If you are a thrill-seeker, a jetski is a must-have. To own a jet ski, you need to know the ins and outs of jet ski loans so that you can acquire one in the most efficient and economical way possible.
Here are some things that you should keep in mind if you aim to be a jet ski thrill-seeker in 2024.
Remember, a Jet Ski is Considered Recreational
A jet ski loan is a recreational loan because jet skis are considered recreational vehicles. As such, financing for them falls under the category of regular recreational loans.
This means that they typically come with a higher interest rate compared to traditional car loans and mortgages. The reason for this is that lenders tend to see these types of loans as more risky owing to their discretionary nature and the fact that they are considered luxury purchases.
Generally, recreational loans are short-term compared to car loans, limited to a maximum of about five years. Recreational vehicles, such as jet skis, tend to depreciate much faster than regular vehicles and therefore, they are subject to shorter loan terms and higher monthly repayments to offset the risk for the lender.
The Process of Financing a Jet Ski
Before you set out to get yourself a jet ski, you should understand the financing process. It all starts with choosing the jet ski model that fits your lifestyle, preferences and budget.
Afterwards, you need to start comparing financing options. This means researching and comparing the offers put out by different lenders, ranging from banks to credit unions and online lenders. iCREDIT is primed and ready to help you with this critical step.
When comparing financing options, consider the different interest rates on offer, the loan terms, and any other additional fees that could drive the cost of the loan up.
Once you have chosen a financing option that works for you, you should apply and hopefully get approved. Approval will be based on factors such as your credit score and your income-to-debt ratio. Therefore, you must get your financial affairs in order before applying to improve your chances of approval.
Once you have the funds approved and disbursed, you can purchase the jet ski. Subsequently, you will be obliged to repay the loan according to the agreed-upon repayment schedule, making monthly payments until the debt is fully repaid.
Factors That Influence the Cost of Jet Ski Financing
Several things will have a material impact on how much the financing of your jet ski will cost. One of the most important is your credit score. If you have a good credit history and a high credit score, you will be more likely to receive a lower interest rate and better loan terms.
The lower your credit score is, the higher your interest rates will be, and the more the loan will cost. This is because you are viewed as a higher risk to the lender, meaning you inevitably have to pay a premium to alleviate that risk.
Your income-to-debt ratio will also indicate to lenders your ability to repay the loan and whether you are likely to run into problems. By comparing your ability through your income compared to your existing debts and financial obligations, the lender can determine whether you are a high or low-risk candidate. The more favourable your income-to-debt ratio is, the better your chances are of obtaining a competitive loan.
Another factor that can influence the loan cost is whether you choose to go for a used or new jet ski. Used jet skis will be cheaper upfront but might have underlying maintenance issues. However, they will depreciate more slowly.
On the other hand, a new jet ski will likely have a maintenance plan included, but it will depreciate quickly and cost more upfront.
For more information on jet ski loans, contact us at iCREDIT today. We specialise in helping customers compare loan options to find the most preferential deal for them.