You don't need to be able to afford a giant yacht to get out on the water in your own watercraft. Similar to car loans, boat loans are a way to finance your pontoon or fishing boat so you can pay it off over time with a fixed loan amount.
However, how much you pay to finance your boat depends on many different factors including your credit, down payment, loan terms, and the type of boat you choose. That said, let's take a look at the different kind of boat loans there are and what you need to do before you apply for one to finance a boat of your own.
Your options for financing your boat include secured and unsecured boat loans, which each have their own benefits and drawbacks. A secured loan is a loan that's backed by collateral in a similar way that an auto loan is.
For instance, if you stop making payments on your car loan, the lender can repossess it. In a secured boat loan, the boat itself is the collateral and the lender can repossess the boat if you go into default on your payments.
An unsecured boat loan doesn't use collateral. Because of this, the lender may find these loans riskier and may charge you a higher interest rate because of this.
Another type of loan that boat owners may choose is a home equity loan, which is a type of second mortgage. It uses your home as collateral for your boat loan. While the interest rate on your loan is typically lower because of your collateral, these types of loans are often riskier because if you default the lender can take your house.
You may already have a basic understanding of how a boat loan works if you've taken out a car loan before. You start by applying for a loan amount (not including the down payment) and a repayment term. Your lender may offer a lower or higher interest rate based on your creditworthiness once your loan is approved.
Credit unions, some banks, marine finance companies, and boat dealers each offer boat loans. However, your down payment, interest rate, and loan terms may differ with each lender.
Remember that your creditworthiness is vital when you're applying for a boat loan. Before you choose to invest in a boat or any boating accessories, be sure that you do your best to improve your credit score. This will help you to get a better interest rate.
Many folks who dream of having their own boat and being out on the water are unaware that that's a dream they can easily realize. In fact, boating is predominantly a "middle-class" activity with 72% of boat owners having a household income of less than $100,000.
If you're looking for a used boat or a pontoon boat for sale, Lakeside Motor Sports is the place for you. Lakeside Motor Sports offers a wide range of fishing boats, pontoon boats, boating accessories, and more. For more information about our watercraft and boating accessories, contact Lakeside Motor Sports today.