One in every 10 American households owns a boat – which is testimony to the sea loving nation the US is. From sailing to fishing, water skiing to exploring, there are a plethora of activities that those who live near the water can best appreciate from a boat. Larger boats are an ideal setting for those into the party lifestyle as well, with yachts making the perfect setting for Champagne-wielding Instagrammers ready to celebrate the good life with their followers. If you have always wanted to purchase a boat but you are saving for a home or other major expenses, how can you make it happen without putting a dent in your monthly budget?
Choosing a Boat that Suits Your Purpose
When you think of sailing across a sparkling sea, do you see yourself on a sailboat or are you more into power? Unless you are already decided on one type of boat, considering the running costs of different types of boats. One advantage of sailboats is that they are fuel-free. Sailboats are also ideal for those into serenity of silence, while powerboats are the way to go for those seeking high-octane speed and wave-breaking thrills. Your intended use is also important; will you be taking the boat out regularly? Will you be competing or simply using the boat for leisure? Instead of buying first-hand, check out secondhand sites, especially off-season. The best deals are usually available when peak seasons ends and owners wish to avoid paying marina fees when they are not actually using their boat. Set a budget and don’t go over it by more than 25%. Give yourself a little way in case you find a steal that is worth a little extra cash.
How to Finance Your Boat?
If you don’t want to make a major dent in your savings or you don’t have the full lump sum payment on hand, then taking out a loan for your boat may be a feasible option. You will need to have between 10% to 20% of the total price available for a downpayment, but the rest can be paid monthly. Before approaching a bank or other financial institution, work out the maximum amount you can pay per month without your quality of life being affected. Remember to include marina fees and any other additional expenses that may arise. When comparing rates, don’t just look at the monthly payment, but rather, look at the total costs. You should also take into consideration closing costs, notary fees, etc. If possible, have a lawyer look at the fine print to ensure there are no restrictive or abusive clauses in the contract.
What Type of Loan is Best for You?
When taking out finance, you will normally given the option of a fixed or variable interest rate. The latter will usually start lower than the former, but if you are a stickler for security, a fixed rate might be the way to go – especially if you currently have a mortgage with a variable interest rate. Regardless of which type of loan you opt for, be prepared to be asked for a marine survey, which will let the lender know of important matters such as the condition of the boat, etc.
The Benefits of an Escrow Service
If you are buying a secondhand boat, enlisting the help of a boat escrow agent may be useful. An escrow agent will stipulate terms that both parties must follow. Under the agreement, there is a trial period during which the buyer can try out the boat to ensure no misrepresentations have been made. After a specific time frame, the agent transfers the purchase price to the seller. An escrow agreement essentially protects both buyer and seller because it ensures that, provided all terms and conditions of the agreement have been met, both will get what they bargained for.
If you have always wanted a boat, you may be surprised to discover it is more affordable than you initially thought. Take your time shopping and, if buying second-hand, consider an escrow agent as a way to boost security. Finally, when calculating costs, do your research and discover any added costs that boat ownership entails. Make sure you are aware of the ‘full picture’ before making a commitment to the boating lifestyle.