Ways to Finance a Boat
Buying a boat is not a small investment for most people and if you are planning to purchase one you’ll likely need to utilize a financing plan. If you’re in the market for a boat, you’ll want to keep reading for a breakdown of the most commonly available loans and where to get one.
Loan Types
If you’re using a financing plan you’ll most likely be taking out a boat loan. Usually, you will acquire an installment loan, meaning you will have fixed monthly payments over a set period of time. Your interest rate will depend on your credit, income, loan amount, the lender, and the type of loan you acquire.
Secured Loans
Secured loans use the boat you are purchasing as collateral in the event you are unable to continue making payments. This means the boat can be repossessed in such a situation. These loan types have high limits, low rates, and extended repayment terms, making them the best option if you can make a substantial down payment.
Unsecured Loans
On the other hand, unsecured loans do not require any collateral and wouldn’t wager your boat in case of missed payments. However, these loan types have higher rates and a shorter term. This option can be beneficial, but an unfortunate situation could lead to wage garnishment, lawsuits, and could seriously harm your credit score.
Where to Acquire a Boat Loan
There are a few different options available to you in regard to where you get your loan. Some dealerships, such as our team at Texas Malibu, have their own finance department to help provide options, but you can also find specific marine lenders or traditional institutions for lending.
Banks
Working with your bank can provide lower interest rates, but even if you’re not an established customer, many banks can offer you a boat loan. Your exact rate will depend on the loan amount and your credit score.
Credit Unions
Credit unions are nonprofit lenders, meaning they can be a great choice for individuals with lower credit. These loans will always be secured loans, so plan on your boat being used as collateral if missed payments were to occur. You can generally obtain a higher loan amount at a lower interest rate with a credit union.
Marine Lending Specialists
Another lender to consider would be specialized marine lenders. Because they are professionals in the industry, you will have access to specialized knowledge of boat-specific financing. You can expect similar rates and terms, but they will be secured loans and often require a good-sized down payment.
What to Consider Before Purchase
Always establish a realistic budget before agreeing to a loan! Have a solid understanding of the policy, expected payments, and interest rate to ensure you can afford the monthly payments.
You should also factor in the costs of maintenance, potential repair needs, insurance, registration, storage cost, and fees. Your budget should reflect more than just the retail cost and you should be well aware of how your boat’s value will decrease over time.
We truly hope this guide will help you navigate the boat buying process! Our team would be happy to answer any questions and help you find the perfect model for you. We are located in Austin, TX, and proudly serve the New Braunfels area.