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How to get a loan for a boat purchase

The Miami International Boat Show, February 15-19 at six locations including Tropical Park, will offer over 1,000 vessels for viewing and more than 1,000 brands. Open from 10 a.m. to 6 p.m. or 7 p.m. the first four days, it will give you many opportunities to find your dream boat and finance it.

Before heading to Florida’s biggest boat show, first download our free Boat Buying Checklist. It will inform you on what to look for in a boat and how to negotiate price.

What’s the right way to borrow for a new boat? The similarities to an auto loan make the terms easy to understand:

You finance for a set time period which varies by price and lender.

  • The dollar amount may be higher than that on a luxury car. While the average boat costs between $40,000 and $75,000, the price increases with each additional foot in length. A 100-foot yacht can cost more than $30 million.
  • Lender choices are much the same: manufacturer, company specializing in marine financing, and banks and credit unions. Credit unions historically have better rates than other lenders on almost all types of financing.

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  • The forms of financing can differ: a traditional loan secured by the boat, a home equity loan, and an unsecured loan. Borrowing against your home will likely have the lowest rate, and an unsecured loan based on your creditworthiness will have the highest.
  • The loan length will be determined in part by your monthly budget. You may find terms as long as 20 years or as short as 12 months. The longer the term, the lower your monthly payment but the higher your total interest expenses.
  • You make a downpayment. Depending on the lender and the price tag, expect to contribute 10% to 20% of the purchase amount.

While you are picking out what to wear to the Miami boat show, also review your finances. A lender like Tropical Financial Credit Union will examine your credit rating, debt-to-income ratio, employment status, mortgage payment history and personal net worth. 

Lenders will crunch the numbers to determine whether you can afford that sleek vessel you would love to sail, or whether your budget is better suited to a more modest boat.

How can you tip things in your favor? Several ways. First, make a larger downpayment to shorten the loan term or improve the interest rate. A lender could offer a lower number because its risk is less.

Compare rates based on the amount borrowed. You may find that the larger the loan, the lower the rate.

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