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Buying a New Boat: What to Factor in when Financing
First-time boat buyers can rely on these well-established guidelines that simplify the financing process.
Consider the full cost of boat ownership
First, you need to calculate the full cost of ownership of your new boat to make a budget. You’ll need to factor in the purchase price, financing cost, insurance, taxes, freight, commissioning, registration, slip or storage fees, upgrades and maintenance costs.
Next, you'll need to learn how much of the full cost can be financed. The labor associated with equipment installation or commissioning typically doesn't qualify for financing. Be sure to check with your individual lender for details.
Secure boat owner's insurance
Getting insurance on a new boat is necessary in order to secure a loan. Boat dealers can share lists of names they trust like Boater's Choice Insurance. Dealers are also a great resource as they will walk you through the insurance process quickly and easily.
Know your boat financing options
Your personal banker may not offer vessel financing but there are other options. An excellent source of available lenders and loan originators is the National Marine Lenders Association. You may also be able to use your boat dealer's own in-house lending program or ask for a list of recommended marine financial solutions. While in the process, ask about rates and payment plans that fit your budget.
Be an attractive borrower
To receive the best rates from top lenders, you’ll need to present your best borrowing self. Lenders look for a high net worth (2:1 net worth/debt ratio), liquidity, experience with similarly-sized loans, homeownership and stability, and a high credit score (700+). It’s not necessary to rank highly on all of these, but a solid foundation will have you choosing between lenders rather than the other way around. Some lenders will accept a credit score as low as around 620, but, as with other loan purchases, the higher your credit score, the more likely you will be to secure a favorable interest rate. Boat loan interest rates can vary greatly depending on your credit score, and the other factors mentioned above.
