Boat Financing━All You Need To Know
Purchasing a boat isn’t cheap. Only a handful of people have the necessary cash on hand to outright purchase a boat, which is why most would-be mariners elect to make use of financing options to partly or completely fund their purchases, paying back the loans over a period of time.
If you’ve never bought a vehicle with the help of a personal loan, you may not be entirely sure about what exactly the process involves. To help you figure out what your options are, we at L&M Marine, LLC, have compiled this guide on getting your boat financed. To check out some quality boats for sale visit our location in Stapleton, Alabama. We also provide financing options, so we can help you get the boat you love!
Types of Loans
Since your boat loan will involve a fixed monthly payment over the course of anywhere between two to fifteen years, think of it as a type of installment loan. The interest rates offered will vary widely and will depend upon the lender, the loan amount, the borrower’s income and credit score and the type of loan.
If you choose a secured loan, it’ll have long repayment terms and lower overall rates. Remember, though, that they use your boat as collateral, which means that the craft can be repossessed if you default on the loan. If you don’t qualify for an unsecured loan or need more money, then a secured loan is your best option, although be sure to always remember the risks involved.
With an unsecured loan, you have no collateral. This means their terms are shorter and their rates are higher. While you aren’t likely to lose the craft itself if you default on an unsecured loan, you may end up with any number of financial consequences, like lowered credit scores, garnishing wages, or even a lawsuit.
Types of Lenders
When it comes time to acquire a boat loan, you have several options, from banks to credit unions to marine lending specialists. In fact, some dealerships (like us here at L&M Marine) have their own financing department, which will help you get the cash to purchase the boat you want.
Banks
Any number of major banks will help you obtain a secured loan for a new or used boat, even if you don’t use them for your banking needs. Though if you choose a lender that you already bank with, you will probably get an interest rate discount. Loans may be anywhere from a few thousand dollars to over $100,000, with repayment terms between one year to several years. Rates will vary depending on the borrower’s credit and the amount of the loan itself.
Credit Unions
If you don’t have the best credit score, you can turn to a nonprofit lender like a credit union. Keep in mind that these will still be secured loans, which means you’ll be using your new boat as collateral. You can probably get a lower rate through a credit union with a higher total loan amount.
Marine Lending Specialists
For those looking to get a boat loan, there are special financial services which are designed to act as brokers. Though the loans will have similar rates and terms as any of the personal loans you can get from credit unions or banks, you’ll get assistance from a professional who knows more about the business. They use banks and other resources to obtain funding. Requiring a down payment of up to 20% of the purchase price, these will also fall under the category of secured loans.
Essential Considerations
You should be sure that you’ll be able to make your monthly payments before you choose to get your boat financed. You’ll need to do some math to determine how much these payments might be for the boat you want, as well as how much interest will accrue over time. To avoid going into debt, a boat loan payment generally should not be more than 20% of your total income.
When budgeting for your new boat, remember that it’s not just the immediate cost of owning a boat that you have to take into account. You’ll want to factor in fuel, licensing, registration, slip rentals, insurance, maintenance, repairs and any necessary supplies.
Like any other vehicle, your new boat will also depreciate in value over time. If you want to avoid a big depreciation rate, you might want to consider getting a used model, since these often retain a more consistent value for future resale. In that same vein, it’s wise to buy a boat that does have resale value, just in case you end up wanting to sell it to recoup your investment or to upgrade to another model. Also know as much about the loan you’re taking as possible. There are some loans that penalize you for paying it off before the term is over, and you don’t want to have to deal with that.
We hope you find this information useful when it comes to purchasing a boat. Whenever you’re ready to check out some top-notch boats for sale in Stapleton, AL, visit L&M Marine and our expert staff will give you a tour of our inventory. Ask us about our financing options and we’ll help you figure out which one will work best for you. We welcome all those coming from Mobile, AL, as well as our friends coming from Pensacola, Florida.