Here’s the scene; the boat just plain feels good. You are sitting nose to nose with a dash full of cool-looking gauges, handy toggle switches and some other stuff you know little about, but want for sure. It feels good, just missing a face full of water, wind in your hair and a box full of just-caught fish.
You’ve shopped to the point of total confusion, read online forums comparisons until your eyes watered and now you’ve just about worn a salesman out answering questions. This is the one, this is going to be your boat, your baby, your chance to fish with the big boys. Oh yeah. And then you take the first step in actually bringing that dream to reality: “I’ll take it.”
But of course, your salesperson takes the next step by asking, “How are you planning to pay for your fine new boat?”
You might ask if you can get a lower price if you pay cash. You can bet that the salesman smiles, knowing full well that if you insist on cash he or she might throw you a bone, but in reality, it’s a rare boat buyer who actually peels off enough greenbacks to handle the deal. But what the heck, it’s fun to ask.
So let’s move onto the real payment thing. You’re going to need a loan. Ten percent down is the standard boat purchase but with a decent credit history you might get that loan with a smaller down payment. And yes, if anything is king in this story, it is your credit score.
The best credit gets one the best loan interest and a boat. Questionable credit comes with a higher interest rate, a larger down payment, and a smaller boat. It’s a good idea to check various sources for your loan, places like your everyday bank, your credit union and of course your dealer. Regardless of where your loan comes from pay attention to the details such as early pay-off penalties.
Following are tips from BoatUS, the leading national organization representing boaters from coast to coast.
Boat buyers can help themselves by knowing three key things: how loan rates work, how much of a boat loan you can afford and your credit score. BoatUS sees these same three mistakes every day. Educating yourself and being candid about the numbers make you a wise consumer and may put you in stronger position when seeking a boat loan.
Know how boat loan rates work. Fixed-rate, fixed-term, simple-interest loans are the most common. They have the same monthly payment for the life of the loan, typically from 10 to 20 years. Generally, interest rates are lower and loan terms are longer for newer boats and larger loan amounts.
However, each is dependent on a variety of factors including model year, loan amount and down payment. But be prepared for lenders to require larger down payments, charge higher rates and offer shorter terms on older boats.
Know how much you can afford. This is a good starting point in figuring what is affordable, but remember your lender will look at your debt-to-income ratio and other criteria, which may change the amount.
Be an open book with your credit report. The closer the score is to 700 or higher, the better the chances you’ll be approved. So before you apply for a loan, ensure your credit report is accurate. That goes for both applicants if two people (siblings, spouses, business partners or friends) are buying a boat together.
You can get free copies of your credit report from all three national credit bureaus at www.annualcreditreport.com, the only site authorized by federal law, for your credit score.
Additional options are to buy it from credit bureaus individually or through an online service. Also note that depending on the bank, a credit report ding like a past bankruptcy or foreclosure may not preclude you from getting a loan.
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