There are boat finance options available that allow a prospective buyer to have the vessel of their dreams in a process that’s not only fast and easy but is also flexible when it comes to payment.
If what’s stopping you from applying for boat financing is your past financial or credit records, then you may want to look deeper into the current options that are available.
Some companies now offer assistance regardless of a client’s financial history because they have access to some specialized lenders that make it possible.
At this point, if you’re thinking of getting a boat, it’s important to understand that ins and outs of boat financing. Here are some pointers to get you started:
How does boat financing work?
Boat financing works in much the same way as a car loan or other loans: you borrow money to buy a boat and you pay the lender the amount plus interest. Installments, or partial payments of equal amount spread over the duration of the payment period, are paid on regular basis until the whole amount is settled. In other words, you and the company agree on an amount and the length of the payment period, which would determine the interest that would be added to the total.
You can select from several options, such as short term, long term, low interest, secured, or unsecured. Often, the finance company will tailor the package for you, such as the payment schedule, terms on extra repayments, balloon payments, leasing, and so on. There could also be other options that you can avail to keep the loan from being a burden.
Moreover, there are lenders that can process your loan through phone calls or emails and you may even be able to get approval on the same day without the need for lengthy or complicated application procedures.
What can you do to make approval faster?
Boat financing is meant to make your dream of owning your own vessel become reality. The thing you need to remember, however, is it’s not about getting the biggest amount you can; rather, it’s about selecting the right package so your dream won’t become a nightmare come payment time. Here are some reminders that you should consider:
- Get your information
Before you inquire or apply for boat financing, it’s best to get your documents ready – those that will prove to the credit provider that you will be able to pay them for the loan. Get your bank statement and documentation that show your income. A stable employment or business would be good, as any loan company would be more open if they know that you have means to make regular payments.
Also, check your credit records and make sure that there are no mistakes, especially with your credit rating. Should you find an error, have it corrected before you apply for new financing.
- Know your budget
Determining how much you will borrow is not just a matter of looking at how much you earn. It’s actually looking at how much you earn minus your current expenses (mortgage/rent, food, transportation, utilities, credit cards, kids’ tuition fees and allowances, clothing, etc.). Include how much you set aside for your savings as well as other things that you spend on. From what’s left, you can determine the amount you can afford for your vessel. Remember, however, that when you’re computing, include the regular boat payment as well as other boat expenses like fuel, mooring, and maintenance.
- Do your research
There are many credit providers but they’re not created equal. Don’t go for the first one that you see; instead, be patient in finding out more about them. In much the same way that they screen applicants, so you, too, should screen companies. For instance, find out about any additional charges that they may have like interest rates, service fees, penalties, and so on.
There are different lenders that you may want to consider, such as banks, financial service companies, and credit unions. You might also consider getting financing from the boat dealer or from a member of the National Marine Lenders Association.
- Go for honesty
When you’re applying for boat financing, you will be required to answer some questions, which may include: your net worth; if you own a home; how long you’ve been living in your current residence; what your current employment status is; what your income is; if you have credit cards; and if you have ever filed for bankruptcy in the past. In short, you need to give the lender a picture of your financial status, including assets, income, and debts.
Be truthful when answering the questions in your loan application, no matter what your credit or financial history may be. This will allow the credit provider to assess how much they would lend you, the terms of payment, and the interest. Any falsehood could result in serious issues later on, which might, in turn, cost you more, not to mention the risk of legal problems.
- Get pre-approval
Pre-approval is a process in which you give the lender information and documentation so they can check your financial background as well as your credit rating. This will allow them to tell you how much you can borrow and give you an idea of the interest rates, and so on. With this, you will be able to select a boat model at a price that is at or is less than the amount you can loan from them.
Remember that pre-approval is different from pre-qualification. The latter is just an evaluation of your general financial information without analyzing your credit record or financial capabilities to pay. This is only to give you a rough idea on the amount that you might be qualified to borrow.
From here, you can start gathering your data and documentation, and you can begin your research on which company gives the boat financing option suitable for you. Surely, you will find the company that will offer flexible terms so that paying for the boat you’ve always wanted does not become a burden on your finances.