Buying a boat can be a fantastic feeling and a major achievement for most people. Whether purchasing a fishing boat or a jet ski, you can get financing to facilitate the purchase. Besides getting financing for a boat, lenders can also finance an engine. You may have bought a boat without an engine or want to upgrade the current engine to a more powerful one. These are the different types of boat engine loans you can access to finance an engine:
Unsecured personal loan
Banks, online lenders, and credit unions can give you this loan. Unlike a secured loan, you won’t need collateral to get this loan. The lender will use other qualifications to decide whether they should give you a loan, including credit score, income, and debt-to-income ratio. Such loans are perfect for buying boats and boat parts that other lenders may decline to finance, such as an older model engine. However, the loan could have a higher interest rate than a secured loan due to the lack of collateral. The repayment period can be as long as seven years, and the monthly payments are constant. It is a perfect financing choice if you have a good credit score because the lender might give you a lower interest rate. The best thing about this loan is that the lender will not repossess your engine if you fail to repay the loan.
Credit cards
Another option you have when looking for boat engine loans is to use a credit card. Take advantage of credit card providers’ 0% APR promotions, such as the 0% introductory promotion. Institutions such as Wells Fargo and Bank of America offer such credit card promotions in the first 21 months. To benefit from this promotion, pay off the loan before the promotion period ends, so you won’t have to pay interest.
Dealer financing
Some boat manufacturers and dealers can finance a buyer. Inquire whether your seller offers such services when you decide to buy an engine. Each manufacturer or dealer offers loans at different terms, so it will help to shop around and find the one with the most favorable terms for you. You will also need to have a good debt-to-income ratio and a credit history. From time to time, dealers offer fantastic promotions that can let you pay your loan with zero APR for a specific period. After the promotion duration elapses, the dealer may increase the APR. The good thing about seeking this loan is that you will buy your engine and get financing in the same place. The downside is that you will have a limited selection of engines to choose from.
Type of boat engines that lenders finance
Lenders can finance any boat engine, such as:
- Jet boat engines
- Four stroke inboard engines
- Propane, electric, pump jet, or propeller outboard motors
- Stern drive engines
- Diesel or gas inboard engines
Factors to consider when choosing a boat engine loan
When you are in the market for an engine, you have to look for the best boat engine loan that you can clear with your income. This means you have to consider the loan terms, which include:
- Annual Percentage Rate (APR)
- Repayment period
- Prepayment penalty
- Monthly payment
- Lender fees
Other factors are:
- Do you need to replace other parts of your boat?
- What brand will meet your needs best and work seamlessly with your vessel?
- Horsepower capacity
Credit score
Sometimes, it can be impossible to qualify for any of the loans mentioned above, especially if you have a bad credit score. The FICO scoring range indicates that a score of 800 and more is excellent, 740 to 977 is quite good, 670 to 739 is good, 580 to 669 is fair, and less than 580 is poor.
It would be best that you know your credit score before applying for a boat engine loan. You can do this by visiting the AnnualCreditReport.com website. When at it, confirm that there is nothing wrong with the score, and if you notice any mistakes, you can report them to the bureau, so they can fix them. If your credit score is good, you can contact lenders like Upstart, Upgrade, and SoFi, some of the country’s best lenders with favorable terms. They have a repayment period of up to 5 years.
Important questions to ask yourself before seeking a boat engine loan
Once you decide to buy an engine for your boat, you need to ask yourself several pertinent questions. What is your financial standing? Can you comfortably pay for a loan and still have enough to meet your other financial goals, such as creating an emergency fund or saving for retirement?
Look for a personal loan calculator online to know the monthly payments you can expect if you get a loan and how much it will cost you at the end of the loan repayment duration.
Remember that if you cannot repay the loan on time, you will badly damage your credit score, and you don’t want that to happen.
Summary of the steps you should take when looking for a personal loan to buy a boat engine
- Find out what your credit score is. If the number is bad, take some time to improve it before looking for a loan.
- Shop around and prequalify with many financiers. Most of the time, prequalifying will not have an impact on your credit score.
- Choose the cheapest boat engine loan. This means a loan with little or no fees, reasonable repayment terms, and a low APR.
- Complete an application form and bring the required documents, such as your ID and bank statement.
- Receive money in your bank account from your financier and start repaying the loan every month for the needed period.
Final thoughts
Your engine may be old, but you don’t want to buy a new boat. If money has been preventing you from enjoying the boating lifestyle, worry no more because there are lenders who can help you acquire the engine you want to buy for your watercraft. These lenders offer boat engine loans to buyers at favorable terms, especially if you have a good credit score, debt-to-income ratio, and a sizable income. Just call or visit them and begin acquiring your dream engine.
