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Your Guide To Financing a Used Boat in Florida

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Over the past few years, Americans have prioritized outdoor recreation. Hence, the popularity of boat ownership has increased. For many, purchasing a used boat is an affordable way to make this dream come true.

Lenders are adapting by offering flexible used boat financing options, but there are some important considerations for prospective boat owners.

The following guide will discuss used boat financing in Florida and how it differs from financing a new vessel.

Understanding the Impact of Interest Rates

From 2018 to 2023, economic activity for the boating sector increased by 53% in Florida, making it one of the top states for water recreation enthusiasts and driving sales of new and used boats.

Whether you're applying for a new loan or want to refinance a boat loan, your lender will assess the risks they're taking and offer an interest rate that reflects these risks.

Perceived risks go up with the age of a boat, but there are a few strategies you can use to keep interest rates down:
  • Save up for a sizeable down payment.
  • Work on improving your credit score.
  • Keep your debt-to-income ratio under 35%.
  • Lower the total purchase price by negotiating.
  • Choose a popular boat model that will be easy to resell. Fishing boats, center console crafts, and wake boats are good options.
  • Stay away from boats in poor condition.
Loan Rates for Used Boats: Navigating Shorter Terms

The term or duration of your boat loan is another important consideration for assessing the total cost of boat ownership.

Lenders typically offer longer terms when financing new boats since the vessel will depreciate slower. You should expect shorter terms for used boat financing.

Due to the lower price tag of used boats, you'll have to borrow less, which justifies a shorter loan term. Lenders will also seek to reduce their risks by asking you to repay the loan before the boat loses too much of its value.

Manage your loan payments with these tips:
  Assessing Boat Condition and Inspection

A boat in poor condition will depreciate faster. It also represents a higher risk for the lender and can result in a denied application.

Safeguard your investment by having a boat mechanic perform a pre-purchase inspection. Depending on the lender, this inspection can be a hard requirement, along with an appraisal.

Here are a few red flags to watch out for:
  • Gas marine engines typically last 1,250 to 1,500 hours.
  • A diesel marine engine has an average lifespan of 5,000 hours.
  • Pay attention to signs of corrosion on metal parts.
  • Have an expert inspect the boat's electrical system.
  • Watch out for leaks and signs of water damage.
  • Ask for maintenance records.
On average, yearly maintenance should cost 10% of a used boat's value. If the seller failed to invest in maintenance, it's best to look for a different boat.

Once you've conducted your inspection, you can start negotiating the price by making an offer based on what similar boats go for in the area. Ask the seller to reduce their ask price to account for any repairs you must perform.

Depreciation and Its Impact on Resale Value

A brand-new boat will typically lose 10 to 15% of its value in its first year. The manufacturer's warranty will expire after a year or two, and the vessel will be worth 70 to 80% of its initial value after five years. Value usually drops to 50% around the ten-year mark.

Mitigate depreciation by keeping up with maintenance:
  • Change the oil regularly, replace the raw water impeller, and clean the sea strainer.
  • Invest in proper storage when the vessel is not in use.
  • Wipe your craft after every use and apply wax to the exterior once a year.
Choosing the Right Financing Option

Choosing the right lender can impact the cost of financing a boat. Traditional lenders often see used boat financing as too risky or overestimate risks.

A specialized marine lender can use their expertise to assess risks and value more accurately. They'll also better understand your unique needs as a boat owner.

Boat loans fall under the personal loan umbrella. Rates for these loans can vary greatly, and one of the key factors is whether you're applying for a secured or unsecured loan:
  • A secured loan uses your boat as collateral. The interest rate is usually lower, and the term is flexible.
  • An unsecured loan typically has a shorter term and higher rate, but the application process is more straightforward if you have a robust financial profile.
Used Boat Financing in Florida with Power Financial Credit Union

Financing a used boat is a realistic goal, but finding the right lender and securing a competitive interest rate can be challenging.

Power Financial Credit Union makes this process easy by offering affordable fixed or variable rates, flexible terms, and additional discounts for existing members.

Whether you're looking to refinance a boat loan or purchase a used craft, you can count on us to offer a highly personalized approach to boat financing combined with exceptional service. Contact one of our boat loan experts to get started!