first need to put some money down when taking out a boat loan. Depending on the cost of the boat, down payments on boat loans are generally between 10%-20% of the total. There are, however, some lenders who won’t require you put down anything at all, but just know that this can increase the amount you pay in interest over the loan term.
While the terms for boat loans can vary depending on the lender, you can typically get up to a 20 year term if your boat loan is secured. If it’s not secured, the term will be shorter and closer to five or seven years. Keep in mind that while a longer term might ease the burden of your monthly payments, it also means paying more interest in the long-run.
When taking out a boat loan, you’ll want to find the best boat loan rates. While this widely depends on your credit health, many lenders will also factor in things like your employment history, income, and other components of creditworthiness when determining what rate to give you.
Buying a boat is an exciting process, but it can also be stressful if you aren’t prepared. Here are a few tips that will steer you in the right direction.
Just like buying a car or a home, you don’t want to spend above your means when buying a boat. Before taking the steps to acquire a boat loan, figure out how much you can afford on boat loan payments each month, and stick to that number.
When establishing a budget, you want to be certain that you have a good understanding of all of the costs involved in owning and maintaining a boat. This includes things like boat fuel, docking fees, storage, and insurance. You’ll also have to factor in regular maintenance for your boat, safety gear, and potential repairs.
It can be tempting to buy the most powerful, decked-out vessel on the waters, but take time to carefully consider what you need and what your experience level is, especially if you’re a first-time boat owner.
If you’re unsure of where to start when searching for boat finance options, here are a few recommended lenders with the best boat loan interest rates.
Credible is an online lending marketplace that allows borrowers to get preapproved for a personal loan of up to $100,000. It is a perfect choice if you’re looking to secure a bigger loan and compare rates. The APR ranges from 3.99-35.99%. Credible is a solid option for a wide range of credit scores as they look at a variety of factors besides credit when approving you for a loan.
Upgrade is an online lender offering personal loans of up to $50,000. This is ideal if you’re in the market for a smaller vessel. APR ranges from 7.99%-35.89% and you can check your rate quickly online without hurting your credit.
LendingClub is a reputable online lending company that has facilitated over $45 billion in loans. With an APR range of 6.95%-35.89%, you can borrow up to $40,000 for boat financing. LendingClub offers competitive rates for a wide range of credit scores, no prepayment fees, and great customer service.
The good news is that there are boat loans available for any type of vessel, be it a pontoon or a yacht.
Getting approved for a boat loan is a similar process to getting approved for a car or home. Your entire financial profile will determine what you qualify for. Generally, you won’t have any issues if you have good credit. If your credit isn’t in the best shape, many lenders allow you to add a cosigner, which can help you get approved.
The down payment amount depends on a variety of factors, such as the price of the boat, the boat’s age, and what type of boat it is.
The best way to shop around is by getting pre-approved. This won’t hurt your credit and it will allow you to easily compare rates from multiple lenders. A lending marketplace, such as Credible, makes the process even easier since submitting just one application lets you see rates from several vetted lenders.
All in all, the process of finding the best boat loans is very similar to getting approved for a standard auto loan. You’ll need to submit a basic application to find out the options available to you. From there, compare interest rates and loan terms with several lenders, including banks and online companies, and see who offers the best boat loan rates. Once you’ve made your selection, it should be smooth sailing ahead!