| Not too long ago, finding a lender that made | | | | - Verification of income (Tax returns for the |
| boat loans was difficult. Today, the | | | | last two years) |
| challenge is deciding which lender to use. In | | | | |
| an active boating market, you'll find several | | | | - Details on homeownership |
| sources for boat loans, so it's a good idea | | | | |
| to compare rates and terms to determine the | | | | - List of monthly financial obligations |
| financing best suited for you. | | | | (Credit cards, alimony/child support, |
| | | | mortgage/rent, etc.) |
| Looking out for the best interests of boaters | | | | |
| and the boating industry is The National | | | | - Personal financial statement (Assets and |
| Marine Bankers Association. NMBA was founded | | | | liabilities) |
| in 1979 to educate current and prospective | | | | |
| lenders in marine financing procedures and to | | | | About the Boat: |
| promote the extension of credit to consumer | | | | |
| and trade borrowers. Members of the NMBA | | | | Have all of the boat information available |
| include financial institutions such as | | | | for the application: |
| commercial banks, private financing firms, | | | | |
| savings and loan companies, credit unions and | | | | - Year, make, model, power, optional |
| retail service companies. | | | | equipment and any upgrades |
| | | | |
| Choosing a Lender | | | | - The total cost, which will include: |
| | | | |
| Some lenders have added boat loans to their | | | | - Purchase price |
| more traditional auto and real estate | | | | |
| offerings, even deciding to specialize in | | | | - All equipment upgrades or additional |
| boat loans by devoting funding and staff for | | | | accessories |
| the purpose. So where should you start? | | | | |
| | | | - Sales taxes that must be paid at the time |
| Your Own Bank Or Credit Union: Many local, | | | | of purchase |
| regional, and national banks are members of | | | | |
| NMBA and offer boat loans directly to their | | | | - Registration, title, or documentation |
| customers. Start with your own bank or credit | | | | expenses |
| union, and call them or check their website | | | | |
| to see if they finance boat purchases. | | | | The Loan Underwriting Process
|
| Inquire about rates and how long a loan term | | | | |
| is available for the boat you are | | | | Getting boat loan is not a sure thing, or you |
| considering. | | | | may not qualify for the entire amount you're |
| | | | applying for. Will you be able to buy the |
| Financial Service Companies: These | | | | boat of your dreams? That depends on several |
| organizations maintain relationships with | | | | factors. The lender will be looking for "red |
| local, regional, and national lenders, giving | | | | flags" on your credit history. |
| them broad access to finance programs. Again, | | | | |
| look for an expert in marine lending, and | | | | - Have you continually and satisfactorily |
| membership in the NMBA. | | | | made credit card and loan payments? |
| | | | |
| Boat Dealers & Brokers: if you're buying from | | | | - Have you ever had a loan comparable to the |
| a dealer, it is likely that an on-staff NMBA | | | | amount you're requesting? |
| Finance Manager will handle the whole | | | | |
| transaction, from assisting with the | | | | - Are you carrying debt that disproportionate |
| application, vessel titling and the loan | | | | to your income? |
| closing. | | | | |
| | | | - Do you have a down payment that meets the |
| Other dealers may not have a finance | | | | lender's guidelines? |
| specialist on their staff, but they may | | | | |
| employ an outside loan service company that | | | | The lender will look at your present monthly |
| handles all the same tasks, and it will | | | | obligations, and then add the monthly payment |
| arrange all of the details, or simply send | | | | for the boat loan. They may also add the |
| you to a bank or financial service company | | | | presumed operating and maintenance costs of |
| they refer business to, to have them handle | | | | the boat to see how these amounts will impact |
| the transaction. | | | | your monthly expenses. |
| | | | |
| Should you work with a lender directly, or go | | | | In addition to your income, the lender may |
| through the boat dealer or broker? Dealers | | | | also look at your overall net worth. Why? |
| usually have established relationships with | | | | Your net worth may be considered for |
| several finance sources. They also have | | | | stability and as a secondary source of |
| access to extended warranty programs that can | | | | repayment should you lose your job. |
| be included in your financing. Because of | | | | |
| their relationship with boat manufacturers, | | | | Things to Consider: |
| dealers may have special finance programs on | | | | |
| certain brands or models. Such programs might | | | | The Down Payment: The down payment is based |
| include delayed first payment, no interest | | | | on the age, type and price of the boat you |
| for several months, or lower rates for a | | | | are buying, as well as your own credit |
| limited time. | | | | profile. Typically, marine lenders offer |
| | | | financing with down payments in the 10-20 |
| Choosing a Loan
| | | | percent range. Manufacturers and dealers may |
| | | | offer a special program that could allow you |
| If you believe that financing a boat is like | | | | to qualify for less on anew boat. |
| financing a car, think again. Much like real | | | | |
| estate loans, several types of loans are | | | | Longer Financing Terms: Very often, a marine |
| available to finance your boat. | | | | lender will offer longer financing terms, |
| | | | which are more attractive than those offered |
| Simple Interest Loans are the most common, | | | | by lenders not actively making boat loans. |
| simplest, and generally considered most | | | | |
| favorable. This fixed-rate and fixed term | | | | Lower Monthly Payments: Because boats have |
| simple interest loan maintains the same | | | | longer life cycles than cars, a marine lender |
| monthly payment for the life of the loan. At | | | | usually extends longer terms on boat |
| the end of the loan, the borrower has paid | | | | loans-which means monthly payments are likely |
| off all interest and principal obligations. | | | | to be much lower than you had expected. |
| | | | |
| Variable Rate Loans have interest rates that | | | | More Electronics and Extras: In addition to |
| float based on different interest rate | | | | financing your boat, a marine lender will |
| indexes, such as the "prime" rate, or LIBOR | | | | allow you to finance optional equipment, |
| rate. Variable rate loans often offer low | | | | electronics, extended service plans and life |
| introductory interest rates, which can change | | | | disability insurance coverage. By financing |
| daily, or at some preset point in the future, | | | | everything with one loan, buyers can usually |
| usually months or years. Make sure you look | | | | afford a newer, larger, or more powerful boat |
| at the adjustable period and other details to | | | | and all the gear that it takes to make |
| clearly understand how payments could change | | | | boating safer and more enjoyable! |
| and anticipate how to manage them.
| | | | |
| | | | Sales and Personal Property Taxes: Although |
| Balloon Payment Loans require borrowers to | | | | this varies by state, most new boat sales are |
| pay the entire balance at the end of a stated | | | | subject to sales and or property taxes; used |
| term. Some borrowers choose this type of | | | | boat sales may also be taxed in entirety or |
| loan, since they know they will only own a | | | | by varying methods. Lenders will require |
| boat for a certain period, say three years, | | | | proof of payment of sales tax to finalize any |
| and prepare to pay off the loan at that time. | | | | loan process. |
|
| | | | |
| | | | Is Your Boat "Loan Worthy?" |
| Regardless of the type of loan, lenders are | | | | |
| required to explain the complete details of | | | | A qualified marine lender want to make sure |
| any type of loan provided. Make sure you ask | | | | you're getting your money's worth with your |
| questions about the different types and | | | | new boat. The lender will research the market |
| choose the one that best suits your financial | | | | value of your boat through price guides, |
| profile. | | | | comparable boats on the market, and |
| | | | discussions with dealers or yacht brokers |
| Applying for Your Loan
| | | | about the boat. In addition, a marine survey |
| | | | by a professional marine surveyor is often |
| Here's a simple rule of thumb: The more you | | | | required. All this is done to verify that the |
| want to borrow, the more details you'll need | | | | selling price reflects a realistic market |
| to provide. Depending on how much you want to | | | | value of the vessel, and that the lender is |
| borrow, some lenders will require a full | | | | comfortable with the loan-to-value |
| written application, while others will take | | | | calculation. |
| the application over the phone. | | | | |
| | | | Loan Closing and Funding |
| The boat loan decision process is quite | | | | |
| simple and straightforward. There are two | | | | Congratulations! Your loan has been approved, |
| major aspects that are examined: You and The | | | | and all that's left is the closing. As in |
| Boat. You may be asked to provide: | | | | real estate lending, this session deals with |
| | | | the paperwork and signatures. The dealer, |
| About You: | | | | lender or financial service company will |
| | | | guide you through the process smoothly and |
| - Your complete name, address, phone number | | | | professionally. Twenty or thirty minutes of |
| | | | review are what it usually takes before you |
| - Employment details | | | | take delivery of the boat. |
| | | | |