Buying a boat can be an expensive business; you could be looking at many tens of thousands of dollars – maybe more – if you're heading for top of the range, or more reasonably you could be looking at 10 to 20 thousand for a good quality small powerboat, cabin cruiser or sailing boat. Whatever your decision you will probably be constrained by your budget and the chances are you will need to borrow money to purchase exactly what you want. Boat loans are available to help you bridge the gap between the amount of money you have and the amount you need to buy the boat.
How do boat loans work?
A boat loan is a personal loan and has the same attributes as a car loan or, at the upper end of the financial spectrum, a mortgage to buy a home. When you take out a boat loan you will be assessed by lenders on the level of your income and your outgoings, so a financial institution that is considering lending to you can be as certain as possible that you have the means to pay back the loan. When you are offered a loan you should check out the interest rate being charged against the length of time you want the loan for, and plan your monthly repayments so you're sure you can afford them.
Why do people use boat loans?
Most people don't have the spare cash to purchase a boat outright, so they turn to boat loans to help buy what they want. It's an effective way of being able to purchase a large item that would otherwise be unaffordable. Boat loans also give you control over your repayments as you have the opportunity to find lenders who are eager for your business and may offer very good deals in terms of interest rates. You should always look out for hidden charges before you accept a boat loan agreement, especially if a deal looks too good to be true.
What are the main features?
As with any personal loan you will have options in terms of choosing an interest rate, the time period to pay off the loan, and whether you have a fixed or variable interest rate. Fixed rates are generally the norm for personal loans but if you are intending to borrow a large amount you should look for the possibility of having a variable rate and discuss it with potential lenders. You might find an introductory deal for new borrowers that will offer a lower interest rate for a fixed time period before reverting to a higher rate, and this could save you money in the long term.
What are the pros and cons of boat loans?
You should always be clear about what you can afford to repay, so using a loan calculator will give you the information you need so you can plan your repayments effectively. A boat loan will give you the freedom to buy what you want but if you fail to keep up repayments on a regular basis you are likely to lose the boat and all the money you have previously repaid.