#boat loan rates
Boat Loan Rates
There’s never been a better time to buy with boat loan rates rates at historic lows
The boat loan rates of a 15 or 20 year loan are lower than financing for a house, in some areas of the country. With boat loan rates like these almost anyone can afford to get on the water. Let’s discuss some boat-financing basics. The advantage of buying a new boat is it will come with a full factory warranty. Even then have the boat surveyed before you take delivery. New boats do not necessarily get the best boat loan rates, it depends on a lot of factors. It is advisable new boat buyers to put down at least 20 percent of the purchase price. This not only gets the best boat loan rate possible, but it helps prevent the resale value from ever falling below your outstanding loan balance. Obviously that is a situation to be avoided, if at all possible.
It very important to prepare a realistic budget of the boat’s operating costs, not just the boat loan rate. There are dockage payments, these can often be a bit of a surprise. You must include the cost of boat insurance. A good way to estmate insurance cost is take one percent of the boats replacement value. As an example, budget a $800 premium and a $800 deductible, for an $80,000 boat.
How to get the best boat loan rates
Do not make ten different applications to finance companies to get the best boat loan rate. This can adversely affect your credit score. All reputable sources post their boat loan rates without making an application. Pick the one you like the best, get preliminary approval for the amount you require. At this point you can safely start looking for a boat you know you can afford.
Always tell the truth about your financial situation, because all that facts will be discovered, along with any other credit skeletons that may be hiding in your closet. It comes as no surprise that the best rates go to the purchasers who can put 20 percent down, borrow $50,000 and take a term of at least 15 years.
The price of the boat you purchase should not exceed the amount of your annual income. Make sure you have all the financing details assembled before submitting the package to a lender. It is a good idea to get the cost any options you might want included into the financing package, rather than have to pay cash for them later.
You should have you new boat documented, if it have never been done before. Any boat over 5 net tons is eligible for documentation by the U.S. Coast Guard. The tonnage number has nothing to do with displacement. It is the potential below deck storage area.
When you’re applying for boat loan you don’t want on your record revolving credit-card debt. Lenders do not like that kind of debt and lower your credit score. It is hard to get the best boat loan rates if your total debt is more than 40 percent of your income.
Boat loan lenders look not just at your credit score and overall debt to income ratio, they also look at an your liquidity, cash on hand and overall net worth. Find a lender with good boat loan rates who you would like to work with and stick with that company. Because every additional credit inquiry from a different lender has an negative effect on your credit score. It can also lead to duplicate applications from different sources but being sent to the same financial institution for approval.
You must be aware of the effect of depreciation because over time it determines the lender’s collateral and the owner’s equity. In general, the smaller and less popular the boat, the higher the annual depreciation. For larger cruising boats a boat depreciates by 15 to 20 percent of the purchase price in the first year. After that, annual depreciation will run between 6 and 8 percent for up to seven or eight years. From then on prices tend to stabilize. Depending on the model and the current price of new boats, the resale value could actually start to increase.
When getting a boat loan rate for the purchase of a used boat a lender is going to look for a current boat survey, check the published used-boat price from BUC Research, but most importantly check the financial strength of the buyer. These factors will really effect used boat loan rates.
When getting a boat loan rate for an old boat, even a wooden boat, the lender cares less about its actual value of the boat and mostly at your ability to repay the boat loan.
When you purchase a new boat the depreciation is worst in the first year, but if you stay with a popular boat from a reputable builder, the boat will hold its value quite well. A boat can even sometimes qualify as a second home so the boat loan interest can be written off.