The Best Financing Options for Boats
As one of the costlier purchases a person can make, a boat is not something you buy without putting a lot of thought into the decision. Most people aren’t going to have the full sticker price of the boat available to them in ready cash to hand over at the dealership, which is why many potential boat owners look into financing their boat purchase in some way. There are a number of different financing options out there if you know where to look, and these options can help you to get the boat of your dreams a lot sooner!
JC Sports in Seneca is proud to be your South Carolina boat dealer. Read on to learn more about boat financing and what you should think about when looking to obtain a boat loan.
Types of Loans
A boat loan is classified as a sort of installment loan, which means that you’ll make a series of fixed monthly payments over the course of several years. The interest amount varies depending on what lender you obtain the money from, as well as how much money you request, your current income level, your credit score and the loan type, which may be either secured or unsecured.
A secured loan uses the purchase itself (your new boat) as collateral. Should you fail to pay off the loan, which is called “defaulting,” you will lose possession of the boat itself. A secured loan has a higher limit with lower rates and longer repayment periods. Secured loans are the best choice if you’re in need of more money up front or you can’t get an unsecured loan for some reason.
An unsecured loan, on the other hand, doesn’t require you to put up collateral in case you default, but you may have to contend with wage garnishment, lawsuits or a precipitous drop in your credit score if it’s not paid off. The rates for unsecured loans are higher, with shorter terms for repayment.
Where To Look
There are a few places you can look if you’re interested in a boat loan. Most banks and credit unions offer them, but you can also seek out a marine lending specialist if you prefer. In fact, we here at JC Sports have our own boat financing department to help you out!
Banks
You can use most banks as a source for a boat loan, even if you don’t already bank with them. However, if you select the bank that you already have a checking or savings account with, then your interest rate will likely be lower. Repayment periods for bank loans range from one to several years, and you can get a great deal of money from them, but how much will depend on the amount you’re requesting as well as your current credit score, which is why it’s smart to check on and try to improve your credit before applying for a boat loan.
Credit Unions
A credit union is a type of non-profit lender which is good for anyone who has poor credit. Credit unions offer secured loans, using your boat for collateral. You may be able to get more money at a lower interest rate at a credit union.
Marine Lending Specialists
A marine lending specialist can act as a broker to assist you with obtaining a loan through a variety of resources. You’ll get similar rates and terms as you would with a bank or credit union, but these professionals can help you with the nuances of boat loans. You may need to have up to 20% of the boat cost up front as a down payment to get a secured loan via a marine lending specialist.
Additional Considerations
You’ll need to do some math to determine how much interest will build up over time on your boat to make sure that you can afford the monthly payments for a given loan. Your boat payment should not be more than 20% of your monthly income.
Also, always read your loan terms very carefully so that you’re sure you know the obligations you need to fulfill. You never want to sign something that you don’t fully understand.
The boat itself is not the only thing you’ll be spending money on. Don’t forget to factor in fuel costs, licensing fees, registration, insurance premiums, maintenance and repair costs, storage options and additional supplies like life jackets.
Bear in mind that your new boat will depreciate in value over the next few years, with the first year being the steepest in terms of lost value. If you prefer to avoid this, you can search for used boats instead. When buying a boat, you may also want to consider whether it will be too challenging to sell a given boat in the future.
We hope this guide has helped to demystify the boat financing process. Ready to go shopping? Come on down to our location in Seneca today to check out our vast array of new and used boats for sale. We even provide boat financing services right here at our dealership! Ask our staff if you have any questions about how to finance your boat purchase. JC Sports proudly serves our customers in the cities of Greenville and Anderson, South Carolina.