Financing a new boat? What you need to know

You’ve made the big decision to purchase a boat. You’ve talked to people and visited dealerships. You’ve figured out what you like and don’t like about the various models and manufacturers. You’ve determined your budget. You’ve met with sales staff and negotiated a fair price that you’re comfortable with.  Now the question is, how do you want to pay for your new boat?

Financing vs Paying in Cash – Is It A Good Idea? Many boat owners don’t realize that there are options besides paying in cash or a check and for many, financing a boat can make good financial sense. Besides the obvious fact that financing a boat and making payments on time can better your credit while you enjoy time on the water, there are also several other reasons why financing a boat can be a great alternative to paying cash.

Let’s start with the opportunity to own your dream now vs later. If you have enough cash on hand now to purchase a boat, financing a portion of the sale may allow you to add some additional upgrades or even look at a nicer model that you couldn’t afford with cash only. Additionally, the entire boating industry has seen costs rise at a greater rate than inflation which means if you’re waiting until you have enough cash on hand, you’re probably paying more in manufacturer costs by waiting than you’d pay in interest costs by purchasing now.

Financing a boat can also allow you to stay more liquid with your money, creating more financial flexibility long term. By financing, you allow yourself to take advantage of other investment opportunities that may lead to a better rate of return than any interest you would pay on the boat. And if your money is already invested, you’re probably receiving a greater return on investment than you would pay in interest.  Keep in mind that unlike cars that rapidly depreciate, a well maintained, premium boat holds it’s value and will sometimes command a resale price 70-80% of the original purchase price years later.  So the risk of being “upside down” when you want to sell it is much more limited.

Another advantage to financing a boat is the ability to package additional items, like storage, service contracts, extended warranties and gear into the monthly payment so you limit any out of pocket expense after the sale. For owners that are on a fixed income, financing is extremely beneficial because you can plan your payments, own your dream boat and not have to worry about the additional costs of owning a boat.

Should I Finance With My Bank or the Dealership? Unless you have a long standing history with your bank and a direct relationship with a loan officer, or are purchasing a boat from a private seller or other 3rd party, it usually makes more sense to work with your dealership to finance a boat when possible.

A professional, established dealership should have a financial professional on staff to work with you and create the best financing program for you as the customer. Whether you are shopping for the best term, payment or interest rate, financing through your dealership creates a seamless process for your purchase and allows you to get on the water quicker.

A dealership with in-house financing can handle all the leg work of financing a boat and is also compliant with state and federal laws. The dealership puts the privacy of the customer first and should have designated personnel to handle the non-public information. This allows for one company to handle the information which limits the chances of identity theft.

Dealerships also allow you to take advantage of more flexible term/payment options, lower interest rates and incentive programs since they work with multiple lenders and receive better rates based on volume. While a personal loan with a bank may extend the terms out for 5-6 years, dealerships can often offer term lengths from 10, 12, 15 and sometime even 20 years to make your payments fit within your budget. Additionally, most loans written by a dealership will have no penalty for pre-payment, allowing you flexibility and savings.

What interest rate can I expect? This is probably the most common question to anyone looking at financing a boat. Unfortunately, it’s also the one question that can’t be easily answered. Just like buying a home or car, your payment and interest rate is determined by several factors including credit score, amount being financed, down payment and current interest rates.  Unlike a car or home loan, financing a boat is considered a recreational or luxury loan. These types of loans follow trends similar to housing and cars with interest rates fluctuating on national and local levels, but are generally higher than the average car loan interest rate. There are several great online calculators for determining the average interest rate on a boat based on your specific credit history, loan amount and down payment and expect a dealership with in-house financing to maintain a current list of interest rates that will be competitive to local banks and national lenders.

About The Boat House The Boat House is a multi store dealership with 4 Midwest locations and 3 Florida locations. Our mission is to supply our community with a superior boat buying and ownership experience through offering premium brands, professional staff, 1st class service and 360º solutions including: New & Used Boat Sales, On Site and Mobile Service, Storage, Parts, Gear, Pier and Lift Services, Long and Short Term Boat Rentals, In-House Financing, Consignments, On Water Demonstrations and Community Boating Events. We believe boating enhances our lives through meaningful relationships and time well spent. We are lifetime boaters eager to share our passion and experience with you. We are The Boat House and this is boating.

Published by Trent TerHaar • National Marketing Director

April 24, 2018