The price of a boat is not only the cost of the boat but also the annual cost of upkeep, repairs, fuel, taxes, parking, insurance, and crew salaries. These costs are approximately 5-10% of the cost of the boat per year, depending on where you operate it.
For example, yearly turnkey maintenance for a 20-meter yacht will cost the owner about €150,000 a year, while a 40-meter vessel worth €16 million will charge about €1 million a year. Most lenders expect a credit rating of about 700 or higher. You can get a boat loan with a lower credit score as well, but expect that you may have to pay the penalty in the form of a higher interest rate or a larger down payment.
Five parameters determine the purchase price of a boat: year, model, size, condition, and place of sale. The Mediterranean is considered the most expensive market for a used yacht but that is where all other parameters were matched for us.
What credit score is needed for a boat loan?
Regardless of the financing option, primary attention is paid to the legal aspects of the transaction and the assessment of the client’s solvency. To do this, it is necessary to provide transparent information regarding the sources of income and the identity of the client.
Documents and information on the borrower:
- proof of residence
- summary of professional activities and sources of accumulation of assets
- property documents
- bank statements
- information about the employer/company owned
- tax returns confirming the level of income required for the requested loan.
Are boat loans hard to get?
Registration of a marine loan will require certain expenses from the future owner of the vessel. As a rule, these are the same expenses that each property owner bears: payment of the bill of sale, notary fees, property valuation, registration fees. In addition, the special conditions of the loan for the purchase of a vessel include interest, the difference in rates, which is somewhat higher than in the case of a loan for the purchase of real estate. It is worth remembering about commission fees, including commissions for opening a transaction and fees in case of refusal of a transaction.
What is a good debt-to-income ratio for a boat loan?
his ratio is the difference between your gross monthly income and your monthly obligations/expenses. Typically, lenders want to see a debt-to-income ratio of 40 percent or less. If your debt-to-income ratio is over 40%, you will probably not qualify for a boat loan and you should focus on paying your current bills before attempting to finance such a large purchase. Ideally, even with a boat, you should try to keep your debt-to-income ratio at or below 43%.
How long is a boat loan term?
Loans in this area are issued on average for 5-7. Their goal can be both the purchase of used boats and the construction of new ones. Generally, the smaller the boat, the more difficult it is to get a loan. At the same time, banks have a plan according to which the volume of such transactions should not exceed a certain part of the portfolio.