How to finance a boat purchase

Buying the boat of your dreams outright is often a financial impossibility (even in dreamland) – which is where finance options really come into their own. Well, the good news is that boat financing options are much like those offered for any other type of vehicle. So here’s how to determine which one is best for you. PERSONAL LOAN Good credit? Then a personal loan makes sense as most banks require 10 to 15 per cent deposit up front on a boat purchase. Interest rates on personal loans vary, so get quotes from several banks or credit lenders. And remember, boat loans typically carry higher interest rates than home or auto loans, largely because banks have learned that when the economic seas get rough, people are more likely to paddle away from a boat loan than the home mortgage. It’s also worth asking the lender if you can get a better interest rate by increasing the amount you put out for a down payment.  THE SELLER Some sellers offer financing, and if your credit is good, you could receive a competitive deal here, in large part because the seller doesn’t want to lose the sale. A key benefit of dealer financing is it’s a simple and quick process for the buyer who can choose a boat and finance it at one location; the dealer does all the work to secure the loan. Dealer financing may also have less stringent lending guidelines, which could make loan approval easier, and the deal may come with financing incentives such as no down payment or a low introductory interest rate. There are disadvantages, though. Key among them is often a higher rate. Note, however, that buyers can sometimes reduce the impact of that interest rate by paying off the loan quickly, provided there’s no prepayment penalty. HOME EQUITY LOAN This is an attractive option depending on how much equity you have in your house. Shop for interest rates carefully as they vary from lender to lender, and triple check your figures, to confirm you can pay both your mortgage and the home equity loan. CREDIT CARD It’s an option, but most boat-buying veterans say you should refrain from putting plastic down for a major purchase like this since interest rates are often high. It is an option, though, for those with below average credit scores and a high limit on their card.