Summer is here and interest rates have ticked up. That affects all banks and the rates they charge, but the increase has been slight. As summer progresses and fall looms around the corner, many boat owners start thinking about selling, either to move up to something larger or to be ready to purchase again in the spring.
So, there’s a convergence of market shifts right now that could make this fall a good time to go boat shopping. If you’re thinking seriously about taking the plunge, then it’s time to consider your financing options. (And yes, finding a good loan takes almost as much focus as finding a boat.)
First, a boat is a luxury item, so you’ll need good credit to qualify for the lowest interest rate. You can positively affect your credit score before you go shopping for financing, You want to begin by paying off major credit cards if you can, and bringing that Amazon or Target card down to zero. The fewer outstanding balances you have, the better.
When seeking financing, start with your own bank and/or your credit union. (If you have relationships with both, odds are you’ll get different rates from them.) Once you have that information, you can search the Internet for financing. Some good sources are:
Once you’ve looked into all those resources, you should have several loan packages from which to choose. Obviously, take the one with the lowest interest rate.
But you’re still not done. If you’re buying a used boat from a dealer, and you arrive with a source for your own financing, you have a valuable bargaining chip. The dealership will want you to finance it through its sources because it gets a cut “on the back end.” That increases the dealership’s profit on the deal.
If the dealer can get you a lower rate, he will make more in profit on the deal. That’s OK as long it doesn’t affect the initial price.
To paraphrase the saying, when banks compete, you come out ahead.
A previous version of this article appeared on Boat Trader in October 2014.
Boat Trader has plenty of Buying and Selling advice, but also check out the hundreds of articles in the Boating section, with tips on everything from seamanship to maintenance, how-to, where to find replacement parts, and much more.