Buying a boat with a loan is a major financial investment, but a lot of first-time buyers don’t realize how much they have to budget to afford it. In addition to having money set aside for the boat loan itself, there are several hidden costs involved that will affect whether you can reasonably afford to finance and sail a boat.
Below, we’ll discuss the ins and outs of applying for boat loans and other costs to keep in mind when budgeting for this exciting purchase. Keep reading to learn more!
What’s Involved in a Boat Loan?
The process of securing a boat loan is very similar to a loan for an automobile. These loans are paid off in installments, meaning you’ll repay your borrowed amount in monthly increments, along with charged interest. You may be required to make a down payment, usually around 10 to 30%. Depending on the terms of your loan, the repayment terms can be from 10 to 20 years in length. The lender you work with will thoroughly explain the rate of interest you’re expected to pay.
Unlike cars and automobiles, which are generally considered essential purchases, boats are considered recreational vehicles and, therefore, harder to get approved for. Most lenders require a higher credit score for boat loans than auto loans to determine whether you are a high financial risk or a reliable borrower. The amount of money you’ll need to set aside largely depends on the boat model you’d like to purchase, but it can range from a few grand to hundreds of thousands of dollars.
Common Hidden Costs for Boat Loans
Financing a boat involves a lot more than being approved for a loan and paying the interest. While you may have the baseline expenses covered for obtaining your vessel, there are a lot of other fees you’ll need to take into account to decide whether you can reasonably afford it. Some of these fees include the following:
Boat Insurance
One of the most important (and often forgotten) costs involved with owning a boat is obtaining boat insurance. While boat insurance is not mandatory in most Canadian provincial laws, the majority of marinas in British Columbia require you to have insurance to secure a spot for your boat.
Moorage Fees
Most marinas require boat owners to pay a moorage fee to access buoys out on the water. This fee is charged for the duration that a boat is tied to a buoy.
Maintenance and Repairs
Similar to owning a car, boats require a lot of maintenance to ensure they’re operational. If you plan to use your boat on a regular basis, the expense of upkeep can climb when combined with your boat insurance, moorage fees, and loan payments.
Operational Costs
Operational costs, such as essentials like fuel and secondary engines, can increase your boat’s expenses even further. Once the colder months kick in, you’ll also have to account for winterization costs and storage.
Overall, when deciding on a price range for your boat model and loan, don’t forget to consider these additional costs. While certain expenses like winterization and repairs will be occasional, others, like insurance, will be regularly scheduled payments in addition to your loan. Research the upkeep and expenses associated with the type of boat you’d like to buy and build a budget that accounts for all costs involved, from your loan payments to fuel (you can create a baseline for your boat and loan budget with our AutoLoan Calculator).
Finance Your Dream Sailboat with AutoLoan Hub
If you’re ready to find the boat of your dreams, our team at AutoLoan Hub is here to help! From locating a reputable lender to filing the paperwork, we’ll handle all the logistics. Contact us today to learn more about securing pre-approval for a boat loan.
