Owning a boat can be a dream come true.
Whether you have just started shopping around for a new or used boat and want to know what type of loan you can qualify for, or you have already found the boat of your dreams, you will want to follow a few important tips to ensure that you apply for the right loan for your needs with the most advantageous loan terms possible.
Explore All Options
As a first step, you should carefully explore all of the financing options available to you.
If you are working with a boat dealership, that dealership may have a financing department that has several loan programs that you could qualify for.
However, you also want to explore different lending options on your own. Local, regional and national banks as well as credit unions often provide financing for boats.
You can compare the rates and terms of these boat loans, but pay attention to special details about the programs. For example, one lender may offer a different rate and term on new boats than is offered on used boats. With used boats, different terms may be offered on loan amounts above a certain level.
In addition, different financing terms may be offered on motorized boats versus sailboats. It is important to pay attention to these details to ensure that you are comparing equivalent loan terms.
Use an Online Calculator
You should also find an online calculator to compute the monthly payment for your new boat loan options.
One lender may offer a lower rate on a 15-year term than another lender offers on a 20-year term, and you may not know which is the best option for you.
When using an online calculator, look for one that will compute monthly payments and that will provide you with an amortization table. A monthly payment will tell you how approximately much your payments will be.
An amortization table will tell you how much your interest charges will be on a monthly basis and how much interest you can expect to pay over the life of the loan.
If you have plans to trade in your boat in a few years, you may use the amortization table to see how quickly your loan balance will be paid down at that time too.
An online calculator can be used to ensure that the financing that you apply for will meet your current budget needs and future financial plans.
Don’t Forget About Loan Fees
As a final note, you do want to compare loan fees.
Some banks may advertise a lower rate, but they charge a loan origination fee. Another bank may have a higher advertised rate and no origination fee.
Keep in mind that most lenders can offer you a rate with a higher or lower loan origination fee than what is advertised, and this can help you to better manage the rate and monthly payment.
However, you do want to ensure that you are making an apples-to-apples comparison. If a bank is advertising a low rate with an origination fee and you want to compare rates without origination fees, you can call the bank directly to inquire about the rate without the added fee.
Shopping for a boat loan is similar to shopping for a home mortgage or auto loan. By shopping around and keeping these tips in mind, you can most easily find a great loan for your upcoming boat purchase.
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