Ron and I were talking about the boat show coming up this May and we thought a good subject for this month’s newsletter would be financing your boat. So we asked our good friend Mike Jenkins at Trident Funding for some advice. This is what he wrote.
Financing that Yacht
Financing your boat is not like financing your house or even financing your car. It is a specialized field of lending that only a handful of companies engage in and is supported by only a handful of lenders. Although, there are undoubtedly many local banks that will offer some sort of financing for boats, often these programs will have higher rates, limited terms and will limit the types and kinds of boats they will finance. These lenders will often have very limited experience in the handling of these kinds of transaction and as a result many problems may arise at the time of closing. You, of course, can search the internet for a lender specializing in boat loans but you will run into two issues. One, many lenders who claim they are experts in boat lending really are real estate lenders in disguise and will try and convert your loan to a home equity loan. The second problem is that many lenders, who claim to be national, are really not but they do broker their loans through national lenders. Preferably, you want to find a lending partner who is local to your area and understands your market. You want a broker/lender that is experienced with the kind of boat you are purchasing, but more importantly has the credit experience to understand your financial profile. This is key, as many brokers use some of the same lending partners, but do not possess the same level of financial and credit experience. And here is the best part, you do not pay any more for this level of expertise. You simply need to find them. One way is to utilize the dealer or broker you are working through. Another is to use the internet but make sure the company has representation in your market. You can also contact the National Marine Bankers Association for a list of their member broker/lenders. Also, try contacting the local documentation service or perhaps a marine insurance broker to locate a good broker/lender.
Once you have selected a lending source. It is important that you give that source as much information as possible. More approvals are delayed over not being able to explain or justify some part of an applicant’s credit profile. Another important point is to apply prior to finding a boat so many issues arising from the application process are addressed and out of the way so when you do find the right boat the closing will go very quickly.
Now how do you choose the right terms and conditions that are best suited for you? First you need to ask yourself, how long you are likely to own the boat. Second is to assess how tightly the costs of owning the boat will be as it pertains to your budget. This will help you determine whether you should select a fixed rate or a variable rate product. Your lending broker sales representative can assist you in weighing all of your options. Remember, that although it is the goal of every marine lending broker to make this process as painless as possible you do need to do your homework.
Vice President – NW Area Sales Manager
Trident Funding Corporation
Thanks Mike and happy boating to all of you out there.