So what types of things should you take into consideration? Here are some tips to help you get started.
Considering your budgetBoats can be expensive. (Did we already mention that?) Along with the monthly payment, you should take into account the cost of gas, oil, winter storage, a slip at a dock, maintenance and insurance. Some of these expenses can run much more than you are accustomed to paying for a car. Plus, boats tend to depreciate quickly, meaning you could quickly be paying more to maintain the boat than what it is worth.
The message here is simply to be realistic. Take time to consider total cost before dashing into buying a boat. And be prepared for a long-term financial obligation, since boat loans can have terms of up to 20 years.
Choosing the type of boatUnless you are already a boater with a definite type of boat in mind, there are many questions to ask yourself:
- How will you be using the boat? Primarily for fishing or for entertaining and cruising on the water? Sailboat or motorboat? What type of engine?
- How many people are you expecting to accommodate? Will it be used only for daytime outings or a home away from home?
- What length and size of boat will best meet your needs?
- New or used? While a new boat offers benefits, such as a manufacturer’s warranty, you can often find barely used boats at reasonable prices (thanks to owners who did not anticipate the true cost of boat ownership).
Buying the boatOnce you have found the boat you want to buy, your next steps are similar to those of buying a car.
- Check reviews. Research the boat model for reliability and safety. If you are buying from a boat dealer, check their reviews as well.
- Before you buy, have the boat inspected and take a test drive. If you are new to boating, take an experienced boater, mechanic or marine surveyor with you. How does the boat run? Do they (or you) feel comfortable at the helm?
- Do a visual walkaround to make a high-level assessment of the boat. Check the hull and gel coat (more easily done on dry land), the deck, engines and mechanical equipment. In particular, if you are buying a used boat, cracks, nicks and ripped seams can indicate other, less visible issues.
- When buying a used boat, ask to speak with the previous owner (if they aren’t the one selling it). Ask why they are selling it. Request maintenance records and ask for the contact information of the mechanic who worked on the boat.
- A boat’s usage is measured in hours versus miles. Ask about the boat’s hours in the water, as this can affect future maintenance costs as well as the transfer of any remaining warranties.
Financing a boat
Do a quick online search for “boat loans” and you will find many, many options for getting a boat loan. Keep in mind that you will be making a substantial, long-term commitment, meaning you will want to choose a lender you can trust who has solid credentials. Here are some additional tips to help you through the financing process:
- Just as you would with any vehicle loan, compare lenders. Compare rates, terms, fees, processing charges, etc. Read the fine print for any hidden costs
- Usually, having a higher credit score will enable you to qualify for lower rates. Before applying, it is best to know your credit score. You can run a free credit check on your own at annualcreditreport.com.
- Various lenders offer boat loans as fixed rate, variable rate and even balloon loans. Understand the differences and how that will affect your monthly payment over the term of the loan.
- Gather the information you will need when applying. This includes your current employment information, tax information for the past two years, a personal financial statement and a list of monthly bills you already pay. The lender will look at your assets and liabilities to determine if you can reasonably afford the monthly cost of a boat loan.
- Also have information about the boat you intend to buy, including year, make, model, power and options.
- If possible, have a sizeable down payment. You will have less to finance, resulting in lower monthly payments and often more favorable loan rates. Twenty percent of your final purchase price is a good target for your down payment.
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