Boat Financing: Part II
You’ve found the right boat, re-arranged your finances, gotten a raise and scoured your savings account. In Boat Financing Part I we talked about where to find a boat loan and what kinds are offered—now let’s talk about the loan process.
Getting a boat loan is not really different from any other property secured loan, but there are a few specific twists.
Read, set, apply. The application process for your boat loan depends on the lender, but generally you can apply in person, on the phone or over the Internet. Some lenders like full and lengthy applications and others less, but generally the more you borrow the more detail you’ll have to get into on the application. Have your financial affairs in order, understandable and available to keep the loan officer happy and make the application process go smoothly. Tax returns (usually 2 years) will often be asked for, so have them ready. Have all the information about the boat you want to purchase available, including; year, manufacturer, model, power, equipment (standard and optional) and any upgrades that affect overall value.
How much? Consider how much you really want to borrow. Your available down payment, monthly income and general sense of “is this worth it?” should all be used to determine how much you want to borrow. Of course, you will need the price of the boat, any specific near-term upgrade or repair costs, sales or transfer tax, documentation and other fees to help determine the loan amount.
And then? From here the lender will perform a credit review to see if you are a good bet and can handle the loan. Credit history, debt to income ratio etc. will be scrutinized by the lender. The lender will also verify through some form of appraisal that the boat is worth what you are paying for it. Considerations such as the boats age, construction, damage history, and results of a survey, if required, will help the lender arrive at a final value they are prepared to lend.
Done! If all the pieces fall into place you’ll be given the loan and, just as with real estate, you will go through a closing process with all the attendant paperwork. If all goes well, you can be on the water as soon as the ink is dry. Hoorah!
We hope these two brief articles about boat financing are useful. In the end, don’t buy more boat than you can comfortably afford. Buy wisely, shop for a loan if you need one, and then enjoy your time on the water.