Purchasing a boat is a big investment, requiring most buyers to take out a loan. Whether you choose to go through a traditional bank or private lender, you need to look at interest rates and contract agreements to ensure that you’re signing on a deal that will be worthwhile in the long run.
What You’ll Need to Take out a Boat Loan
Taking out a boat loan is similar to getting a mortgage on a home. Your credit score will be a deciding factor when applying for the loan. For individuals with poor or no credit, you’ll either be denied the loan completely or get a high interest rate. Interest rates can vary from 3 percent to a whopping 20 percent depending on both your credit score and lender. To apply for the loan, you’ll need bank information, salary data and personal identification paperwork.
Loans from Banks
Typical banks will sometimes offer boat loans to clients who are purchasing marine equipment. If the bank has a marine lending department, you’ll need to go through them to apply for borrowed money. Non-specialized loan officers may not approve your case because they are used to putting out loans for individuals, homes and businesses. If denied a boat loan, you could try taking out a personal loan to pay for the purchase. However, personal loans may only be obtainable up to $20,000, so this option isn’t viable if you’re buying equipment over this amount.
Traditional boat loans offer interest rates and terms that are similar to what you’d find with mortgage refinancing. Depending on the specific type of boat you’re buying, you may even qualify for essential tax breaks that you would get when refinancing your home’s mortgage. Marine lenders offer the largest range of options with comparable rates that make buying a boat affordable and easy. You might find a lender who approves your loan despite your bad credit or another lender who gives a loan for an atypical aquatic purchase.
The dealer you purchased the boat from may offer their own financing provided through national and local lenders. When you’re purchasing the boat and applying for the loan in the same visit, this saves you time and hassle. The dealer will put all of the necessary paperwork through to approve your loan. Oftentimes, approval takes just a few minutes once your credit score has been scanned. Be wary of high interest rates associated with these loans, as dealers won’t normally look for the best rates.
With these three loan options, you should find a lender and rate that fits your budget. Because boats can be a niche area of expertise, don’t expect every bank or loan lender to approve your case. Most boat loans are approved for five to ten years, making repayment a lengthy and financially grueling process. Getting the best rate and term agreement makes repayment of the loan easier for you and provides you with a boat you won’t regret buying.