Purchasing a boat to sail with your friends and family is a real bucket list prospect for so many of us. It is the ideal 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 completely break the bank. There are affordable boats that are available for most budgets now as long as you have your finances under control and do the right research. It is crucial that you take everything into account because buying a boat can be a life-changing decision.
To help everyone out there with the often tricky finances of a boat purchase here is how to finance and buy your dream boat.
1. Choose a Boat that Fits Your Budget
The first thing you will need to do when buying a boat is considered what type of vessel you want. If you are new to boating, you may be unaware of the different options but different boats suit certain people better than others. You will need to take into account your level of experience because if you are totally new to sailing and are not planning on hiring a crew, you probably want to avoid big sailboats which are different to control.
While you can certainly learn, it may be wiser to start out with an engine-powered vessel instead. You will also need to make sure that you buy a boat that is big enough for everyone that you want to take with you on the boat. If you have a big family or you want to host big parties then look at the biggest boat that you can afford.
As well as the purchase costs of the boat, you will also need to factor in additional costs such as harbor fees, boat fuel, and maintenance. In addition, you may have to pay a captain and crew if you are not planning on operating yourself.
2. Pay the Full Total If You Can Afford It
The easiest way to pay for a boat is to just pay the whole cost in one go if you can afford it. This will save you time working out 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 then you may even get a discount for paying the boat all in one go. There is often room for negotiation, especially if you find the same model of a boat in multiple dealerships where you may be able to start a kind of bidding war in order to get the best deal.
3. Apply for a Boat Loan
If you don’t have the money to pay outright, you don’t need to worry. You can still buy a boat with the help of a boat loan from a licensed provider. In order to secure a loan, you will need to show the loan provider that you can afford to pay the loan back. Boat loans are secured in much the same way as mortgages, car loans, and other similar loans. Many people are worried that they will not be granted a boat loan but they are surprisingly easy to apply for and many people get accepted as long as they are in good financial health.
4. Prove Your Financial Health to the Provider
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 the division of your monthly debt outgoings divided by your monthly income. Your outgoings will include everything such as rent and car payments, but will also include the monthly repayments if you were to be approved for the boat loan.
As long as your DTI is less than 50%, and you have a good record of paying back similar loans, you will be in a good position for approval. If not, you will need to take steps to improve your DTI so that you can come back again later and apply for a loan again.
Before you commit to buying a boat you need to educate yourself on every aspect of the process. Make sure you know your exact budget, and that you have considered all potential financing avenues. Once you have taken everything into account, it is time to make an offer and get ready for your new life sailing the seven seas.