For many of us, financing a boat is a great option that allows us to afford and justify the boat we want. Instead of tying up savings or spending a large cash sum, financing a boat is a relatively low-cost way of leveraging your cash.
Here are 10 facts about financing a boat and why it might be a good idea for you!
1 ) What is boat financing and how does it work?
Boat financing is an easy and effective way of spreading out the cost of your boat through an open-ended, long-term loan. This type of loan is similar to what you would see when purchasing an RV, or other big-ticket items, and the application and approval process is as easy as buying a new car.
You will find financing options from 10 years to 20 years, spreading the payments out and making the boat of your dreams more attainable.
At United City Yachts, we work with Walker Financial Services. They specialize in boats, RV's, Motorcycles, ATV's, PWC's, and other lifestyle purchases you may have. Walker Financial will take a consultative approach ensuring you are getting the best financing options available.
2) Why should I finance a boat?
Every financing agreement is unique, and as Yacht Brokers, we are experts in guiding our customers and helping them navigate financing their boats. Our goal is to help you obtain the boat of your dreams and make it an affordable and enjoyable hobby.
Even if you have the cash to buy a boat, financing can help you keep liquidity and help you get that more expensive boat you have been dreaming about. This results in obtaining the boat you want and you're not tying up available cash, investments or equity.
There are a lot of financing options including loans from major banks, smaller lenders, and specific lenders like Walker Financial which specialize in leisure financing. Using our services, we will help guide you to the best loan provider ensuring you get the best rates and financing package.
3) What is the typical interest rate on a boat?
This really depends on your personal finances and the current market rates, however, we have experienced rates as low as 5.99%APR. There are many factors that influence interest rates. These include the duration of the loan, the amount of cash down, and the downpayment.
When you speak with our team about financing a boat, we will provide different options and payment packages and work with you to find the best options for your personal situation.
4) How long can you finance a boat?
Boat financing can be as short-term as you wish, or up to twenty years. This can help you keep payments low and you can be approved in a matter of minutes.
Boat loans are typically open-ended, which means you can make lump sum payments, and there are no penalties for selling your boat or paying it off early.
Our boat financing partners will work with you to establish an ideal loan duration based on your personal preferences.
5) How much will my boat depreciate?
At United City Yachts, we only sell pre-owned boats, so the initial depreciation (of a new boat) has already occurred. As the boat you purchase from us will be pre-owned, depreciation will be significantly smaller and your "new-to-you" boat will retain most of its value over your finance period.
Here is the good news! With a low depreciation rate, if you choose to upgrade your boat, you won't be at a big loss. Depreciation is slow and our team at United City Yachts will work for you to get the best price when selling your boat.
The following chart shows you the percent of purchase value over a 20-year span.
Source: https://boaterpal.com/how-much-do-boats-depreciate-helpful-chart/
Boats depreciate much slower than cars do, and they have a much longer useful life. At United City Yachts, we have boats from 1980 that are still in amazing condition and still can offer a long service life with proper maintenance.
6) You get some flexibility with your loan, allowing you to build in upgrades and equipment
When you buy your boat and start exploring financing options, it is good to keep in mind what gear and upgrades your 'new-to-you' boat might need or what you will want. If you plan on fishing, maybe you'll want a new fish finder /GPS, add a bow or stern thruster, or you'll want to renovate or update some styling. The advantage of financing is you can build those costs into your loan - instead of forking up the cash.
7) What is required to finance a boat?
Just like financing anything, in your application, you will be providing your personal details, debt and income details, and job and home ownership information. Our financial providers will use available technology to determine credit ratings, debt-to-income ratios, net worth and overall financial stability to ensure the loan you are inquiring about will fit into your personal finances.
This all can occur within moments, and you can get a loan approval very quickly.
8) How do I sell my boat that is financed?
If you choose to sell your boat, we will help manage your boat loan and ensure specific funds are allocated from the sale to pay off your loan. Boat loans are open-ended, and there are no penalties for making lump-sum payments or paying them off in full early.
At United City Yachts, we work for you. We will help ensure you get top dollar for your boat for sale and will help you purchase your next boat. Thanks to low depreciation rates, and current market trends, you will be in a good financial position upgrading to a new boat.
Also, if your current boat is financed through our services - you have a credit history, which makes selling, buying, and obtaining a new loan even easier!
9) Yacht Financing is available
Yes, you can finance a yacht! Working with our financing partner, they will help determine the size of your loan, what downpayment is required, and what you are able to purchase.
10) Is buying a boat or yacht a good financial investment?
No. Boating is not about financial investments. Boating is about investing in you - it is a lifestyle investment. When you buy a boat, you are investing in your free time, your family, and your physical and mental health. It is about making memories and enjoying an activity that allows you to fully escape daily life and enjoy the therapeutic nature of being outside and on the water.
You work hard, you deserve that boat!
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