A boat is a great asset. It is used for leisure, business, and much more. Boats are not cheap to buy; maintaining them can cost you a lot of money. If you do not have enough money to buy one or pay for its maintenance, then arranging boat finance may be the best option.
Take stock of your finances
Before looking for a loan, you must take stock of your finances and know how much you can afford to buy a boat. Once that’s done, answer the following questions:
- How much do you earn?
- What do you spend your money on?
- Do you have any savings?
- What is your credit rating like? Is there anything in your past that could affect this (for example, had a bankruptcy or CCJ)?
- Do you have any outstanding debts (for example, a credit card debt or student loan)?
Take a look at your assets and liabilities
The essential step to financing a boat is looking at your assets and liabilities. Assets can include property, such as a house or car, while liabilities could be a mortgage or other debts. If you have few assets and many liabilities, you won’t be able to borrow enough money to buy the boat of your dreams.
Compare boat loans to see what you can afford
- Compare loan interest rates and monthly repayments.
- Check the terms of the loan, including any early repayment fees.
- Look at whether there is a balloon payment (e.g., where you pay off the rest of the loan after a set period)
- Try to get a lower rate by paying a lump sum.
Calculate your loan repayments
The next step is to calculate the monthly repayments you can afford. To do this, use the loan calculator. It will tell you how much your monthly repayments will be and what they would be if you paid off your loan early. It also shows how much interest you’ll have to pay over the life of that loan.
Once you’ve worked out what sort of loans are available and how much they cost per month, it’s time to decide whether or not you can purchase a boat with what’s available. Remember additional costs, such as maintenance and insurance premiums, when determining affordability.
Decide how long you want your loan to last
The length of your loan term is a significant factor in how much you will pay for it. For longer terms, the monthly payments and interest rates are lower. But there are some downsides to a longer loan:
- If you need to sell your boat early, you’ll pay more than what you owe because of accumulated interest over time.
- If you don’t have enough money set aside every month for repayment, this may prevent you from having enough cash flow to make repairs or upgrades.
Find out what options are available to you
There are many types of boat finance available. They include:
- Boat loans from banks and credit unions. These may be offered through the dealer, or you can do research online and apply for it directly with the bank or credit union. It’s crucial to determine what requirements you need to meet before applying for a loan, such as having a good credit rating and enough cash in savings.
- Boat loans from dealerships. The dealership may offer boat financing as part of your purchase agreement on the boat. It could require you to pay off any outstanding balances before taking ownership of your new vessel.
Finance options for buying a boat are varied, so it’s essential to do your research first and understand the interest rates and fees charged. When you are arranging a loan to buy a boat, it is crucial to understand that the terms and conditions of your arrangement will differ depending on the lender and the type of credit facility.
Banks often require collateral for any loan and may ask for additional collateral if they want to secure their investment. It can help protect their assets if something goes wrong with their initial investment (for example, borrowers default).
A boat is an excellent investment, but it is expensive. If you want to own one but need more capital to buy it outright, availing of boat finance could be the ideal option. Many types of loans are available, and you must know what type suits your needs best. Then finding one will be easy.
Author name: Grace