Individuals who want to get boat loan can check with banking institutions, credit unions, and financial service companies. Most national, local, and regional banks provide boat loans to their customers. Some banking institutions advertise their loan products in boating magazines and other publications. Financial service companies maintain good relationships with national, regional, and local lenders that give them access to diverse financing programs. These companies also advertise in various boating publications. Credit union members enjoy attractive interest rates on boat loans and if there is a marine lending specialist on staff, credit unions will offer you an attractive boat loan package.
Choosing a loan
Similar to real estate loans, boat loans come in several types. The most common and preferred type of loan is the fixed term or fixed-rate interest loan. The borrower is required to make the same monthly payments until the loan is repaid in full. At the end of the term, the borrower has paid off the principal and all interest on the loan. This done, the borrower ‘burns the mortgage’.
With balloon payment loans, the borrower has to pay off the full balance at the end of the specified term.
Boat Brokers and Dealers
Persons who choose to buy a pre-owned or new boat from boat dealers typically get assistance with the loan process. The majority of dealerships have finance managers who hold responsibility for the whole transaction – from assisting borrowers with the application to the loan closing. Other dealerships do not have finance managers on staff and use the services of loan service companies. These entities take care of the entire process, arranging all details. A third group of dealers send their clients to a financial service company or bank that handles the transaction on behalf of the client.
Applying for a boat loan
Some lending institutions require a written application, while others accept applications over the phone. The application procedure mostly depends on the amount of the boat loan. The higher the amount, the more details are required.
Potential borrowers should provide copies of tax returns as a form of proof of occupation. Most lenders will request tax returns for the past 2 years. Some institutions require that the client prepares a personal financial statement containing his or her assets and liabilities. Lending institutions will request this information is order to make the best decision, and the client’s cooperation is a definite plus.
Last but not least, potential borrowers should fill in the model, make, year, optional equipment, power, and any upgrades in the application. They have to identify the cost of the boat, including: purchase price, sales taxes payable at purchase, registration expenses, and the cost of any additional accessories.