With all of the uncertainty in the economy lately, potential boat buyers may be concerned about the costs and availability of boat loan financing. The good news is that credit for marine purchases and refinances remains widely available and historically inexpensive for qualified borrowers, and despite many banks exiting the business, there are still several lenders out there who can help with financing. If you’re thinking about a new boat purchase, here are some things to take into account:
Credit considerations
Before you begin boat shopping, consider how your personal financial status can impact your borrowing experience. Your credit score, liquidity, down payment and income/job history can all factor into the financing offer you receive – so it’s a good idea to review and understand your credit history before applying for a loan.
Choosing a specialist
Marine finance is a very specialized business line, and it makes sense to choose an experienced lender. Some choices to consider are: commercial banks that provide loans directly to the consumer with no additional fees;marine finance service companies that broker financing on behalf of the buyer for a lender-paid fee, typically with lower rates than borrowers could get on their own; and boat dealers who also receive a fee from the lender and try to make the process as fast and convenient as possible. A good place to start your search is www.marinebankers.org, where you can find a marine lender that’s a member of the National Marine Bankers Association (NMBA).
Types of loans
After deciding on a lender to help finance your boat purchase, another choice to make is loan type. Loans are generally either fixed rate, variable rate or a combination of the two. Fixed rate loans offer the stability of a fixed payment amount every month. Variable rate loans adjust their payments as interest rates go up and down and are usually offered at a lower initial rate than fixed. An adjustable rate loan starts out fixed for a period, usually three years, and then begins to vary as interest rates fluctuate.
Remember, a loan with the lowest rate is not always the best choice. Talking with a marine lending specialist to review your options is an effective way to make sure you’re getting the right loan at the right rate for your personal financial situation.