You have
decided to enjoy the boating lifestyle, and like many people
you ask where do I start boat financing? This article is designed to answer
many of those boat financing questions.
- primarily
plan to cruise or fish — or a combination of both?
- need overnight
accommodations — if so for how many people?
- need a
boat designed for specific sea conditions that you might be
exposed to?
- want an
express style or cabin style vessel? An express style boat
allows everyone to be on the same level and makes line handling
easier while a flybridge sedan vessel gives you greater interior
room and better visibility from the helm.
- want the
economy of a single engine vessel or do you want the increased
performance, maneuverability, and safety of a twin engine vessel?
- want a
gas or diesel powered vessel? Gas powered vessels are less
expensive initially while diesel power offers superior performance,
long term reliability, and safety.
- want a
new or used vessel? A new vessel will have warranties, a used
vessel may offer a better value and has already been equipped
but may require higher maintenance based on the age of the
vessel.
Questions
specific to a sailing vessel
- What
are the vessels sailing characteristics versus interior accommodations?
- How accessible
are the systems on the vessel?
- Does the
vessel have adequate storage space and ventilation?
- What is
the location of the traveler, is it more suitable for cruising
or racing?
Now that you
have established these basic parameters, one of the next steps
should be to look in the other costs associated with the purchase
of your new boats. Those would be financing, survey, insurance,
and Coast Guard Documentation, if applicable.
Boat Financing
A lender who
specializes in boat financing will normally be your best source
for financing your new vessel as they understand boats and are
familiar with all the paperwork and documents involved. Most boat financing lenders will do a preapproval for you which will give you the
budget parameters within which you can work and also should increase
your negotiating position with the dealer or seller.
The standard
terms for a boat financing loan are 15 years for boat loans of $25,000 and
above, with a 20 year term being available with most lenders
at $75,000 and above. Down payments range from 15-20%. You should
keep in mind that the more money you put down now will allow
you to be in a better equity position in the future when you
want to trade up or sell your boat. It is a simple case of "Pay
me now or pay me later."
If your boat
has eating, sleeping, and bathroom facilities it may qualify
for the second home mortgage interest deduction. You should check
with an accountant to verify the details. The loan approval process
will normally take from 24-48 hours. Loan approvals are usually
good for 30-60 days from the date of approval by the lender.
Note: Make
sure you get a commitment in writing from the lender spelling
out the details of your approval so you are aware of and understand
the terms and conditions of your loan and any fees associated
with the closing of the loan.
Survey
If
you are buying a used vessel a marine survey will be required
by the lender, normally when the boat is three years old or more.
A prepurchase marine survey will run between $24 and $26 per
foot depending on the geographic area, type and size of vessel,
and other parameters.
You
should talk to two or three surveyors to see which one you are
most comfortable with and has the most expertise in relation
to the type of vessel you are purchasing.
A
list of certified surveyors can be obtained from us in addition
to those the dealer or broker may recommend.
Insurance
Yacht
insurance is a specialty field. You want an agency and company
that understands boats. The coverage will be better, the policy
will be agreed value and replacement cost and if you ever do
have a claim they will have adjusters that actually understand
boats. Costs can vary substantially depending on territory and
the type of coverage you need. We have a licensed yacht insurance
agent in our corporate office
Documentation
Coast
Guard Documentation of a vessel will be required by most marine
lenders if the boat is of applicable size. This typically comes
in to play with vessels that are approximately 26' and larger.
This allows the bank to secure its lien on the federal level.
One of the primary benefits of documentation for you as the buyer
is that a title search, called an abstract of title is done on
the vessel prior to settlement to show what liens if any are
outstanding on the vessel and to make sure that free and clear
title can be passed to you as the buyer. We hope this information
will be helpful to you as you look for your new boat. We will
continue to try to update this article as the industry changes
and new and different questions are posed by you.
We
are members of the American Vessel Documentation Association
(AVDA). Our Coast Guard documentation is done in house, not
by an outside service.
E-mail: financing@sterlingacceptance.com
©
2009 Sterling Acceptance Corporation |
