Boat Loans – What You Should Know?
Do you know anything about boat loans? Boat loans are usually quite different from other types of loans because they seem to be more of a challenge to obtain than other loans such as car loans and insurance loans. Admittedly, every loan is different and unique so we have to pay more attention when selecting boat financing for our watercrafts. Actually, boat loans are typically simple interest loans that do not have many limitations on the prepayments like other loans do.
For example, a common car loan may require some certain prepayment penalties for paying off your loan earlier than the fixed term. But boat loans do not have such penalties for the debtors. In this way, we have more flexible choices for the payments of our boat loans. When we have gained enough money, we are free to pay off all the loans at anytime within the mortgage term. As a result, we will save a lot of money on the interest rates.
Two Typical Types of Boat Loans
Boat loans can be obtained with ease at some nice banking and financial companies or corporations. There are two primary types of boat loans: one is the secured boat loan, and the other is the unsecured boat loan.
Secured boat loans are loans under the guarantee of some necessary collateral such as houses, cars or other valuable properties. The borrowers are not able to receive a secured boat loan without any collateral. Unsecured boat loans do not have any limitation on the collateral from the borrowers. People can obtain unsecured boat loans without ant collateral. However, these loans always come with higher interest rates. Usually, a secured boat loan features much lower interest rates than an unsecured boat loan does.
What are the Common Terms of Boat Loans?
Common loans such as car loans, house loans and others usually offer quite flexible payment terms for the debtors. We can choose 1-year term, 10-year term or even 40-year term loans. Basically, boat loans also provide many choices for flexible payment terms. But they do not allow short term payments, such as one year-term or two-year term mortgage. The shortest term for a boat loan is 36 months (at least three years). And the longest term for boat loans is 240 months (no better than 20 years).
Boat loans with different terms also have different requirements on the interest rates. A 15-year term loan may offer much lower interest rates than a 5-year term mortgage. If you want to apply for a boat loan, please make sure you are familiar with the available terms. Make sure the one you choose can help you most with the least interest rates.
What are the Factors to Determine a Boat Loan?
Getting a boat loan is not an easy task for most of us. The creditors will take several important factors into consideration to determine whether we are able to get our preferred boat loan. Necessary factors go to credit scores, our existing debts, the age of our vessels as well as the type of our vessels. If we want to obtain a boat loan, we have to own a good or perfect credit score. People with bad or poor credit history are not allowed to get boat loans. Our vessels also play important role for the loans. Different kinds of boats are restricted to get certain loans, and old vessels and new boats also enjoy different treatments on the loans.