Before you apply for a boat loan it may be a good idea to familiarize yourself with some of the terminology you may experience while speaking with your boat loan specialist. Below is a list of some of the terms you may see and their definitions with respect to financing.
Abstract or Abstract of Title – Issued by the Coast Guard, it provides complete vessel lien information and chain of ownership for boats documented with the Coast Guard.
Amortization Schedule – A record of your loan payments that shows the principal amount and the interest amount included in each payment.
APR – Annual Percentage Rate refers to the yearly interest rate on your loan.
Bill of Sale – Is the document that transfers ownership of the boat from the buyer to the seller. The Coast Guard as well as some states require their specific form to be used.
Certificate of Documentation – Referred to as your Document or COD. This is the certificate of ownership issued by the Coast Guard
Coast Guard Documentation – A federal form of boat registration, typically required by lenders for boats meeting the Coast Guard requirements. You must be a US Citizen.
Co-Borrower – A second borrower, usually a spouse or life partner who shares in the obligation. Both individuals’ income and credit history are used to qualify for the loan and are both responsible for the repayment of the loan.
Co-Signer– A second borrower, maybe a relative or friend. Each borrower’s income and credit is used to qualify each individually. A Co-Signer is liable for the debt if the primary borrower fails to make the payments.
Credit Score – Also known as a FICO score and the score is a rating based on your creditworthiness. It is obtained from the credit reporting agency and is based on payment history, current debt, available credit and other factors.
Credit Utilization – The sum of all your revolving credit balances divided by the sum of your revolving credit balances.
DTI – Debt to Income Ratio compares how much you owe each month to how much you earn.
Gross Monthly Income – This is your income before taxes, deductions or any other withholdings.
LOA – Stands for Length Overall and measures your boat’s length.
Loss Payee – This is the name and address of your lender that is required to be listed on your Insurance. In the event of a loss, they will receive payment first.
LTV – Is the Loan to Value ratio percentage; the difference between the loan amount and the current value of the boat.
Hull Identification Number or HIN – This is the 12 digit number assigned to your boat at the time it is manufactured. It identifies the manufacturer and the model year. It is affixed on on a plate or engraved on the transom of the boat.
Mortgage of First Preferred Ship Mortgage – This is the form of lien filed on the boat with the Coast Guard.
NAMS or SAMS Survey – NAMS and SAMS are the two organizations that professional surveyors are accredited with. Most Lenders will require you to have your survey completed by one these accredited surveyors. You can find their links under the About Us tab.
Official Number – This number is issued to a boat the first time it is documented with the Coast Guard. It remains with the boat indefinitely and must be displayed to the interior in accordance with the Coast Guard requirements.
Prepayment Penalty – Some lenders may charge a fee if you pay your loan off early. If a lender charges this fee, it will be noted in your Loan Contract.
Purchase Agreement – Also referred to as the Sales Agreement. This is the contract between you and the seller of the boat. It discloses the purchase price and terms of the sale.
Stated Income Loan – The lender will base the approval on the Income you provide on the application without any supporting documentation.
Survey – This is a comprehensive inspection of the entire boat and its propulsion system performed by a NAMS or SAMS accredited surveyor. Lenders may require it on any used boat. The survey must provide the current market value and condition of the boat.
USCG – This the abbreviation for the United States Coast Guard.
If you’re ready to take the next steps in your boat financing journey, give us a try.
Call 1 -203-712-7204 or email us with questions.
