Ask the Expert: Securing Your Dream
Loan and financial assistance in shopping for a bigger boat help take boaters from operators to owners.
Photos courtesy of Newcoast.
For boaters who are looking to upgrade to something larger, some factors to consider include size (how much can I afford/handle?), model (is this model the best, or is there something new and improved?), and much more. Financial and insurance groups that provide boat insurance use these factors to act as a compass that helps guide potential buyers. Groups like Newcoast, whose finance team connect buyers to the largest network of quality lenders for the most competitive rates and loan options — all in order to guide boaters toward the upgrade purchase that works best for their situation.
Expertise on what someone needs to know before looking for their next boat starts with understanding options so as not to get too far ahead, according to Jake Hill, Director of Boat Insurance at Newcoast. It’s trying to educate the potential buyer and save them from disappointment [of] wanting to move up too much in size, or looking at too old of a boat that will make financing very difficult, as well as insurance. “It’s a huge milestone and one worth celebrating. But with that excitement comes an important conversation about safety, preparation, and insurance,” says Hill.
From an underwriter’s perspective, it’s not just about learning to operate a bigger boat. It is about the difference between ownership experience and operational experience. Many boaters have owned smaller vessels, but that does not always mean they have enough hands-on experience operating something much larger. Ownership means you have been responsible for a vessel and its maintenance. Operational experience means you may have navigated the vessel, but were never fully responsible for the upkeep, preventative maintenance, and insurance.
One of the best ways to demonstrate insurability is by putting together a detailed boating resume. This should include your past vessels (owned and operated), training courses you have completed, and your on-water experience. “A strong resume often allows for a temporary captain requirement until you are signed off to operate solo,” says Hill. He also notes that this is a great alternative to having a captain warranty that would usually always require a licensed professional aboard. “Make sure your experience and preparation are keeping up with the size of your boat. Work with your insurance agent, plan your training, and ease into the new size with confidence. Then you’ll be ready to enjoy your new adventure safely and fully insured,” says Hill.
Ultimately, financing a boat or yacht is a manageable process approached with proper planning. With the right lender and insurance agency, you can secure your dream vessel today.
Breaking It Down, with Joey Gotfried
Newcoast Finance Specialist Joey Gotfried says speaking with a customer about buying a bigger boat is something he truly enjoys, finding fellow boater’s excitement contagious. “It makes me happy and excited when I get to help a customer make the leap,” he says. Here Gotfried covers some of the more important details that customers should keep in mind when it comes to financing a boat or yacht.
Let’s first look at boat financing. For boat loans in the $25,000 or $250,000 range, the loan decision is mostly based on two factors, credit and income. Let’s break each one down into separate and important parts.
Credit: This would be your credit scores, credit history, high credit (the largest loan you’ve had), how much new debt you have, revolving debt (credit card), etc. To qualify for a great rate, you need to have Very Good to Excellent credit.
Income: Underwriters are focusing on affordability. The debt-to-income ratio is calculated based on the income you state on the credit application, compared with the amount of debt that appears on your credit report. There are cases where proof of income (tax returns) is required: larger loans (over $200/$300K), older vessels (over 20 years old), limited credit history, lower credit scores, and a few others.
When it comes to financing a yacht, or bigger boat in the $250,000 or more range, there is a third factor that comes into play: liquidity. Let’s break that down too.
Liquidity: cash (savings, checking), investment accounts, and even retirement accounts in many cases.
Buyers with excellent credit (mid 700s and higher) are often surprised to find out that we rarely need proof of income on loans under $200K, sometimes even $300K. And that includes those who are self-employed. Most of the available marine loan options nationwide are limited to vessels that are no more than 20-25 years old. But again, there are exceptions to the rule. We have multiple attractive options for vessels of any age.
Quick Tip: Marine lenders specialize in streamlining the process, making it as quick and easy as possible. Don’t try to qualify yourself based on what you see on the internet or what your local banker or friend is telling you. We often secure approvals within 1 business day. The key here is to discuss your plans with an experienced and reputable marine loan officer, the earlier in the process the better.
Boating is such a healthy and fun activity. Is there anything better than being out on the water with family and friends? I don’t think so, which is why I think I have the best job in the world.
