While boat loan financing is similar in its basic structure to that of car loans, there are some important differences as well.
For the most part, most people own a car out of necessity - they need transportation to and from their workplace, the supermarket, or school. Boat ownership, meanwhile, is considered a luxury - people need cars, but with few exceptions, people do not need a boat.
Most lenders will permit a home loan or car loan applicant to have a co-signer for the loan and will consider the co-signer's financial stability alongside the main applicant's. But a boat loan applicant may not have a co-signer on their application - he or she must qualify for their boat loan individually. Boat loan lenders are also stricter about your qualifications - for example, your "debt-to-income ratio", or the difference between your monthly income and your monthly debt payments, should
be under 42%. Boat buyers also have to consider the different expenses that go with boat ownership - dockage fees, winter storage, and the like - that would also affect your debt-to-income ratio.
On the other hand, some differences between car loan and boat loan financing may work in your favor. Most car loans have a 36-month limit - within three years, your loan must be paid off. However, some boat loans have a much longer term - depending on the amount you are seeking, you may be able to stretch your terms to seven, ten, or even twenty years. Also, car loan interest is not tax-deductible - but if your boat has a kitchen and sleeping area, you may be able to declare it as a "second home" and may be able to claim your boat loan interest payments on your tax returns.
Improve Your Credit Score - Free Consultation