Financing a boat can be very expensive. But like every major investment, you can save a lot on interest by taking some necessary steps. In this article, we will explore the different types of boat loans and share some tips for securing the best deals on your boat loan.
Types of boat loans
1. Secured boat loan
When applying for a secured boat loan, keep in mind that you will have to use the boat as collateral. What this means is that until you completely repay your debt, the boat isn’t really yours.
However, since the lender is protected by the collateral, they would usually offer lower interest rates, which can be a good thing.
Although this must be balanced against the fact that secured loans typically have longer loan terms. They also have a longer application process, as the lender will always evaluate your credit before concluding.
2. Unsecured boat loan
If you would rather not use your boat as collateral, requesting an unsecured loan might be your best option. These loans largely depend on the borrower’s credit. So, unless you have a high credit score, qualifying for an unsecured loan might prove difficult.
Even if you qualify for one, note that you would likely be offered higher interest rates to provide the lender with some protection on the loan’s approval.
How to find the best loan rates
1. Review and improve your credit
When it comes to boat financing, a high credit score can be the difference between securing a loan and failing to qualify for one. Therefore, you must review your credit report before applying for a boat loan.
Check for potential errors and outstanding debts. And if you find any, ensure that you resolve them as soon as possible.
2. Get prequalified
As with other loan types, you can first apply for pre-qualification to improve your chances of securing the boat loan. Getting pre-qualified has several benefits: to start with, it gives you an idea of which boats you can comfortably afford and which ones you can’t.
In addition, getting prequalified at multiple lenders can help you compare and contrast their loan offers, making it easier to choose the most suitable loan offer.
3. Shop at different lenders
The worst mistake you can make when financing a boat is to go with the very first dealer you find. Boat financing is a sensitive project; therefore, you want to avoid any costly mistakes in this process. And you can only do this by doing your research before making any decision.
Boat loan terms tend to vary with each lender, so don’t be afraid to shop around for loans from multiple lenders. This will help you secure a loan with the best term and interest rates in the long run.
Finding the best loan deal can often be a challenge, especially since different lenders have different terms and requirements. Nevertheless, with these few pointers, you will be well on your way to finance the boat of your dreams.