The largest boat and yacht show in the world, the Miami International Boat Show, starts Feb. 14. Over five days at six locations, you’ll be able to view thousands of vessels and maybe test drive a few at the Venetian Marina.
Before setting foot on your dream boat, think about what it’s going to cost you. Financing firms at the show will offer you a deal, but how do you know you are getting the best one? Here are five areas to investigate.
What interest rates and terms are available for recreational boat loans? You want to know what you can and cannot afford, plus compare offers compare offers from different financial institutions.
You should then ask, “Are there any fees or charges associated with the loan?” They can have different, confusing names and drive up your borrowing costs: administration fees, application fees, origination fees, processing fees, and late-payment and prepayment penalties. Some lenders base their fees on the amount financed such as 1% of the loan while others charge a flat fee. Tropical Financial has no application fees and no prepayment penalties.
Next question: What is the loan-to-value ratio for the boat loan? As with a mortgage, the lender finances a percentage of the purchase price and you make a down payment on the rest. Knowing the ratio will help you determine how much boat you can afford based on not just the monthly payment but the cash you will need in hand to take the title.
The lender will want to evaluate your creditworthiness, just as it would for a car loan. Ask about eligibility criteria such as how your credit score and your ability to be approved affects your loan rate. Be prepared to verify your income and share information about your other debts.
Having your finances in excellent order can pay dividends. Tropical Financial has a “beat the rate” deal in which it will charge a lower rate than a competitor provided you meet certain criteria.
The best deal should include the best service. A smart lender will tell you upfront what documents are required. If you don’t have those on hand, your financing approval process will move slower. A good lender should also be able to give you an idea of how quickly you will receive an answer on your application.