|Shopping for Loans|
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Despite the unsteady economy, 2011 is still a good time to ﬁnance a boat purchase. Lenders are asking for more data than they did when the economy was strong, but qualiﬁed buyers will still be able to obtain loans.
“The terms are very favorable and interest rates are low. It’s a great time to buy a boat,” says Karen M. Trostle, president of the National Marine Bankers Association (NMBA), www.marinebankers.org. The NMBA performs services including educating prospective and current lenders about procedures for marine ﬁnancing.
“Lenders out there are looking to lend,” Trostle says, encouraging prospective buyers to go to boat shows and look at vessels in person. The NMBA web site also has a list of lenders in every state and territory, and additional information about the types of boats and insurance for-sale.
If interested in ﬁnancing purchases, buyers should focus on the money they will need to contribute, the terms, the interest rates and the small print, according to eBoatLoans.com, an online loan center that quickly connects web site visitors with a network of marine lenders. To become “approved,” boat loan applicants must be able to pay back their loans.
Borrowers may wish to consider whether to obtain longer loans. Essex Credit, www.essexcredit.com, provides 25- or 30-year terms for loans, in contrast to many other lenders, who offer only 20-year terms. “The ‘term’ of the loan usually ranges between 5 to 20 years for most boats,” states eBoatLoans.com.
The current economic climate has also likely made qualiﬁcations more stringent for borrowers who would like to ﬁnance various purchases, including boats. Who is borrowing is changing somewhat, likely due to these stricter requirements. Although the image of boat owners is generally of wealthy individuals, 58.3% of them have household incomes of $50,000 or above, and 41.7% take in household incomes of $100,000 or more, according to the NMBA.
One of the key, common sense elements that buyers need to contemplate is their budgets. In addition to the sticker price of a boat are the hidden costs of storing and transportation; any necessary, additional equipment; and fuel.
Mariners should note that another item they will need to buy is insurance for the boat. “If a vessel is ﬁnanced, the lender requires the vessel be insured and the lender be named as the lien holder with the insurance company,” points out James Barrõn, senior vice president of administration for Essex Credit Corporation.
The economy and the perception of it affect purchasing, Trostle notes. The current view of the economy is that difﬁculties in the housing and job markets are tied together. The idea that the markets are tight means that spending is less likely, and that saving is more probable.
The rough economy has made marine loans more difﬁcult to obtain, as boaters must present more background information about their ﬁnancial situations upfront.
Earlier, when economic prosperity was more common, “no dock” loans were available, where prospective boat owners could simply apply and be virtually assured of becoming funded, Trostle adds.
Today, most loans require boat, personal, co-applicant information and a personal ﬁnancial statement, according to eBoatLoans.com. Verifying income with W-2 forms, pay stubs and tax returns can be necessary, depending on the lender. Some banks may also request conﬁrmation of liquidity for the down payment. These items are called “credit-grading criteria,” Trostle explains.
Marine lenders are also looking for the following before they approve applications for boat loans: a ﬁ ve-year, solid credit history; average credit scores close to 700, while ﬁnding favorable comparable credit on longer-term, larger loans in the record, especially on earlier boat loans, states the NMBA. “A good credit score is paramount,” Trostle claims.