You have found the boat of your dreams, and now it's time to finance your purchase. But before you settle on a lender and sign off on a loan, there are a number of issues to consider, including loan type, available payment plans and a lender's reputation.

Although it is tempting to choose a loan based only on interest rates, make sure you compare all aspects of a loan before accepting an offer. Keep in mind that there are a number of features and benefits to consider. Choosing the right lender for your needs can make all the difference in the quality of your boat buying and boat ownership experience. Below are some good questions to ask.

Choosing a Lender
What should I look for in a lender?
When selecting a lender, make sure they specialize in boat loans. For example, when buying a used boat, lenders need to understand related laws, such as mechanic's liens and possessory interest. Without this expertise, you could end up having to pay for retroactive yard fees and mechanics charges.


How long will it take to process my loan?
The most sophisticated marine lenders can process loan applications with remarkable speed. In many cases, a customer can be notified of the results within a matter of hours. These lenders typically have Internet sites and telephone centers that maximize the speed and efficiency of the loan application process.


What payment plan options do you offer?
Look for banks that offer more than the typical monthly payment plan. For example, you may be more comfortable with a seasonal payment plan option that allows you to skip up to three consecutive monthly payments a year and continue to skip the same months each year for the life of the loan. This option can be especially attractive for people with seasonal variations in income, such as contractors, sales representatives, retailers, consultants, and others.


Or, for those with a large seasonal bonus, an annual payment plan option may be best. With this option, customers pay just one payment a year, and can delay the first payment up to six months for some "breathing room" between the time of the down payment and the time of the first payment.


For those whose income and lifestyle work best with smaller, more frequent loan payments, a biweekly payment option may work best.


Choosing a Loan


What is the difference between fixed rate and variable rate loans?
Fixed rate loans have a guaranteed, fixed rate over the life of the loan. This means your monthly payments never change. A fixed rate loan generally charges a slightly higher rate.


Unlike fixed rate loans, adjustable rate loans usually begin with a fixed-rate period (typically 1 or more years) and then fluctuate over the remainder of the loan's life, within certain parameters. An experienced marine lender will be able to help you determine which type of loan is best suited to your needs.


What fees are associated with the loan?
Investigate closing costs and other loan-related fees. These can include, but aren't limited to, processing and underwriting fees, appraisal fees, the cost of a credit report, tax service fee, application fee and others.


Are there any prepayment penalties?
Some lenders will penalize you if you repay your loan in less time than originally planned. Check with your lender about these fees, especially if there's a possibility you may have a large increase in income over the life of your loan.


What financing options can you offer me to make the most of my boat purchase from an investment standpoint?
Did you know that your boat may qualify as a residence for purposes of deducting interest expenses on your tax return? In such instances, some customers choose to finance more of the purchase price of their boat and hold on to their cash for other purposes. Of course, you need to discuss these issues with your tax adviser for specific recommendations. The team of marine loan specialists at KeyBank NA will be able to guide you through a variety of money saving options.


The Importance of Surveys


Why do I need a survey done before I buy a used boat?
A professional survey is essential for all used boat sales, and most lenders require one. These surveys can uncover information about the boat's condition that you may not have known. Getting a professional survey before you buy could save you thousands of dollars down the road. It's better to be safe than sorry.

 
Content provided by KeybankNOTE: The Key Recreation Lending Division of KeyBank NA, one of the nation's leading marine lenders, has prepared this tip sheet to help boat buyers choose reliable lenders and competitive loans. The accuracy or completeness of this information is not guaranteed nor does Key make any warranties to you regarding the results obtained from its use. The information should not be deemed an offer or solicitation by Key or any of its affiliates with respect to the sale or purchase of any securities, nor shall it be considered investment or other advice. By using this information, you agree to the terms of the User Agreement/Disclosure.