In a perfect world, you pay off your boat loan as you planned and own your boat free and clear. But the reality is that life happens and circumstances may change.

If they do, you may no longer be able to make your loan payments. One strategy you may consider is transferring your loan to a friend or family member. Unfortunately, most lenders don’t allow transfers of boat loans.

Keep reading to learn more about boat loans and why transferring them to another person is uncommon.

What is a boat loan?

If you don’t have the cash to cover the cost of a boat, you may be able to finance it with a boat loan. Offered by banks, credit unions, online lenders, and boat dealers, boat loans provide the borrower with an upfront lump sum of money. The borrower makes fixed monthly payments over an agreed-upon term, which is typically a few years.

The cash that’s received, as well as the interest rate and terms of the loan, are based on the borrower’s credit score. Because moving a loan to another person can be risky for a lender, most will not allow such transfers, meaning you keep the loan and are responsible for paying it back.

What if you can’t make your boat loan payments?

Fortunately, there are steps you can take to improve your situation when you realize you don’t have the money to make your boat loan payments.

1. Consult your lender

As soon as you know you can’t make a payment on your boat loan, reach out to the lender. Explain your situation and find out if they can help.

Some lenders might let you defer your payments or make partial payments until you get back on your feet. Keep in mind that such options may extend the term of the loan, and some lenders’ hardship policies could result in more interest accruing on the loan.

2. Pay late

Ideally, you make boat loan payments on time. While it’s never recommended, paying a day or two late is not as harmful as paying very late or not paying at all.

Always try to get your payment to the lender within 30 days of when it’s due. By doing so, you won’t have to worry about late payments damaging your credit score.

3. Refinance

When you refinance, the goal is to close out your current boat loan and take out a new one with a better interest rate or other more favorable terms.

Refinancing a loan with a longer term will lower monthly payments and make your loan more affordable in the short run. Keep in mind that if you go this route, you end up paying more interest in the long run.

The Bottom Line

A boat loan can turn your dream of owning a boat into reality. But it may also hurt you if your financial situation changes and it’s no longer possible to make your payments.

While you probably won’t be able to transfer your loan to someone else, there may be ways you can overcome your financial troubles and eventually pay off the loan.

Read Also:

• Applying for a Loan? Use These 6 Simple Strategies to Fix Your Credit Score
• Commercial Mortgage Loans 101: What You Need To Know
• What Is A Conventional Loan?