Marine Lending Consumer Finance Tips (during the US market downturn)

There is credit availability for boat loans

US banks are making boat loans. Yes, there are fewer banks doing this today than one year ago. However, proportionately both boat sales and loans are down so the service capacity for boat loans remains about the same. For best results, see your local boat dealer. They will likely have the banking relationships you need.  Other ways to obtain a boat loan from a marine lender is contact the National Marine Bankers Association - www.marinebankers.org -  a list of qualified marine lenders can be found on the website.

 

Know what you want and what you can afford

Do your financial homework and run a budget --- before you buy a boat. It’s the smart thing to do and will save you a lot of time. Be sure to allow for general maintenance, storage, insurance and other important add-on products you may require such as extended warranties.

 

Credit score is very important

Remember, your credit score is your payment story. It determines the loan approval and often your interest rate. The recent financial crisis means fewer sub-prime (bad credit) loans are available.

 

Think “back to the future” for credit guidelines – it’s not bad news

Credit underwriting guidelines in the boat loan business have returned to what they were about 20 years ago. This means you need to be prepared to make a down payment (usually around 20% of the retail sales price). “Collateral value” is an important factor to marine lenders. They will review a boat’s value and future value against the finance amount. Keep your monthly terms as short as possible. It will save you real money in terms of interest and will help prevent (along with the down payment) negative equity situations.Debt-to-income ratio requirements (generally, your debts compared to your net income) have decreased in recent months. It will be much more difficult to have your loan approved with a 45%+ debt-to-income versus one below 40%.

 

It’s a great time to buy a boat

Knowing there are loans available and that dealers and manufacturers are motivated to sell boats, it really is a great time to buy at boat.

 
Jim Coburn is the First Vice president of Flagstar Bank in Troy, Mich., and President of the National Marine Bankers Association in Chicago, Ill. He can reached at 248/312-5201 and via e-mail: jim.coburn@flagstar.com
 
Content courtesy of Michigan Boating Industries Association.