Boat Loan Down Payment Requirements - With cheap fuel, low interest rates, tons of new boat models, and plenty of lenders, now is the perfect time to buy (and finance) a boat. Nowadays, taking a loan is also becoming more and more necessary as it has increased and become more expensive. The average new boat loan today is over $200,000, so larger loans have been on the rise. That said, small loans are also getting attention after national and local banks, financial services companies and credit unions have returned to offshore lending since the recession. Maybe it's time to take the plunge and get your dream boat.
About half is financed, and that percentage increases with new purchases. But this is no longer the world of declared income. Lenders do their due diligence, and with today's access to online resources, background and address checks and income verification are easy, the process has become somewhat more complicated. Do not be afraid, there are many experts who can guide the borrower and make the process less unfamiliar and boring. With almost 30 years in the marine lending industry, Trident Finance is the boat finance partner of choice. You can get marine lending support and tools at Trident Funding.
Boat Loan Down Payment Requirements
Shippers can expect a roughly standard 20/20/5 loan (a 20-year loan with a 20 percent down payment at 5 percent interest) quickly and relatively hassle-free.
Down Payment Assistance For Virginia Home Buyers
A boat loan can be confusing. At Trident Financing, we simplify boat loans and yacht financing tools.
Whether you are buying a home, car or boat, lenders are looking for stability and consistency in your employment history, income and assets.
Interest rates fell around 2014, but are still low by historical standards, and borrowers can expect rates of 5-6 percent. The amount of down payment required will depend on the age, price and type of vessel, as well as the borrower's credit profile. Expect to pay 15-20 percent on most monohull cruises. Loans for multi-homes usually require a larger down payment (20 per cent) than for a house (25 per cent). A zero loan is possible, but it will require a special lender and a special borrower profile, and this will inevitably translate into higher monthly payments.
Most boat loans are for 15 or 20 years and there is often no prepayment penalty. A longer term means lower payments, but also more total interest paid. A three-month delay in payments is possible after the initial purchase with a 90-day deferred loan, which can (very slightly) increase monthly payments for the duration of the loan.
Boat Loans Frequently Asked Questions
New boat loans can be originated, processed and closed within a week, which is much faster and easier than real estate loans. Pre-owned boats take longer to finance. Lenders who know the marine industry can process the paperwork faster, provide worksheets detailing all the items needed for a real estate boat loan, can direct you to the necessary resources and interest in the loan . Working with them can be much quicker and easier than working with the borrower's personal banker.
Typically, buyers can get a boat loan that lasts for 15 or 20 years, usually with no prepayment penalties.
You may not be aware of some of the small benefits that can help you in the funding process. For example, borrowers can pay cash to get the boat right away, but choose to finance later (like 3-6 months, but not years later). Tax deductions are also possible. As long as the boat has a bed, head and galley, it qualifies as a second home, so the interest is deductible on federal tax returns.
Additionally, the vessel can be placed in a family trust, but in this case, be sure to consider the additional costs of attorney's fees. More lenders are placing yachts in single asset limited liability corporations as long as the boat is for personal use. This has some tax advantages, especially when it comes to sales.
How To Get A Used Boat Loan
Financing is not just about the price of the boat. Fixed or tangible assets can often be included in a boat loan and this can include electronics, mounting kits, base paint and extended service plans. That said, installing new electronics, undercoating, and operating tasks cannot be funded.
Finally, remember that boat dealers and brokers are excellent free resources. They are interested in selling boats and have relationships with lenders, insurers, surveyors and repair facilities in the marine industry. They can walk the borrower through the lending process and manage expectations on timelines and necessary steps.
When it comes to your first boat loan, don't be afraid to ask for help. Dealers, brokers and our team at Trident Funding are happy to help you understand the process.
Now for the red flags: First, insurance is required and should be in place before the loan closes. Your broker can help by providing a list of reputable boat insurance agencies.
Boat, Rv, Leisure Loans
Liveaboard status is offensive, so if the boat is going to be your primary residence, you're likely to face some obstacles. Eviction laws make it difficult to return a living board, and by definition, a living board likely does not have a primary residence that can be used as collateral. That said, it is not impossible to finance a houseboat.
Many lenders will not finance a boat that is on charter because it will be used for commercial purposes. It is possible to finance a charter boat, but there are specific lenders and rules for this process.
Since more than 85 percent of products sold in the United States are pre-owned, it's a good idea to get used to financing as well. However, securing a loan for a used boat is more difficult and often more expensive. First, a survey or assessment is used, which involves raising money and other expenses. In order to estimate the fair market value, the bank sometimes asks for similar products apart from research and unique/vintage ships. A title check will be required to ensure there are no outstanding liens. Some lenders can finance a boat that is 20 or 30 years old.
Finally, consider the total cost of boat ownership. For example, buying a $500,000 boat doesn't mean you'll have $400,000 to finance even after a 20 percent down payment. The costs to be included in the total price include U.S.C.G. Documentation fee (about $500), survey for older boats (about $25/long foot), insurance, loan processing fee, taxes, freight, operation and more.
Boat Loan Calculator: Estimate Monthly Payments On Your New Or Used Boat
The lending landscape has changed since the depths of the recession and the vast majority of boats will be eligible for loans. The process is more rigorous and background and reference checks could be more thorough, but the number of loans being given out is increasing, which is generally good news for the boat.
Because there are more borrowers than there were five years ago, subprime borrowers with credit scores in the 600s can still benefit. The trade-off will be higher rates and installments, but many lenders are now willing to negotiate.
In such friendly lending waters, why not jump in? With a good lender, that boat you've been eyeing may be out of reach after all.
For more information on buying a boat, visit our Boat Buyers Guide, or read How to Buy a Boat: Tips for the First Time Buyer.
Should You Use A Home Equity Loan To Buy A Boat?
Zuzana Prochazka is a writer and photographer who works for dozens of sailing magazines and websites. A USCG 100 ton master, Zuzana has cruise, charter and captained fleets in many countries around the world and serves as an anchor for charter resorts and communities. He is chairman of the New Product Awards Committee, which judges innovative equipment at the NMMA and NMEA shows, and is currently past president of Boating Writers International. He contributes to YachtWorld.com and also blogs regularly on the boat review site, TalkoftheDock.com. For many people, pleasure boating is a popular form of entertainment. Whether you want to fish, hang out with friends, or just relax on the water, owning a boat gives you the flexibility to get out on the water whenever you want. However, it's no secret that owning a boat is an investment, which is why most boat owners choose to finance.
Before buying your boat, it is useful to know how many years the boat is being financed and how much you can afford to spend over the life of your loan. The number of years you finance the boat can affect your monthly payment and interest rate, so you'll want to find out before you choose a loan. Here's our boat financing guide to help you.
If you've ever bought a home or a car, the boat financing process may sound familiar, but there are some key differences. The number of years you can finance a new or used boat depends on the following factors:
Age
How Long To Finance A Boat
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