Please select your home edition
Edition
Highfield Boats - Power - LEADERBOARD

How to get a boat loan without a hiccup

by Scott Croft 10 Mar 2018 01:02 PST

With interest rates already on the rise, how can you ensure your boat loan goes smoothly without time-consuming hiccups? Here are 10 tips from Boat Owners Association of The United States (BoatUS) just in time for the spring buying season.

1. Check your credit. Before applying for a loan get your current credit score and ensure your credit report is accurate. Scores above 800 may earn you a better interest rate. A free copy of your credit report is available annually from each of the three national credit bureaus at www.AnnualCreditReport.com. You can also check with your credit card issuer or bank you do business with. Other options are a credit counselor, a fee-based service, or to purchase it from the credit bureau. Find more at the Consumer Financial Protection Bureau.

2. Find the right loan type. A fixed-rate, fixed-term, simple-interest loan is the most common. This offers the same monthly payment for the life of the loan. Variable rate or hybrid options may offer a combination of a fixed rate for a few years, and then a variable rate. With interest rates forecasted to continue to rise in 2018, the appeal of variable rate loans may decrease. Don't forget to ask if there are prepayment penalties for paying off the loan early.

3. Consider a HELOC. Buyers of smaller vessels often tap into their home equity line of credit (HELOC) to fund a boat purchase. That may work well if you plan to pay the boat off while interest rates remain relatively low. However, passage of the Tax Cut and Jobs Act of 2017 eliminated the deductibility on interest for a home equity loan (if the qualifying vessel has a sleeping berth, cooking and toilet facilities).

4. Compare loan rates. Generally rates are lower and available loan terms are longer for newer boats and larger loan amounts. However, each is dependent on a variety of factors including model year, loan amount and down payment. Be prepared for banks to require larger down payments, have higher rates and offer shorter terms on older boats, especially those more than 20 model years. There could also be a significant rate difference between some consecutive model years, so be sure to talk with your lender and understand their rate and term structure.

5. Don't be fooled by ads. You may see rates advertised as low as 3.99 percent, but there usually will be some small print that could make that loan less attractive. For instance, the rate might only be fixed for a few years or the loan period might be only seven years.

6. Get pre-approved. To help save time, ask if you can get preapproval, or if you can possibly start the underwriting process before you have a signed sales agreement or even have a specific boat in mind.

7. Know your tax benefits. A boat can qualify as a second-home loan interest deduction if it has a berth, galley and head, so buying a boat with these features may offer a tax advantage. However, the new Tax Cut and Jobs Act of 2017 reduces the previous $1 million second-home mortgage deduction limit to $750,000 and completely eliminates deductibility of interest for a home equity loan that's often favored by small boat buyers to fund a purchase.

8. Get it surveyed. For pre-owned vessels, hire a qualified marine surveyor to inspect the boat to ensure it is in good condition and you won't have any unexpected repair bills. BoatUS.com/Surveyors can help you find one. Also, many lenders will require a marine survey.

9. Ask about closing costs. As with any loan, there are some fees involved. Sales tax, processing fees, title and registration and/or US Coast Guard documentation fees are common. Check with your lender to find out what to expect.

10. Calculate your monthly payment. How much can you afford? Go to BoatUS.com/Calculator to easily crunch the numbers. Your lender will also review your debt ratio and other criteria.

To learn about boat loans from BoatUS, go to www.BoatUS.com/Boatloans.

Related Articles

Last chance for East Coast boaters to be heard
On Shallow Draft Waterway Aids to Navigation Survey West and Gulf coast recreational boaters have already spoken. Now the U.S. Coast Guard is asking East Coast boaters, in a short, 5-minute online survey, to weigh in about the Aids to Navigation (ATON) system on shallow draft waterways Posted on 17 Oct
What's different about fall boating?
Follow these 5 boating safety tips to ensure a great day on the water Other than the colors of trees and cooler temperatures, what's different about boating in the fall? A lot, according to the BoatUS Foundation for Boating Safety and Clean Water, especially when it comes your safety aboard. Posted on 9 Oct
Gulf Boaters prepare for Hurricane Delta
BoatUS offers free hurricane planning information, videos, worksheet Just three weeks ago, many boaters were caught unprepared when Hurricane Sally shifted eastward and came ashore near Gulf Shores, Alabama. Posted on 8 Oct
Alameda County Boaters: expired marine flares
Collection event helps address disposal challenge Boat Owners Association of The United States (BoatUS) is urging Alameda County residents who own boats as well as those who keep their boats in the county to take advantage of a Marine Flare Collection Event to be held Sunday, Oct. 18. Posted on 2 Oct
BoatUS team responds after Hurricane Sally
Most boat damage due to lack of preparation GEICO | BoatUS Marine Insurance Catastrophe Team is finding that the Category 2 hurricane's sudden shift to the east just prior to the storm's September 16 landfall caught many boaters unprepared. Posted on 1 Oct
Boat buyers and sellers: Don't get scammed
How to spot the email warning signs The boating season is drawing to a close, but the cold weather buying season will heat up soon. On snowy nights, potential boat buyers will hunch over computers and cellphones looking at boats for sale, dreaming of sugarplums and their first boat Posted on 30 Sep
The best boat winterizing checklist
And everything else you ever wanted to know about putting away a recreational boat for the season Boaters in much of the U.S. and Canada acknowledge the need to winterize their boat's engines each autumn. But what else can go wrong? Posted on 17 Sep
Labor day boating safety tips
An increase in number of boaters on the water this three-day Labor Day holiday period For the nation's 12 million boat owners, Labor Day weekend is the last blast, with many enjoying the end-of-summer boating ritual with family and friends aboard, according to Boat Owners Association of The United States (BoatUS). Posted on 2 Sep
Gulf boaters prepare for Marco and Laura
Tropical Storm Marco, expected to run along the Louisiana coast tomorrow A one-two punch with two tropical storms bearing down on the Gulf Coast this week is getting the attention of recreational boaters, leading some to wisely haul out their vessels to a safe location and make storm preparations. Posted on 25 Aug
Lifecycle Solutions for Fiberglass Boats
Rhode Island Marine Trade Industry Association aims to grow boat recycling across the U.S. With the move to phase 2 of the Rhode Island Fiberglass Vessel Recycling (RIFVR) Pilot Program to address the disposal issue of recreational boats, project managers have released “Facing the Legacy: Lifecycle Solutions for Fiberglass Boats.” Posted on 12 Aug
Highfield Boats - Power - FOOTERMaritimo 2019 FooterMarina Exchange FOOTER 1