If you are a boat owner and have decided to purchase a boat or trailer, you may be curious about boat financing. Boat financing refers to the method of financing used to pay for a boat. Many lenders usually offer fixed boat interest rates for as long as you own the boat. Generally, boat financing terms and rates vary among lenders, but generally the lowest rates are reserved for good credit and long term loan terms are normally based on the total loan amount (the larger the amount, the shorter the term.) You should shop around to get the best possible quote on your boat financing needs.
In general, there are four types of boat lenders that you can consult when looking for financing: banks, credit unions, private lenders and brokers or dealers. Banks deal primarily in business finance and they provide unsecured and secured loans. Most banks require borrowers to have collateral security such as real estate or household goods. They also require a credit history that meets lending criteria. A bank will give the best possible quote in most cases; however they may offer better terms if you have good credit or an excellent credit score.
Credit unions have developed a solid reputation in the financing market and offer good value and competitive financing terms and rates. A credit union will work closely with you to find out what your individual requirements are and tailor a plan to meet those requirements. Credit unions tend to have a long standing tradition of responsible and customer-oriented business. Some unions also work with small businesses that would otherwise not be able to obtain traditional financing. They also provide options such as low interest rate loans with no prepayment penalties.
Private lenders offer boat loan terms and rates that are less-than-perfect credit and usually do not require collateral. These types of lenders generally require good credit, a tax return and some form of employment agreement. Private lenders will require you to make monthly payments for the amount financed until the boat is paid off in full. Payment schedules can vary from six to twelve months depending on your personal circumstances. A private lender may also reduce the overall cost of the boat loan if it is paid off early.
Small businesses and self employed individuals can obtain boat loans from credit unions, other financing institutions and local boat brokers. A small business may obtain a loan at a rate that is half or one-third of what a bank charges. A self employed individual will pay higher interest rates because of their lack of experience and the higher risk of not having any collateral to keep the boat loan current.
In addition to financing options that are less-than-perfect, boat loans can also come with variable interest rates. These interest rates can change over time. For example, if oil prices drop in the future, a lender could increase the interest rate for new boat loans. If inflation occurs, downfalls in oil prices could result in future decreases in loan interest rates. Some people are able to cover the increased costs of their boats through insurance and depreciation, but others must find alternative ways to pay for the additional expenses.
Before you choose a boat loan, you should research several different sources for finance. Be sure to ask for quotes and compare them to see which ones offer you the best deal. Once you have located several lenders that can offer you boat loans, you should shop around for the best deal. Each source will give you different interest rates, terms and conditions and the fees and costs associated with financing. You should choose the lender that offers the best terms and lowest costs in order to be sure that your money will be used for its intended purpose.
It is important to remember that your primary goal is to purchase a boat that will get you out on the water and allow you to enjoy spending time with family and friends. It is an expensive expense to obtain a boat and it is wise to avoid costly mistakes. Keep your goal in mind and make sure you take your time when comparing different lenders to find the right boat financing loan. Most boat loans can be quite affordable, so take your time and compare your interest rates and options. It will be well worth the effort when you are ready to own your boat.