Boat Financing Basics

Is there any reason to be thinking about boating during the dead of winter? Of course. There are a lot of reasons beyond brightening those cold days with daydreams of warm  sun on the water. Boat show season takes places during the cooler months, and you can typically find the best boat deals of the year since it's the ideal time to offer perks and incentives that make an early purchase worthwhile. It all adds up to one mission: get buyers into their dream boat in time for the coming boating season!

If you are contemplating purchasing a new boat, there is a final step in the process that can sometimes be downright intimidating. This can happen when you go to the back office marked “Finance.” and the finance manager enters with a calculator and stack of loan paperwork.

Avoid second guesses and nerves on the sales floor, or in the finance office, by doing your research and planning ahead. Here is where to start.

• Check your free credit score with the three national bureaus (Equifax, Experian and TransUnion). Your credit score can make a difference in financing options. Also know that when a lender checks your credit score it can drop a few points.
• Calculate the down payment amount you can afford. Most lenders will ask for at least 10% of the loan amount.
• Determine the amount you can allocate for monthly payments from your budget.
• Compare loan offers. You might be tempted to take the first financing option offered by a lender or dealership, but check your options from other financial lending institutions. Making a quick finance decision to get it out of the way could end up costing more over time.
• Get pre-approval. If you use an outside lender, a pre-approval letter gives you—and the dealership—the confidence and commitment that you are a serious buyer.
• Know the payoff terms. Typically, lenders will reserve the longer terms of 180 or 240 months for boat loans of $25,000 or more. Longer terms mean lower monthly payments for any given purchase price. Something to keep in mind, though, is that the longer the term of the loan, the longer it will take for you to gain equity in your purchase. Over the long term you might pay more for interest than the boat.
• What else can I finance? If using a lender specializing in boat loans, you will have the opportunity to consider the inclusion of optional products or services. Those can include accessories, extended service and payment protection plans. The benefit of such plans extends for several years, so it might make sense to include them in the loan for a very small increase in the monthly payment.

Oh yeah, that. In your monthly budget, you should factor in the insurance premium for your boat. Your existing auto policy might cover a grace period that allows you a day or two to switch your policy to the new ride after leaving the dealer. Not so with boats. You should have boat insurance before you leave the dealership. Proof of boating insurance is mandatory in many states, and it might be required by the lender. Some marinas even require proof of a policy for rental slips, and for you tournament anglers out there, many tournaments require coverage. There are two main options for insurance policies—a new policy, independent from any other insurance policy you have, or an umbrella policy, which is bundled with your homeowner’s insurance. There are minimum required coverage areas, including liability to others, medical payments, damages, wreck removal and medical expenses for towed water-skiers. Remember, you want to be sure the cost of your boat is covered, as well as any injuries to you or other boaters and any personal items you have on the boat, e.g., watersports or fishing equipment.

You have many options for financing. Your bank is only one of them. Another alternative is a credible lender specializing in boat loans. Benefits include purchasing factory-backed extended service plans and other loan protection products not offered by banks. As you are shopping Nitro you may consider boat financing through White River Financial Services, a market leader for boat loans. In operation since 1984, White River Financial Services loan processors have provided financial services specially designed for the marine and outdoor industries. With access to the best national and regional lenders across the country, loan processors are dedicated to helping you obtain the right loan quickly and easily.