How to finance and buy your dream boat: South Florida Caribbean News
Buying a boat to sail with your friends and family is a real prospect for many of us. It’s the perfect way to escape all your worries and stresses and just enjoy some peace and quiet on the open oceans. Despite what many people think, buying a boat doesn’t have to break the bank. There are affordable boats that are available for most budgets now, as long as you are on top of your finances and do the right research. It is essential that you take everything into account because buying a boat can be a life changing decision.
To help everyone with the often tricky finances of a boat purchase, here’s how to finance and buy the boat of your dreams.
1. Choose a boat that fits your budget
The first thing to do when buying a boat is to determine the type of boat you want. If you are new to boating, you may not be familiar with the different options, but different boats are better for some people than others. You will need to take your experience level into account because if you are completely new to sailing and don’t plan on hiring a crew, you will probably want to avoid the big yachts which are different to control.
While you can certainly learn, it may be wiser to start with a motor ship instead. You will also need to make sure that you buy a boat that is large enough for everyone you want to take with you on the boat. If you have a big family or want to throw big parties then look at the biggest boat you can afford.
In addition to the cost of purchasing the boat, you will also need to factor in additional costs such as port charges, boat fuel, and maintenance. Additionally, you may need to pay a captain and crew if you don’t plan on driving yourself.
2. Pay the full amount if you can afford it.
The easiest way to pay for a boat is to pay the full cost at once if you can afford it. It will save you time to work a payment plan and also save you money on loan interest rates. Most people are not in this position, but if you are lucky enough to have the full amount, you can even get a discount to pay for the boat in one go. There is often room for negotiation, especially if you find the same boat model at multiple dealerships where you may be able to start some sort of bidding war in order to get the best deal.
3. Apply for a boat loan
If you can’t afford to pay directly, you don’t have to worry. You can still buy a boat with the help of a boat loan from an approved supplier. In order to get a loan, you will need to show the lender that you can afford to repay the loan. Boat loans are secured in much the same way as mortgages, auto loans, and the like. Many people are worried about not getting a boat loan, but they are surprisingly easy to apply for and many people are accepted as long as they are financially healthy.
4. Prove your financial health to the supplier
In order to be accepted for a boat loan, you will need to prove that you can repay the money. Boat loan providers will judge this based on your debt to income ratio, or DTI. This is calculated by dividing your monthly debt expenses divided by your monthly income. Your expenses will include everything like rent and car payments, but will also include monthly repayments if you were to be approved for the boat loan.
As long as your DTI is below 50% and you have a good repayment record for similar loans, you will be in a good position for approval. Otherwise, you will need to take steps to improve your DTI so that you can come back later and apply for a loan again.
Before committing to buying a boat, you should educate yourself about all aspects of the process. Make sure you know your exact budget and have looked at all of the potential funding possibilities. Once you’ve taken everything into account, it’s time to make an offer and get ready for your new life sailing the Seven Seas.