New boat loan costs are highly dependent on two things, the amount borrowed and the interest rate. Although this could be seen as obvious the point is that you can put this information to use to discover either your monthly boat loan repayments, or the period of time which you want to take the loan. Both of these will be determined by the amount you feel is feesable for you to pay monthly.
The total cost of new boat finance is determined by the time over which you pay and the interest rate. You can use a boat loan calculator to dicover the cheapest way, and also the best way according to what your affordable monthly repayments are. The monthly repayment amount is not of considerable importance to some people, while to others it is of most importance, and in the latter case you can pay less each month by increasing the repayment term. However the total cost of your loan in terms of both capital repayment and interest repayments will be greater.
It is often true that the longer time frame over which you give, the more interest you will have paid by the time you have paid off the loan. A boat loan calculator is able to work that out for you, and let you know the amount of interest you will need to pay. However, you are able to decrease the expense a new boat loan by careful selection of the lender. Not all financiers are the same, so what should you be looking for?
First find a lender that will provide you a guaranteed fixed interest rate for the duration of the loan, whether that be one or five years. Not all do this, however it is possible to get lenders that will give you this security. Because your boat is new you will be able to negotiate a secured boat loan, using the boat as security. Generally this will enable you a reduced interest rate, and so the cost will be less than if your loan was unsecured.
However, hidden expenses may be encountered in buying a new boat besides the actual new boat loan itself. If you have a secured loan, the financier will insist on the water vessel to be maintained and well looked after, and will require you getting a fully comprehensive auto insurance policy. This is so that, should an unfortunate incident occur to the boat, it will not lose value through you being unable to pay for dages or even a replacement, depending on the extent of the accident.
You will encounter that this is true of any secured new boat finance, and it will be a cost that you will have to consider of when deciding on the size of loan that you find affordable. It more than uses up the benefit of the lower interest rate through the loan being secured on your marine vessel, and could be a terrible burden if you are not aware of it and have included the cost into consideration in your calculations.
A boat finance calculator enables you to clarify the monthly repayments at a specific interest rate over a set interval, however this will not factor marine insurance. In spite of this, there may be a way out if this means that you can't afford the loan you require. If you feel you will be in improved financial circumstances at the end of the loan time frame, then you could apply a balloon.
This is similar to paying a deposit on the boat, but at the end of the loan instead of the beginning. You state a sum to be paid in cash at the end of the loan term, and that is taken from the amount of the loan. Your monthly repayments are correspondingly less, and you can afford the loan you need plus the comprehensive insurance payments. As you earn more money you can save up for the balloon payment at the end.
Most financiers offer this option, and it is a good one for those whose earnings are expected to rise during the time period of the loan. If you find the balloon payment not to be affordable, then you may have no option to either take out another loan to pay it or to sell the boat to raise the money. However, it is a beneficial option worthy of consideration should you need more money than you can initially repay.
The cost of new boat finance, then, is a combination of interest rate, amount you borrow and period of the loan, but you must also take the comprehensive insurance policy into consideration. Choosing the option of a ballon payment allows you to reduce your monthly repayments, however not the over cost due to the fact you are still paying interest on the entire boat finance, including the balloon.