Introduction
Buying a used boat is a thrilling experience – you get to explore the open waters, spend quality time with friends and family, and have the freedom to go where you please. But for many people, the biggest obstacle to owning a used boat is figuring out how to finance it. Depending on the type of boat you want, the price tag can range from a few thousand dollars to several hundred thousand. That’s why it’s important to know what your options are when it comes to financing a used boat.
This article will provide an overview of the different ways you can secure the funds for your dream boat. We’ll look at the advantages and disadvantages of each option, so that you can choose the best way to finance your used boat.
Saving Up and Paying Cash
One of the most straightforward ways to finance a used boat is by saving up and paying cash. This is often the easiest and least expensive option, as there are no interest payments or loan fees associated with it. Plus, there are some boats that will only be sold for cash, so if you don’t have the funds saved up, you won’t be able to buy the boat.
According to a recent survey conducted by the National Marine Manufacturers Association, “62% of boat owners paid for their boat in full with cash or savings.”1 If you’re planning on paying for your boat with cash, it’s important to start setting aside money as soon as possible. Here are a few tips for building up your savings:
- Create a budget and stick to it.
- Cut back on unnecessary expenses.
- Set up automatic deposits into a savings account.
- Look for ways to earn extra income.
- Take advantage of matching contributions from your employer.
Bank Loan
If you don’t have the cash to pay for your used boat, you may want to consider taking out a loan from a bank or credit union. To qualify for a bank loan, you’ll need to have good credit and a steady income. Banks typically require a down payment of 10-20%, and the interest rates can range from 3-10%. The length of the loan will depend on the type of boat you’re buying and the amount of money you’re borrowing.
“The average amount borrowed for a boat purchase was $25,000 in 2018, according to the NMMA survey, and the average loan term was 8.5 years.”2 It’s important to keep in mind that loans from banks and credit unions usually have higher interest rates than other types of loans, so it’s important to shop around and compare rates before signing any paperwork.
Personal Loan
Another option for financing a used boat is taking out a personal loan. Personal loans are unsecured loans that don’t require collateral, which makes them attractive for people who don’t own a home or other property. There are two main types of personal loans available: fixed rate loans and variable rate loans. Fixed rate loans have a set interest rate that doesn’t change over the life of the loan, while variable rate loans have an interest rate that can fluctuate based on market conditions.
Personal loans typically have shorter terms than bank loans and lower interest rates. In addition, they can be easier to qualify for since they don’t require collateral. However, there may be fees associated with taking out a personal loan, so it’s important to read the fine print before signing any paperwork.
Finding a Co-Signer
If you don’t qualify for a loan on your own, you may be able to find someone to co-sign the loan with you. A co-signer is someone who agrees to take responsibility for the loan if you’re unable to make the payments. They must have good credit and a steady income, and they’ll be responsible for repaying the loan if you default.
When looking for a co-signer, it’s important to keep in mind that this person is taking a big risk. According to the Consumer Financial Protection Bureau, “a co-signer should understand that he or she is fully responsible for the debt if the primary borrower does not pay.”3 It’s also important to make sure that you’re both comfortable with the terms of the loan before signing any paperwork.
Utilizing a Boat Financing Specialist
If you’re having trouble finding a loan on your own, you may want to consider working with a boat financing specialist. These professionals specialize in helping people secure the funds they need to purchase a boat. They’ll work with you to create a plan that fits your budget and financial situation, and they’ll help you find the best loan options available.
In order to work with a boat financing specialist, you’ll need to have a good credit score and a steady income. You’ll also need to provide proof of insurance for the boat, as well as a copy of the sales agreement. Working with a boat financing specialist can be a great way to ensure that you’re getting the best deal on your loan.
Applying for a Marine Loan
If you’re looking for a loan specifically for a used boat, you may want to consider applying for a marine loan. Marine loans are designed specifically for boat purchases, so they may offer more favorable terms than other types of loans. They also tend to have shorter repayment periods, ranging from 1-5 years.
To qualify for a marine loan, you’ll need to have a good credit score and a steady income. You’ll also need to provide proof of insurance for the boat, as well as a copy of the sales agreement. It’s important to keep in mind that marine loans tend to have higher interest rates than other types of loans, so it’s important to shop around and compare rates before signing any paperwork.
Conclusion
Buying a used boat can be a daunting task, but it doesn’t have to be. With the right financing, you can make your dream of owning a boat a reality. This article has explored different methods of financing a used boat, including saving up and paying cash, taking out a bank loan or personal loan, finding a co-signer, utilizing a boat financing specialist, and applying for a marine loan. By understanding your options, you can make an informed decision about how to finance your used boat.
1 National Marine Manufacturers Association. (2019). Boat Ownership Survey. Retrieved from https://www.nmma.org/research/boat-ownership-survey
2 Ibid
3 Consumer Financial Protection Bureau. (2018). Co-signing a Loan. Retrieved from https://www.consumerfinance.
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