The prospect of getting a boat is super exciting. You can spend time in the open seas enjoying nature, hosting parties, or just fishing with friends. However, before the fun begins, you need to take some time to consider your options. If you’re planning to get a boat loan, it’s important to make sure you’ll be getting the right kind of loan for your needs. There are many types of loans out there, so if you plan on taking one out but aren’t familiar with the best options for boat ownership, here are some things to keep in mind when looking into loans.
1. The Interest Rates
The interest rate you pay when taking out a loan is the primary factor in determining how much debt you will ultimately end up in. While it’s not possible to predict exactly what your interest rate will be, you can look at the different boat finance rates available near your area and see which of them appeals to you the most. The interest rates are usually calculated as a percentage of the total amount you take out. Always make sure you only borrow for what you really need. In general, these rates are usually between 10% and 14%, but keep in mind that there’s a greater risk of not being repaid entirely when the interest rates are higher. The type of loan you take out also has an effect on the interest rates you’ll be paying. Home equity loans tend to have better rates than other types of boat finance because they’re secured by your home as collateral. On the other hand, unsecured loans tend to have higher rates, but you don’t need to have collateral or guarantors.
2. The Repayment Period
The repayment period is the amount of time you have to repay your loan, usually between one and ten years. The amount of time you have to repay your loan will depend on several factors. Out of which, the most important one is your credit score – a good credit score will likely enable you to get a longer repayment period. If you have collateral, the amount of time you spend repaying your loan could be even longer. Keep in mind that a repayment period can’t be extended further no matter what after a certain point in time. Your interest rates are fixed throughout the entire repayment period, but if for some reason you’re not able to repay your loan within that time frame, you’ll usually have to repay it within one year after the initial period. You can also pay off your loan before the repayment period is up, but if you do, you might have to pay extra charges for going over your limit, unless stated otherwise in your contract.
3. Job Stability
Because most people don’t take out a boat loan for just a year, it’s important that you’re able to look at the major income sources in your life long-term. If you’re unhappy with your job currently or aren’t exactly sure where you stand when it comes to job security, you really need to consider if getting a loan is right for you at this moment. However, if your job is stable, and your career is in a good place, then it’s the perfect time to get a boat loan. While no one can see into the future, of course, it’s important that you try and predict what your life will be like during the next 5-10 years – or for however long your term is. Do you see yourself being financially comfortable? Do you plan on making any significant changes like buying a home, or starting a family? Considering all of these things before deciding on what kind of loan to apply for is a key step in ensuring you’ll be getting a loan that really suits your needs.
4. Contract Addendum
Whenever you sign a contract, there is an option of personalizing it in a way, so that it reflects your particular preferences. For example, if you believe you’ll be able to repay your loan faster than the term predicts it, adding a clause that states you can do so without any additional fees is a great way to ensure you’ll get the loan you want. Lenders also have the option of personalizing contracts based on their business needs – adding clauses that would signify them being able to take over if certain conditions are met is one example of this, but it’s important for you to understand exactly what these clauses mean before signing on the dotted line. It’s not exactly a secret that most contracts these days are riddled with small print, so understanding what you’re signing is vital to ensuring your loan will turn out exactly as you expected it to when you first took it out.
The best way to get a boat loan that you can rely on is to know exactly what kind of suits you the best. Before taking out a loan, think about the interest rates, your current, and future income sources, how long you’re going to need until repayment kicks in, etc. However, once you think things through – the hard part is over, and you get to enjoy your very own boat!