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Things You Need to Consider Before Applying for a Boat Loan

If you’re ready to have your morning coffee on the deck of your dream boat, then you’ll need to start thinking about boat loan choices. Getting a boat loan is a lot like getting a car loan, as they have many of the same options. Read further for a list of things you should look into before applying. 

Set Up Financing With a Lender

A lender will help you set a finance plan that works for you. You may wish to contact one of the marine finance experts through this site to set up a payment plan that suits your needs. You’ll need to answer a few of the following questions, and just like any kind of loan, those answers will determine what kind of finance arrangement can be set up:

What’s your net worth?

What’s your income

Do you own a home? 

What’s your employment history? Do you currently have a job?

Have you ever filed bankruptcy? 

What to Know Before Applying

You’ll need to know what you can afford to pay on before you begin to fill out an application with a lender. Estimate your monthly payments and interests with a loan calculator that can be trusted. A loan calculator is a handy tool in figuring out what kind of loan will best fit your income.

Find out what your credit score is so you are aware of the likelihood of getting approved. A credit score of 700 is ideal, and the closer you are to that number, the higher your chances of approval are. If you’re buying a vessel with someone else, then they’ll need to check their credit score as well. Checking your credit score is easy and free, but you’ll need to make sure you go through the best channels to get an accurate one. There is a possibility that any black marks on your credit score could prevent you from getting a loan, so be prepared for that. 

Know the types of loans that are out there. Fixed-rate, fixed term, and simple interest loans are the most prevalent types you’ll encounter. The monthly payments will be the same for the lifespan of the loan, roughly 10-20 years, and you’ll need to be able to afford a down payment of 10-20 percent. New boats with large price tags will come with lower interest rates and longer loan terms. Depending on your lender, the down payments can vary, but older boats will usually have higher down payments with shorter terms and larger interest rates. 

Don’t Fall for the Ad

You might see some sites or shops with big banners or headlines about dirt cheap interest rates or instant approval. Any company with instant approval is definitely going to have high interest rates that will cost you more than what is fair. And low interest rates could come with fine print that would make the loan not as appealing. For example, maybe the low interest rates would only last for a couple of years, and then they would spike up later on. These types of scams could seriously cost you, so don’t be fooled. 

Compare Rates

Just like buying anything, you wouldn’t want to sign off on anything until you’re sure you’ve got the best deal. You won’t know that you’re getting a steal unless you’ve shopped around. Chances are, you won’t get lucky with a solid offer unless the lender can tell  that you understand the market and what other companies are offering. Get a quote from several different lenders and compare the rates before deciding. 

Look into Pre-Approval

Before you get in deep with the application process, ask your lender if you can get pre-approved for the boat loan. If you have good credit, a stable monthly income, and no dings in your credit history, then you could get pre-approval. This will save you loads of time. 

Discuss Closing Costs

There are typically fees involved with closing on a loan. Most lenders will require you to pay a processing fee, sales tax, and registration and title fees. This is something that should be discussed before you sign so you’re fully aware of how much the loan is actually going to cost you. Instant loan companies that don’t require high credit or care about bankruptcy will usually stick you with higher processing fees to ensure they break even if clients dip out on payments. 

Getting a loan for your dream vessel is a lot easier once you understand the terminology and what type of market you’re dealing with. Before you dive in, do some research on the type of loans and get an understanding of the jargon used. That way, you’ll surely have no problem getting set up with a suitable loan.

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