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