Jet Ski Financing Options – How to Finance a PWC Purchase
Jet ski financing is certainly something you’ll want to look into before shopping for a jet ski, especially if you plan on buying more than one.
If you’ve been doing any research at all, you know that new jet ski prices can go as high as $18,000. This means if you want to turn your dreams into reality, you’ll need to be smart when it comes to the nitty-gritty of jet ski finance.
Obtaining jet ski financing can be fairly easy. In fact, it’s not much different to financing other types of recreational vessels or even vehicles.
Depending on your finances, certain options may be better than others. We’ll guide you through the most affordable ways of getting your jet ski financed while pointing out some options that would make good sense to avoid.
Jet Ski Financing Options
Save Up and Pay in Full
If you can avoid having to finance your jet ski, that’s by far the cheapest way to go. For most people, this would mean saving up first and paying in full before taking delivery.
This way, you would avoid any interest or financing fees. If you deposit as much money as you can afford each week into a high-interest savings account, before long you’ll have what you need to cover the cost of your jet ski.
Saving money isn’t easy. It takes discipline, but in the end it’s worth all the little sacrifices. Once you see how much a little discipline can benefit you in terms of your finances, you’re bound to become more disciplined in other areas of your life, which can lead to an even bigger pay off.
Let there be no doubt, if you don’t need jet ski financing, you won’t have to pay interest. Is that important to you? Let’s crunch the numbers to see how much you’ll save by paying all cash up front.
A jet ski selling for $18,000 financed at 6% over six years
would mean a monthly payment of $298.
Your total interest on the loan would come to
$3,456, which is a substantial amount!
Manufacturer’s Jet Ski Finance Options
Car and boat manufacturers frequently offer borrowers with good credit a decent interest rate on certain models as an incentive.
So, if you’re in the market for a jet ski you may want to look at the manufacturer’s jet ski finance options first. Don’t forget that their initial low APR will likely jump up considerably if by chance you’re going to need more time to fully pay your loan.
Leisure, Sport or Specialty Vehicle Loans
Banks, credit unions and other lenders will offer jet ski financing under categories like leisure, sport or specialty vehicles.
These types of loans come with a higher rate of interest than what manufacturers typically offer, but lower than the interest you would pay on a personal loan. While comparing these rates, don’t forget that the rate you’re offered by a manufacturer will likely go up over time.
It’s important that you determine the total interest for the duration of the loan so that you’ll know which option provides the lowest cost to finance your jet ski. In researching powersport loan rates we found the lowest at a 4.5 % APR and more offers in the 5 % to 6 % APR range.
But don’t forget, the lowest rates go to borrowers with excellent credit and those loans are for the shortest possible terms.
Banks and other lenders will often allow a borrower to take out a personal loan for the purpose of jet ski financing.
Although each lender has its own set of requirements, borrowers with lower credit scores usually find it easier to qualify for a personal loan than for other types of loans. If you have excellent credit, chances are you can find less expensive jet ski financing.
However, a personal loan might be your best option if you’re buying a used jet ski, unless you can afford to pay all cash for it. You need to find out from your lender what their lending requirements are for powersport loans as opposed to personal loans.
Using a Credit Card
While it may be possible for you to use a credit card to buy your jet ski, it’s probably not a smart move.
Unless you are getting a great introductory offer on the interest rate, using a credit card can be an extremely expensive way to finance any large purchase. Furthermore, if by doing this you increase your debt-to-limit ratio, you will be damaging your credit scores until the balance on your card is substantially paid down.
Of course it’s tempting to put a big purchase like this on a credit card, but what it costs can take all the fun out of it.
Unlike a car or mortgage loan that comes with a lower rate of interest since the loan is secured by the car or the house, that doesn’t happen when you use a credit card. It could easily cost you 20% or even more for jet ski finance!
Additionally, most jet ski dealerships have a set limit on the amount they’ll accept on a credit card. And many dealerships do not even allow customers to put something as expensive as a jet ski on a credit card!
Jet Ski Financing is Not the Same as a Car
It’s good to know that jet ski dealerships rarely make money from jet ski financing, unlike car dealerships who do make money when someone finances a car.
Jet ski dealerships typically turn to the manufacturer for financing and make no money off the transaction. How it works is that the manufacturer will work with a bank in buying down the rates on the purchase. These rates vary around the state, but they are lower for those who qualify.
Therefore, the dealership isn’t the one deciding the rates or the loan terms but is simply acting as the middleman between the bank and the customer.
However, the dealership will still likely provide you with the rates and terms although they don’t have any say in the matter. And these rates will typically be better than you would find by going elsewhere for the same loan.
Also, you need to know that getting a loan approved to buy a jet ski is much harder than getting a loan approved to buy a car.
The reasoning for this is that the bank considers having a car essential, whereas a jet ski is simply for enjoyment. The bank takes the position that if you should lose your job, you’ll likely stop making payments on your toys before stopping the payments on anything else.
Pros & Cons of Financing a Jet Ski
Jet skis come with a hefty price tag so before you sign on the dotted line, you need to consider the pros and cons of taking out a loan for the purchase:
- You don’t need to come up with all this money right now: You can start enjoying your jet ski immediately once you sign the loan papers.
- Quick turnaround: As soon as you find the right loan and submit your application, you will likely get an answer that very day.
- You won’t be asked for any additional collateral: The jet ski may be enough collateral to secure the loan, which should save you on interest.
- You’ll be charged interest and fees on your loan: If there’s no urgency to get the jet ski and you’d like to keep costs down; it would make sense to save the money up first.
- You’ll need good credit to get a good rate: If you are to have any chance of qualifying for a lower interest rate on jet ski financing, you’ll need good credit scores.
- You may need to get your jet ski insured first: If you’re planning on using your jet ski to secure the loan, your lender will likely want the jet ski insured before they approve the loan.
How to apply for a jet ski loan
Once you decide on a dealership, ask them about PWC finance options and what kind of deal they can offer you.
Before doing anything else, you should compare interest rates and terms to find the best possible jet ski loan. Once you’ve narrowed down your options, be ready to provide the following information:
- Your ID: All lenders will ask you for a valid photo ID so they can verify your identity. A valid driver’s license, your passport or another government issued ID should suffice.
- Proof of Income: You will need documentary proof of your income. You can provide your latest pay stubs or your most recent bank statement showing continuous deposits from your employer.
- Current Contact Information: The lender will ask for address verification as well as your phone number and email address.
Jet Ski Finance Calculator
If you need help finding the current rates and calculating your payments, you can always utilize a jet ski finance calculator. And you may as well start with the Kawasaki Jet Ski Finance Calculator here.
In case you didn’t know, there are other manufacturers besides Kawasaki that sell PWCs, and they too offer financing. You can check out the Sea-Doo Finance Calculator right here, and the Yamaha Waverunner Finance Calculator as well.
Don’t be shy about comparing them all!
Jet Ski Finance for bad credit?
We all know that the people with good credit have better options when it comes to financing any type of purchase.
But, is there any hope of getting approved for jet ski financing for bad credit?
In most cases, you will need to have a good credit rating to finance the purchase of a jet ski or any other type of recreational sport toy. There are a couple of things you need to consider:
- There is no doubt that having your own jet ski would be loads of fun. But it makes no sense at all to finance any type of recreational vehicle, boat or PWC unless you can easily afford the payments.
- Reputable financial consultants recommend that you never allow a purchase like this to bury you financially. It is never worth the cost if you’re going to stress out over finances and risk missing payments on other bills.
If you search the Internet you’ll find stories from others who got into trouble financing a jet ski. You’ll likely come across Daniel Brouke’s story who bought himself a jet ski to celebrate his graduation:
“I had cash in the bank but decided to use three different credit cards to get the points. The dealership didn’t care how I paid…. Picking it up felt like a lie. Buying an unnecessary item on credit feels like sleeping with the wrong girl. On the surface, it’s sunshine and rainbows but underneath, emptiness. There’s no condom for the soul. The more bills tied to something, the less you want it. Jet ski’s have more costs attached to them than horsepower.”
This story did have a happy ending because this irresponsible purchase was what motivated Daniel to start a career in personal finance.
Here’s one more story to read about. It’s Grayson Bell’s experience as posted on Debt Roundup:
“It was a purchase that never should have happened. I saw money coming in and I was partaking in lifestyle inflation. I was being a stupid consumer and the only thing I had to show for it was a bruised ego and a nice loan. Terrible. Buying the Jet ski was one of my biggest money mistakes that I will always remember.”
After reading these stories, be very cautious about financing such an expensive item, especially one that isn’t really necessary!
FAQs About Jet Ski Financing
Can you Finance a Jet Ski?
Just like any other powersport vehicle, jet skis can also be financed.
Major manufacturers offer financing plans directly, but you can also get a jet ski loan from your bank or through the dealership.
Is It Hard to Get Financing for A Jet Ski?
Obtaining jet ski financing is fairly easy since it’s not much different than financing a boat or other types of recreational vessels.
On the other hand, getting financing for a jet ski is typically harder than getting financing for a car.
This is because a jet ski is a recreational vehicle while a car is a necessity for most people.
How do You Finance a Jet Ski?
The easiest way to finance a jet ski is directly through the manufacturer.
If this doesn’t work for some reason, you may want to apply for a jet ski loan at your bank and avoid the one offered by the dealership.
You may get a better interest rate and a smoother process at your bank!
How does Jet Ski Financing Work?
A jet ski loan is very similar to a car loan. It’s approved for a specific machine, which could be taken back if you don’t make the monthly payments.
When it comes to financing a jet ski, you have to complete a loan application. The lender will take a close look at your financial status, including your credit score, assets, income, and obligations.
It’s always wise to get preapproved before heading out to shop. A jet ski loan preapproval helps you determine how much credit you qualify for.
Do You Need a Good Credit Score to Finance a Jet Ski?
Although it’s possible to finance a jet ski with bad credit under certain circumstances, a good credit score never hurts.
You will be in a better position to get financing if you have a low debt-to-income ratio and a good credit score. What’s more, you can expect better interest rates as well!
Can You Buy a Jet Ski with a Credit Card?
As reported by SteveninSales, you can’t buy a jet ski with a credit card in most dealerships due to the applicable merchant fees.
Note that while you get 2% cashback on your credit card after the purchase, it may cost the dealership anywhere from 3-4%.
Since jet skis are sold at a very low margin (4-8%), using a credit card is a deal breaker for most dealers.
Some of them may let you pay a deposit or a smaller amount with a credit card, but not the entire purchase price.
How Long Can You Finance a Jet Ski for?
As a rule of thumb, you can finance a jet ski for 6 months up to 7-8 years.
The exact conditions may vary from one lender to the next, but they also depend on the actual promotions.
You can expect the longest terms for the highest amounts. For example, two high-end jet skis with a double trailer and accessories may cost you from $40,000-$45,000.
These setups can be financed for 8 (or even more) years, depending on the lender and your credit score.
What Are Jet Ski Interest Rates?
In most cases, jet ski loans have lower rates than personal loans. Shorter, 3-4-year jet ski loans typically come with lower (3-5%) interest rates, while you can expect 4-7% on a 5-year personal loan.
In contrast, longer jet ski loans with a term of 6-8 years are available with 5-8% interest rates.
Again, the exact rate depends on many factors like the amount, your credit score, and current promotions offered by the manufacturers and banks.
How Much Do You Need to Put Down On a Jet Ski?
Unless you have a bad credit score, you typically don’t have to put down a cash deposit on a jet ski.
Even if you can put down a smaller amount, keep in mind that it can’t significantly lower the monthly payments. This is especially true for long-term jet ski loans.
How Much is a Monthly Payment on a Jet Ski?
You can expect a monthly payment on a jet ski to be in the ballpark of $150-$300.
For example, an entry-level $8,000 jet ski has a monthly payment of about $150 for 5 years with an interest rate of 5%.
On the other end of the spectrum, you can find flagship models with a price tag of $18,000-$20,000.
Be prepared to pay a monthly payment of $280-$300 for these high-end jet skis for 8 years with an interest rate of about 8%.
Can you pay cash for your jet ski? If so, think long and hard before getting stuck with a loan you have to pay interest on.
There’s also a huge advantage in saving your money for however long it takes in order to avoid charging something so expensive on a credit card. Even if you have to wait a year or so, the money saved on interest would certainly be worth the wait.
However, if you’ve made up your mine to finance your jet ski so you can get it right away, do your homework first and compare the interest rates and fees of various lenders. Check with your bank as well because as an existing customer you may be offered a discounted rate for agreeing to autopay.
Also, set it up so there is no prepayment penalty. That way you can make extra payments to pay your loan off earlier, lowering the total amount of interest paid in the end.
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