You may want to buy a boat for many reasons. You could be a commercial fisherman looking to add to your fleet. Or you could want a sail or power boat for some fun with the family. Perhaps you’re looking into purchasing a yacht as your home away from home. In any case, you will probably be looking for a boat loan to help finance your plan. Here are some important things to consider when contemplating your loan–and your boat.
First of all, boats are classified as recreational vehicles; they are a luxury, not a necessity, so the terms of a loan will be stricter than those for a house or car. That said, there are many banks and marine lenders out there who offer loans for all kinds of boats, including power and sail boats, high-performance boats, “liveaboards,” older wooden boats, or even multi-hull models.
Before you check out boats, you may want to get pre-approved for a loan first, so you can shop with confidence–and within your means. You will need to provide the same information you would for almost any kind of loan: two years’ worth of your tax returns, proof of income, and your monthly expenditures. Your prospective lender will most likely examine your credit score as well. The minimum amount most lenders are willing to finance is $25,000; some will go as low as $15,000. Keep in mind that you will have to furnish a down payment of at least 10 percent of the boat’s value.
Plot a Course to Your Boat Loan
Once you decide what kind of boat you want–and which ones you can afford–you’re ready to go shopping. Keep in mind that there are other expenses involved with having a boat, including insurance, fuel, dockage, and maintenance costs. With these realities in mind, you’ll be ready to sail into the sunset on the boat of your dreams.
- Apply for a Home Equity Loan – to raise money for a boat purchase