You know where to find auto loans and mortgages, but how will you finance your boat? You might think that buying a boat requires a different process than buying a car, but they are very similar.
Who offers boat loans?
There are plenty of financial institutions that will give you a loan for your boat. Many national and even local banks will help you finance your boat and even some credit unions offer boat loans! Credit unions typically offer lower rates than big banks. If you decide to finance your boat through a bank or credit union, ensure that they are members of the National Marine Lenders Associations.
Of course, you can also get boat loans from the dealership just as you would if you were shopping for a new car. Before signing an agreement, look around for the best rate on a boat loan. Sometimes dealers can offer special deals that the banks can’t make. For example, the dealership may be able to leverage a relationship with a boat manufacturer or lending bank to offer zero interest for the first six months if you buy a particular brand and model of boat or purchase a certain warranty.
Types of Boat Loans
There are three main types of loans used to finance boats. First there is the fixed-rate simple interest loan. This common loan is popular because the interest rate remains the same throughout the term of the loan, meaning your monthly payment remains the same every month. Compare this to a variable rate loan; although these loans tend to offer lower introductory rates, the interest rate is subject to change at any given day. If you decide to go with a variable rate loan, make a plan of how to handle fluctuations in payments.
Balloon payment loans are popular with several boat buyers because they will buy a new boat every few years. A balloon payment loan allows you to pay the total sum of the loan at the end of a period of time. Balloon payment loans are appealing because the payments are very low at first, but be sure to plan for the final payment or you may find yourself in hot water.
How to Apply For a Boat Loan
First, you should find out your credit score. Many credit cards now let you see your FICO credit score on your monthly statement. You can also check your score for free on websites like Credit.com and AnnualCreditReport.com. Knowing your credit score allows you to get an idea of the loans you can be approved for.
The perfect boat loan probably won’t be the first one you see or get approved for. Look around at loans from not only the dealership but different banks, lenders, and credit unions too. Stick to your budget, no matter what you get offered, and keep your search limited to two weeks to avoid multiple hits to your credit. Finally found the right loan? Go buy your boat!