Buying a new or used boat is an exciting time. It opens up a range of new leisure activities and lets you connect to nature out on the water. You can enjoy your new boat purchase so much more when you know you’ve secured a great boat loan. It doesn’t have to be difficult to make sure you get boat financing that works for you. It takes some planning and preparation, but spending the time now can save you thousands in the long run. Below are 5 recommend tips to assist you when it comes time shopping for boat loans.
1 – Set a budget
The first step should be figuring out exactly how much you can afford with your new or used boat purchase. Have an idea of what you can afford to borrow including all costs like registration and insurance. Using a boat loan calculator is very handy for working out what you can afford to pay each month. Like cars, boats depreciate over time, so it is important you don’t overextend yourself because you may not get the expected value for your boat if you’re forced to sell. Setting a budget and sticking to it will help you never be in a situation where you can’t afford to make your repayments.
2 – Understand Your Loan Type
Knowing what loan you are going to apply for is another crucial step when preparing for new boat finance. While most boat loans are fixed interest rate loans, the term length can vary from 12 months, all the way to 7 years and longer. A shorter boat loan term usually means higher scheduled repayments, but less overall money having to be paid. Some loans will require a deposit, which is another factor you will need to consider along with the rate and term length.
Different loans through different lenders have varied approval waiting times. This is especially important when shopping for a used boat – If you need to wait days for finance approval, that boat you are eyeing off may have already been sold to another party. Some lenders will enforce a minimal finance amount. While most of the time this is not a problem as boat prices tend to exceed this baseline amount, if you are looking for a smaller watercraft like a jet ski, it could be an issue.
Some boat lenders will offer secured and unsecured loans, and it’s necessary for you to consider the differences between the two. A secured loan uses the boat as collateral, with it being sold back to cover as much of the principle as possible if repayments are not made. An unsecured loan, on the other hand, doesn’t carry this risk, with failure to pay only affecting your credit rating. Both loan types can have certain conditions that differ from each other, and your current credit rating may also play into what options you have available.
Be wary of ongoing account fees and charges and other special conditions such as penalties for early payout, etc. It’s also worth checking that you can make additional payments towards your loan with no added fees, so if you do come into a situation to pay your loan off faster you can do so.
3 – Improve Your Chances of Securing a Loan
Assessing how attractive you are to a potential lender can save you lots of time. Knowing your current credit rating will increase your chances of approaching the right lender that can help you obtain boat financing. Review your credit rating and ensure there are no errors or inconsistencies and if so, get them resolved as fast as possible.
Remember to maintain a good credit rating, you must be accurate and honest with credit application forms and make certain you make your payments on time. If you are having financial difficulties, contact your lender as soon as possible and explore what options they can assist you with.
You have a greater chance of obtaining approval if you have stable employment. The longer uninterrupted work you have, the better, as it shows you have a reliable source of income to make repayments. You can also help your chances if you can show long term savings, so consider printing out your bank statement and taking it with you when negotiating.
If you have poor credit history or are a first-time borrower, using a guarantor can be a fantastic solution. The guarantor pays the loan if the borrowing is no longer capable of making repayments. It will increase your approval odds significantly, as it provides the lender a source to recover the principle. The higher the credit rating of the guarantor, the more effective they will be in helping you obtain a boat loan.
4 – Shop Around For Your Boat
Timing the day you shop around for a boat is essential if you want to find the best offer. Like cars, dealers are always trying to clear old stock to make way for new models towards the end of the calendar year. The end of the financial year also traditionally offers big savings with many ongoing sales. It will also be an easier period to negotiate a better sales price. Cheaper boats mean less cash is needed for financing and an improved chance you will be approved for new finance.
Consider the features when you compare loans as well. A boat loan may have a lower interest rate compared to another one that is more feature rich, which may be more suitable for your needs. Perhaps one boat loan has flexible refinancing options while another has an overdraft facility. Don’t just look at the interest rate number, and make sure you’re comparing everything and do your homework.
5- Ask Questions and Make a Checklist
Don’t be afraid to ask questions when you find a loan package that looks attractive to your needs. Find upfront the requirements of the loan, because you will find many unique distinctions between boat loans, particularly between bank lenders versus non-bank lenders. If you feel confused or don’t understand something, speak up and get them to explain it again in a way until you do understand.
Make a checklist of all the important details you require for your boat loan. This way you won’t forget any critical information when dealing with your 360 Finance broker. Also, use a checklist for the documentation you need to submit. This will ensure the application process is not slowed, as a lender waits for a piece of required paper.
We hope these tips help you get the most from your boat loan options.