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With the boat-buying season heating up, BoatUS has tips on how to get a boat
loan.
Know These 3 Critical Things Before Getting a
Boat Loan
As reported by the BoatUS Boat Finance
Department
It’s high
season for shopping for a loan to finance a recreational boat purchase,
according Boat Owners Association of The United States (BoatUS). The nation’s largest advocacy,
services and safety group urges boaters to be smart consumers when it comes to financing a new
or used boat and offers three tips to help you avoid common problems when
applying for a loan.
“Boat buyers
can help themselves by knowing three key things: how loan rates work, how much
of a boat loan you can afford, and your credit score,” said BoatUS Boat Finance
Department Manager Rache’ Llerena. “We see these same three mistakes every day.
Educating yourself and being candid about the numbers make you a wise consumer
and may put you in stronger position when seeking a boat loan.”
Here’s what
you should find out before you apply for a boat loan:
- Know
how boat loan rates work. Fixed-rate, fixed-term, simple-interest
loans are the most common. They have the same monthly payment for the life
of the loan, typically from 10 to 20 years. Down payments from 10% to 20%
are the norm. Generally, interest rates are lower and loan terms are
longer for newer boats and larger loan amounts. However, each are
dependent on a variety of factors including model year, loan amount and
down payment. Be prepared for lenders to require larger down payments,
charge higher rates and offer shorter terms on older boats, especially
those over 20 model years. There could also be a rate difference between
some consecutive model years, so talk with your lender to better
understand the rate and term structure.
- Know
how much you can afford. Estimate
your monthly payments using the BoatUS online boat loan calculator.
This tool is a good starting point in figuring what is affordable, but
remember your lender will look at your debt-to-income ratio and other
criteria, which may change the amount.
- Be
an open book with your credit report. The closer the
score to 700 or higher, the better the chances you’ll be approved. So
before you apply for a loan, ensure your credit report is accurate. That
goes for both applicants if two people (siblings, spouses, business
partners or friends) are buying a boat together. While you can get free
copies of your credit report from all three national credit bureaus at annualcreditreport.com (the only site authorized by federal law), for your credit score you’re
going to have to go to your bank or financial institution. Additional
options are to buy it from all three credit bureaus individually or
through an online service. Also note that depending on the bank, a credit
report ding like a past bankruptcy or foreclosure may not preclude you
from getting a loan. More information is available at the Consumer
Financial Protection Bureau.
For more
information on boat loans or to apply for one, go to BoatUS.com/Loan.
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