Boat Loans
One luxury we enjoy is an excellent time on the sea. However, whether for recreation or luxury, the cost of purchase can sometimes be daunting. More often than not, you will avoid making your dream purchase due to financial limitation. However, that does not have to remain the case. You can easily avoid this financial limitation with a boat loan.
What Is A Boat Loan?
A boat loan is a financing option where you get to avoid the responsibility of a one-off payment when buying a boat. With a boat loan, you get the purchase price from a lender in return for your payment of an interest price. Then, you commit to the repayment of the interest plus purchase price over an agreed period that suits your financial convenience.
How Does It Work
A boat loan follows through a systematic process, although there might be some variations based on the loan type. Regardless, a boat loan occurs through three steps.
The first step is application. At this stage, you locate a preferred lender and apply for a boat loan from such lender. You can either do this yourself or through the help of a brokerage service provider.
The next stage is financing. At this point, your lender examines your application and other necessary documentation. Your lender then determines if you meet all requirements to get the loan. If you do, then, your lender offers the loan amount to you through which you can make your purchase.
The final step is then the repayment stage. At this point, you begin repayment of the loan sum and interest based on the schedule you agreed to. Then, upon completing the total payment obligation, the boat loan process comes to an end.
Available Finance Options
There is a wide range of financing options that you can take advantage of for your boat loan. Typically, this will depend on your use of the loan. For instance, a boat loan for finance purposes will attract financing options such as Chattel Mortgage, Commercial Hire Purchase, Boat Rental, and Leasing.
However, for recreational and personal usage, popular financing option includes secured and unsecured loan options.
Secured Lending
This is a lending option where you obtain the loan amount after providing an asset as security for the loan. In this case, the asset is the boat which you intend to purchase with the loan amount. However, in some cases, you might use a different asset as security for the loan.
Typically, this loan option comes with lower interest rates. And this is thanks to the fact that the loan is secured and you pose a little risk of default.
However, in the case that you fail to pay as at when due, you might lose the asset you used as security to your lender.
Unsecured Personal Loans
This is a lending option where you obtain the loan amount without providing any asset as security for the loan. In such cases, you might have to pay a higher rate due to the higher risk of default on your part. Also, the amount you can borrow is lower compared to the amount you could have under a secured loan option.
However, you might need to sign a personal guarantee agreement that makes you personally liable in case you didn’t come back with payment.
Bad Credit Boat Loan
A relevant requirement when obtaining a boat loan has a good credit score. This is like a valuation that determines whether you are a good borrower or otherwise. Usually, factors such as whether you repaid your last loan as at when due determines your credit score.
Typically, lenders rate individuals above 600 as having a good credit score. Then, those below are regarded as having a low credit score. Usually, some lenders will then fail to give a loan to individuals with a low or bad credit score.
However, just in case you do not have a good credit score, you can still get a loan. And that is with a bad credit boat loan. It is a specialised financing option that allows you to get a loan irrespective of your credit score.
However, you will need to pay a higher interest rate to obtain such loan. Also, you might get limited as to how much you can loan and how long your loan can span for.
Boat Loan Calculator
Understanding your future financial obligation is a huge part of getting a boat loan. This enables you to decide if you can afford the loan or in some cases, determine how much to borrow. This is where a boat finance calculator comes in.
It is a finance tool that allows you to get an estimate of your monthly repayment obligations based on the loan term. The relevant terms will include the loan amount, the loan duration, the interest rate, and your intended payment frequency.