How To Get A Used Boat Loan - Bankrate.com

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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
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Whether you enjoy setting sail for a day of relaxation or going deep sea fishing, a used boat can make those dreams a reality. But maybe you’ve been forced to put your dreams of owning a boat on hold because you don’t have the funds to purchase one outright.
Fortunately, financing options, like used boat loans, are available to make boats more accessible to marine enthusiasts. But before you take out a loan, familiarize yourself with the process to avoid surprises when it’s time to apply or later down the line.
Although securing financing for a used boat is possible, it becomes more difficult with older models. Depending on the vessel’s year, make, and model, the lender may be reluctant to approve you for a loan out of fear that it’ll become obsolete and you’ll stop making payments. So, you may be charged a higher interest rate or required to make a hefty down payment to help minimize the risk posed to the lender.
Before shopping for a used boat loan, understand how these factors may impact your finances and the terms you receive.
Can you afford the monthly payment on a used boat loan? You can use a boat loan calculator to determine a purchase price that works for your budget. It’s equally important to include other boat ownership costs you’ll incur at the point of sale and for as long as you own the boat. These include registration fees and taxes, insurance for your vessel, marina fees and storage costs (if applicable). Also, don’t forget to factor in the cost of fuel and maintenance, along with fees for your boating license.
How much does the boat cost, and what loan amount will you need to make the purchase? Confirming this amount is vital, so you’ll know which lenders aren’t an option when shopping around. If you plan to roll origination fees (if applicable) and other upfront costs into the loan, you’ll want to include those when calculating how much you need to borrow.
The lowest interest rates on used boat loans are generally reserved for borrowers with good or excellent credit scores. A lower credit score doesn’t automatically equal a denial, but you can expect borrowing costs to be higher. Furthermore, the lender may require a hefty down payment to secure a loan.
To illustrate, if you get a 5-year $20,000 boat loan with an 8 percent interest rate, you’ll pay $406 per month and $4,331.67 in interest over the life of the loan. But if your credit score is lower and your rate is 21 percent, the monthly payment will increase to $541.07. Plus, you’ll pay $12,464.03 in interest, an increase of $8,132.36.
So, checking your credit score and ensuring it’s up to par before applying is worthwhile. Otherwise, you could spend a fortune on interest.
Used boat loans are available through dealerships, online lenders, traditional banks and credit unions. Here’s what you should know about each option.
Once you’ve decided on a loan amount, ran the numbers and checked your credit score, here’s how to move forward with applying for a used boat loan:
A used boat loan is worth considering if you can’t afford to pay cash. However, your credit score should be up to par to ensure you get the best deal on financing. You also want to run the numbers to ensure you have room in your spending plan for monthly payments. Use the boat loan calculator to understand how much you can expect to pay each month.
Most importantly, research lenders and get pre-qualified to identify the best loan offers based on your credit profile. That way, you can apply confidently and have peace of mind knowing you’re getting the best deal on a used boat loan.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
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