Boat Loans 101: Should You Finance A Boat? #Finance

okay i’ll say it buying a boat can be expensive that’s why 70 of boaters choose to Finance their boat but what exactly is financing a boat how can you

prepare for it and should you Finance a boat all of those questions and more will be covered in this CashNews.co similar to other types of financing boat

Loans are personal installment Loans that are offered by lenders who agree to lend you a fixed amount of money from there you’ll pay the Loan off with interest by the agreed date the greatest difference however is that the Interest

Rates are often higher for recreational vehicles such as boats than they are for your home or your car the average car Loan interest rate currently hovers around four percent while a recreational boat Loan typically averages between six and eight percent

houses and cars are seen as essential Assets while boats are not so in the event of a financial hardship you’d likely have to give up your boat before your car or your house making a boat Loan a higher risk for the lender therefore the higher rate there are

three different types of Loans that you can utilize for a boat secured Loans unsecured Loans and a second mortgage secured Loans are backed by collateral such as a Savings account or vehicle this means that in the

event that the boat cannot be paid for your lender can place a lien on your collateral practically possessing it until the Loan is paid off because this is a lower risk to the lender Interest Rates are often lower for secured Loans on the other

hand with unsecured Loans your Loan is not backed by collateral instead approval for the Loan is solely based on your Credit score and text-decoration: none;">Finances rates are often higher for unsecured Loans and lenders are typically a little bit more selective about who they would approve for this type of Loan second mortgages are an option for individuals who don’t want to

take out a personal Loan but here your home service is collateral of course this is the riskiest Loan option second mortgage Loans also tend to have lower Interest Rates now before you apply for a Loan it’s

important to do a little bit of research this first step will help you understand if and what you’ll be able to Finance and that’s your Credit

score first it’s important to know your Credit score this magic number will let you know if you’re likely to be approved for a recreational Loan or not since recreational Loans are a higher risk for lenders they’re also a little

bit more selective with what Credit scores they’ll accept for Loans generally you’ll need a Credit score above 600 to be approved for a boat Loan although we’ve seen people with lower rates be approved

additionally knowing your Credit score can help you approximate your interest rate which we’ll use in a couple minutes for payment calculations a better Credit score often equals a lower interest rate there are many great options for you to use to check your

Credit score for free i use Credit karma Credit karma uses a slightly different grading model to determine your Credit score however they use vantage score to generate Credit scores where most lenders will be

looking at your fico score Credit karma’s scores should closely reflect your Credit score but it may not be the final score your lenders see and ultimately use to determine your Loan approval another important factor that lenders will assess

is your Debt to Income ratio and your employment and housing stability your Debt to Income ratio or dti is the percentage of the Income that you devote to paying off Debts which include but are not

limited to mortgage payments Credit cards student Loans auto Loans and personal Loans rent payments although they’re not technically Debt are also included in your dti boat Loans will likely

be denied if your dti is higher than 40 or 50 once the new boat Loan is factored in as far as employment and housing stability goes the longer you’ve lived in the same area and worked for the same employers the more favorably a lender is likely to look at you for a

Loan approval now that we know your Credit score dti and stability status it’s important to see if you can get pre-approved for a Loan all the time you spend researching and testing out votes will be for not if you can’t be approved

marine dealerships such as ourselves have in-house Finance applications which are then sent to our various lending partners so you can go about pre-approval that way or

manually apply for pre-approval yourself if you chose to go that route you’d have to individually go through different lenders and assess each offer many lenders require a minimum down payment which often ranges between 10 and 20 percent of the Loan’s value however

there are plenty of lenders that offer lower down payment rates regardless plan accordingly all right now you’ve got a couple offers but you need to decide which option is right for you let’s pretend you’re wanting to buy this suntracker party barge 22 which will cost you around

50 thousand dollars including a trailer prep and freight when you’re comparing lender offers it’s best to choose the offer with the lowest rate fewest fees and repayment terms that align with your budget the longer term length of the Loan the lower you’ll have to

pay however Interest Rates are higher for longer term lengths so you’ll be accruing additional interest that way and vice versa the shorter the term the higher the monthly payments but you’ll be paying less in total interest at the end of the term and now is the time we

do some calculations assuming we take out a 50 000 Loan and pay the boat off over 15 years with a six percent interest rate we’d pay 421.93 cents a month if for example we had a lower Credit score which in turn raises the interest rate to let’s say

eight percent the monthly payment jumps to 477 477.83 point being keeping your score healthy can really help you manage monthly Finances and even buy a bigger dream boat with

the same monthly payment now here’s a little tip if you’re able to put additional money down when you can throughout the term if we put just 50 a month towards the initial Loan we talked about you’ll end up paying off your boat two years sooner and you’re

going to be saving extra on interest putting additional cash towards your boat over the term is a great way to knock off some cash you would have otherwise spent on interest so should you none;">Finance a vote if you’re not able to pay the boat off in full then of course financing a boat allows you to pay for the boat monthly and control how long the Loan term is just remember the lower the rate and the shorter the term the more money you save

this CashNews.co check out this CashNews.co about the true cost of owning a boat right here leave us any questions you may have or recommendations for CashNews.cos we should make down in the comments section and again thank you for foothills marine i’m mason strother and we’ll see you

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