Liquidity and Net Worth
Facts, tips, & explanations on what marine lenders expect
A basic definition of liquidity is the ability to sell an asset without losing much, if any, of its value.
Lenders want to see an applicant with liquid assets such as cash, stocks, bonds, and mutual funds that can easily be converted to cash within 30 days. These assets combined should show that you have the money for the down payment, sales/use tax on the boat if not included in the loan, and reserves set aside for loan repayment and living expenses should your income decrease unexpectedly. The standard down payment requirements range from 10 to 20 percent of the purchase price and it’s wise to have savings after the down payment of 6 to 12 months’ worth of total payments (home, auto, boat, etc.).
Getting a pre-approval before you start searching for a boat or RV to purchase is something that will really come in handy. It saves you from wasted time and frustration by looking at units that are unaffordable. Also, your offers are more likely to be accepted by sellers when they know you are already pre-approved and have your financing in order!