Buying a boat is a dream for many water-lovers, whether for sport or pleasure. However, a boat can be a significant purchase that is not easily covered with cash on hand. The purchase price range of a new motor boat is between $20,000 and several hundred thousand dollars, while a pontoon boat averages around $35,000.
For most boat enthusiasts, this is not something they can pay for out of pocket. That’s where boat financing and boat loans come in to lend a helping hand.
Types of Boat Loans
Boat loans are specifically designed to cover the cost of a new or used boat for a qualified borrower. Some lenders offer loans for boats, with special terms and rates, while others do not offer this type of financing, even if the borrower is qualified.
Like other types of financing, boat loans may be available with a wide range of interest rates, repayment terms, down payment requirements, and other up-front or built-in costs. It is necessary to understand your options before purchasing a boat.
Types of boat loans may include the following:
Fixed interest rate boat loans with a set interest rate and repayment amount over the life of the loan
Variable interest rate boat loans with a fluctuating interest rate and fluctuating payment over the life of the loan
Balloon payment boat loans with a smaller monthly payment due for the majority of the loan term and then a large, lump sum payment at the end
Personal loans for boat purchases that do not require the boat to be used as collateral to back the loan
Home equity that uses a borrower’s personal residence as collateral instead of the boat itself, with either variable or fixed interest rates
In addition to these traditional options for financing a new or used boat purchase, there may be specialized boat loans that combine one or more of the features listed above for qualified borrowers.
Any type of boat may be financed, so long as the prospective boat owner qualifies for the new loan. Lenders may have specific requirements for minimum and maximum loan amounts for boat purchases, as well as specific terms for how long repayment can extend. However, just about any boat purchase, including speedboats, yachts, pontoon boats, and water sport vehicles, can be financed.
Borrowers should note that boat loan lenders may differentiate between used boats and new boats, similar to how auto loans are priced. Because used boats represent more of a risk, loan terms may include a higher interest rate, a shorter repayment term, or a combination of the two. Typically, new boat purchases have the best available loan terms.
See the full article here: Boat Loans and Financing Options
