Lendingtree: A Smart Option For Boat Loans?

LendingTree is a marketing lead generator that connects borrowers with lenders. LendingTree gets paid by the companies on its site, and this compensation may impact how and where offers appear on the site. LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

LendingTree offers boat loans for various amounts, with repayment periods of up to 20 years. It also offers boat loans for people with bad credit. However, it is important to note that LendingTree does not offer loans directly but acts as a broker between borrowers and lenders.

LendingTree's compensation model and how it may impact loan offers

LendingTree is a free-to-use online lending marketplace that connects borrowers with lenders. It is compensated by the lenders in its network, who pay to be on the platform and compete for borrowers' business. This compensation model may impact the loan offers presented to borrowers in the following ways:

• LendingTree only includes lenders in its network that have paid to be on the platform. Therefore, borrowers may not see offers from lenders that operate outside of the LendingTree network.
• Lenders on the LendingTree platform are competing for borrowers' business, which may drive down prices. As a result, borrowers may receive lower interest rates and fees on their loans.
• LendingTree passes borrower information on to lenders, who then contact the borrower. This can result in borrowers being inundated with calls and emails from multiple lenders, which some may find overwhelming.
• LendingTree does not make any approval decisions on loan applications. Instead, it passes borrower information to its network of lenders, who decide whether or not to extend an offer based on their loan criteria. This means that borrowers may receive preliminary quotes from multiple lenders, but the final approval and specific loan terms will be determined by the individual lenders.
• LendingTree's compensation model allows it to offer its services for free to borrowers. However, if a borrower decides to take out a loan, they will be responsible for any processing fees, closing costs, or other fees normally associated with the loan.
• LendingTree's compensation model may incentivize lenders to offer more competitive rates and terms to borrowers to increase their chances of securing their business.

In summary, LendingTree's compensation model, where lenders pay to be on the network and compete for borrowers' business, may impact the loan offers presented to borrowers by influencing the number of offers received, the competitiveness of the rates and terms, and the overall borrower experience.

LendingTree's boat loan calculator

Your loan amount will be the cost of your boat minus any down payment. The typical cost of a new boat is $42,000, while a used boat costs around $10,000. The down payment is usually between 10% and 20% of the boat's purchase price.

The interest rate, or annual percentage rate (APR), measures how much it will cost you to borrow money. Boat loans have fixed rates, meaning your monthly payment will be the same every month. Current boat loan rates start at 6.36%.

The loan term is the number of months or years you have to make monthly payments on your boat loan. Shorter loan terms result in lower overall interest payments. Typical boat loan terms range from 10 to 20 years.

Pros and cons of boat loans

Pros

• Breaks up the cost into smaller, more manageable instalments.
• Depending on the lender, boating-related expenses may also be covered.
• Interest rates are low for those with a good credit score.
• Payments can be low with a long-term loan.
• Access to funds: A boat loan can give you access to the funds needed to buy your dream boat, which you otherwise might not be able to pay out of pocket for.
• Flexibility: With a multitude of lenders offering boat loans, you can shop around to find flexible terms that suit your needs.

Cons

• May be difficult to be approved for larger amounts.
• Secured loans will risk your collateral if you default.
• High interest rates could lead to paying much more than you originally borrowed.
• Longer loan terms mean paying more interest over the life of the loan.
• Risk: A loan is a financial obligation. If you cannot repay it, you could damage your credit. In the case of a secured loan, you could also lose your boat.
• Depreciation: Boats depreciate over time. It's possible that the boat will become less valuable than what you'll owe your lender.

Alternatives to boat loans

There are several alternatives to boat loans that you can consider. Here are some options:

Unsecured Personal Loans

Unsecured personal loans can be a good option if you don't want to put your boat up as collateral. With this type of loan, you won't risk losing your boat if you miss payments. However, personal loans typically come with higher interest rates, so you'll likely pay more in interest over time.

Home Equity Loans or Lines of Credit

If you're a homeowner, you can tap into your home equity with a home equity loan or line of credit (HELOC). These options often come with lower interest rates compared to personal loans. However, it's important to remember that your home will be at risk if you miss payments.

Renting or Leasing a Boat

If you're a part-time boater or not ready to commit to boat ownership, renting or leasing a boat can be a more cost-effective option. While you'll save on the total cost of owning a boat, you'll have to give up the dream of boat captaincy.

Paying Cash

Paying cash for a boat is the cheapest option as you avoid interest charges and loan fees. However, ensure you have enough cash left for other financial goals and an emergency fund.

Boat Dealer Financing

Boat dealers may offer onsite financing options, providing a convenient way to buy and finance your boat in one place. However, it's important to compare their financing terms with other lenders to ensure you're getting the best deal.

How to get preapproved for a boat loan

Check your budget

Use a boat loan calculator to ensure you can afford the monthly payments. You will need to know the following:

• Loan amount: The cost of your boat minus a down payment of 10% to 20%.
• Interest rate: Boat loan rates start at 6.49% as of October 2024, but you will pay more for a bad credit boat loan.
• Loan term: Boat loan terms typically range from 10 to 20 years.

Apply for preapproval

When applying for a preapproved boat loan directly with a lender, you will need to provide information such as your identity, employment, and income. You may also need to provide documents like your driver's license, tax returns, or W-2s.

The lender will perform a hard credit pull, which will temporarily knock a few points off your credit score. If you qualify, you will receive a preapproval letter that you can take to a dealership.

To minimize the impact on your credit score, do all of your boat loan shopping within 14 days. Multiple hard credit pulls for the same type of loan will only count as one if they occur within a two-week rate-shopping period.

Compare offers

Don't accept the first offer you receive. Compare boat loan offers from at least three lenders, paying close attention to each feature and the fine print before deciding.

Sign your loan agreement

Once you've chosen a lender, you'll need to supply documentation to verify your identity and income. You will also likely need to submit to a hard credit pull. Once the lender verifies everything, you'll sign your loan agreement and start making payments.

Preapproval vs. Prequalification

Some boat lenders offer prequalification rather than preapproval. Both allow you to see potential rates before formally applying for a boat loan, and neither is a guarantee that you'll qualify for a loan. Here are the key differences:

• Preapproval requires a hard credit pull and a thorough review of your credit history, impacting your credit score by up to five points. The rates offered are unlikely to change since the lender has done an extensive credit review.
• Prequalification involves a soft credit pull and a limited review of your credit. Your credit score won't change, no matter how many lenders you prequalify with, but the rates are more likely to change as the lender has only done a basic credit review.

Obtaining preapproval is an ideal first step before shopping for a boat. It means a lender has qualified you for a specific loan amount, and you can understand how much you can spend. It's simple and usually only takes a few minutes to complete the application.

New vs. Used Boats

Financing is available for both pre-owned and new boats, but different terms may apply depending on the boat's age. For example, some lenders won't provide loans for boats over 20 years old. Here are some other things to consider:

• Newer boats are more expensive upfront and to insure.
• Used boats are less costly to purchase and insure.
• If your credit score isn't high, receiving financing for a new boat might be more challenging.
• Lenders often require a marine survey for a used boat, which you'll need to pay for.

Understand Your Budget, Your Loan, and the Purchase Price

Boats can be expensive to maintain, so plan your budget accordingly. Your loan payment will only be a part of the total cost of owning a boat. Don't forget to factor in other costs like insurance, fuel, storage fees, and maintenance. Online loan calculators can be helpful when planning your boat purchase.

Types of Loans

Several types of loans can finance a boat purchase:

• Secured Loan: This loan type is backed by collateral, such as a home, vehicle, or the boat itself. The benefits include lower interest rates, and people with poor credit history could also access this loan.
• Unsecured Loan: This loan doesn't require collateral but comes with higher interest rates and more restrictions as the lender considers them riskier. Getting an unsecured loan is much more challenging than a secured one if your credit is not great.
• Home Equity Loan: You can use your home's equity to fund your boat purchase, but defaulting on this loan could result in losing your home.

Frequently asked questions