Maybe you’ve decided to sail the high seas — or just fish on a local lake. Either way, there is a boat purchase in your future. Before you begin shopping around or brainstorming a clever name, make sure you can pay for the lifestyle change. Here are a few things to keep in mind.
You’ll need to determine how much you want to spend on the boat purchase while considering other costs, such as ongoing maintenance, insurance, licenses, marina or docking fees, and other storage fees. These will need to be worked into your budget. This part of the process can be a challenge, but a necessary one, so that you can enjoy time on the water free of financial worry.
With a budget set, you can determine how much you’d like to put toward a down payment to lower the financed amount. Knowing this could provide flexibility during the buying and financing process as you weigh your options. For instance, a larger down payment can mean lower monthly payments on the financed amount.
Your credit score is an important factor in determining the interest rate you receive for the loan. Generally speaking, a lower credit score results in a higher interest rate. Ideally, you should know your credit score before beginning the financing process. If your score needs some work to obtain better interest rates, you may focus on improving the factors that comprise your credit score. These can include on-time bill payments, amount of debt and length of credit history.
Typically, this is an installment loan secured by the titled boat. Generally, the interest rate and monthly payments are fixed allowing you to maintain a predictable monthly payment schedule for the entire life of the loan. Other factors including your debt-to-income ratio (DTI), a calculation which helps lenders determine if you can afford an additional monthly payment, and age of the vessel may also come into play when determining the financed amount.
