There was a time when figuring out how to finance a boat was complex and time-consuming, but luckily for boaters, those days are long gone. In fact, financing your brand new Harris is a lot simpler than many people would guess, and knowing a bit more about boat financing will help make the process as smooth as silk.
In the past, lenders generally offered shorter terms at higher interest rates with larger down payments than most other types of loans. Boats used to deteriorate and devalue rapidly, so lenders had to make sure they recouped their investment quickly. But modern boats are built much better and tend to last far longer, so financing a boat over a 10- or even 20-year term isn’t at all unusual. Plus, down payments these days are often around just 10-percent of the purchase. At times it may even be possible to finance with no money down.
So, how will you make it happen? For most people, financing a boat will boil down to four main options:
· Financing through the boat dealership
· Arranging financing with a lender who specializes in marine financing
· Securing a boat loan from your bank
· Getting a second mortgage or home equity line
For most boat buyers, financing through the dealership is the simplest way to structure a boat loan. Most dealers have relationships with a number of lenders and can make the loan a seamless part of the boat-buying transaction. Since boat dealers depend on repeat business, it’s in their interest to make sure you’re happy with the process.
There may be cases where a dealer doesn’t handle financing, and in that scenario, they may refer you to a financial services company like Blue Water Finance. They’ll be able to help you figure out the best loan rates and monthly payment amounts, which often depend on factors like the term and size of the loan as well as your credit rating and debt-to-income ratio. These specialized companies know the ins and outs of boat loans as opposed to the average bank or credit union, which usually don’t handle boat loans very often.
As for second mortgages and home equity lines, while they may offer certain advantages for some buyers, these options are significantly more complex and carry more risk.
Initially, most people will want to use a boat loan calculator to figure out just what sort of monthly payment they’ll end up with depending on the term of the loan and its interest rate. Then it’s time for a conversation with the boat dealer to find out what they can offer. Naturally, we all want to get the most favorable deal possible, so most people will then explore the other available options before making a final call.