For sailing enthusiasts, there is nothing more wonderful than the feeling of the rays of the sun caressing your face and the wind blowing your hair. But unless you have enough cash to buy a boat, you would have to take out a Personal loan to realize your dream of setting sail on the waterBoatsats can be more expensive than c depending on the model and sizes, so loan tenure can be longer and higher. The total loan amount is also dependent on several factors such as the type of loan, the terms you and the lender would agree on, the length of the loan tenure, your credit score, and the initial amount you will be making for your deposit.
However, taking out a loan for a boat is faster, easier, and not as difficult than you might. Financing a boat is nearly the same as financing a car.
So if you are eager to set sail, here is what you should know about different types of financing options, what to consider before getting a loan, where to get a loan, and the requirements needed for a boat loan.
Whether you plan to buy a new or used boat, your financing option will include secured and
and each type will have its advantages and disadvantages.
Secured loans – A secured loan requires any item that will serve as your collateral. This collateral will protect the lender from a capital loss if you can’t continue making payments on your loan. As with an auto loan, your boat will serve as your collateral to avail of a secured loan. Secured loans offer lower interest rates because of the lower risk lenders take.
Unsecured loans –
Lenders consider unsecured loans as riskier because there is an absence of any collateral. To apply for unsecured loans, you will need to present proper documentation together with your credit history documents. Loan terms under unsecured loans are also stricter and come with shorter loan tenure and higher interest rates.
Home equity loans –
A home equity loan, similar to a second mortgage, is another possibility. The interest rates are often cheaper because this is a secured loan. However, if you continue to make payments on your home, it may be seized as a form of payback for this financing choice.
Things To Consider Before Applying For Financing
The price of a boat is not the only fee you will be paying for. Other factors include maintenance, insurance, storage rental fees, and marina administrative fees.
A more important factor to look at is your personal and future finances. Your responsibility doesn’t end when you make a deposit; you must fulfill your contract until the loan tenure. Therefore, if your source of income is not stable, the likelihood of you being able to complete your future payments may be low, and you might end up not only losing the money you initially invested as your deposit but also the boat, or house, that you used as your collateral.
Where To Get A Boat Financing
To finance a boat, you can try these options:
Arrange financing through your boat dealer –
Many boat dealers now offer financing options. However, the terms and interest rates may not be comparable when applying from other lenders like your bank or other institutions.
Get a loan from the nearest bank –
Most banks located in areas where sailing is commonplace usually offer boat financing. It is better to ask your bank where you already have an existing relationship for their financing options. Having a long-time positive relationship with a bank will help your chances of getting approved for a loan.
Other lending institutions or credit unions –
Lending institutions specialize in maritime financing, and they usually offer lower down payments, longer loan tenure and monthly payments, and faster loan approval.
Requirements For A Boat Financing
Getting financing for a boat is very similar to getting a car loan. The requirements are straightforward and the same:
- Net worth
- Credit score
- Credit history
- Stability of source of income
If setting sail in the open water has always been your dream, there are boat financing options you can choose from to realize your dreams. However, if you cannot find the best option for you, consider taking time to build your credit score or saving up for your initial down payment to lessen your initial investment and avail of better terms of financing.