Boat Financing Glossary of Terms

• APR - Annual Percentage Rate
• ARM Adjustable Rate Mortgage - Mortgage agreement between a financial institution and a boat buyer stipulating pre-determined adjustments of the interest rate at a specified intervals
• Amount Financed - This is the amount of credit provided by the bank on your behal
• Coast Guard Documentation - Coast Guard Documentation is the process of registering a boat with the U.S. Coast Guard so a First Preferred Mortgage of Vessel can be filed on a federal level to satisfy loan requirements.
• Credit Scoring - This is an objective methodology used by credit grantors to determine how much, if any, credit to grant to an applicant.
• Down Payment - A down payment is the dollar amount required down for a new or used boat
• Finance Charge - This is the cost of credit, including interest, paid by a customer for a boat loan or a consumer loan.
• First Preferred Mortgage of Vessel - A mortgage of vessel filed with the U.S. Coast Guard used as collateral for a boat loan.
• Fixed Rate Loan - Type of loan in which the interest rate does not fluctuate with general market conditions.
• Insurance Binder - The binder is an agreement executed by an insurer ( or sometimes an agent ) that puts marine insurance coverage into force before the contract is signed and the premium paid.
• Interest - Cost of using money, expressed as a rate period of time, usually one year, in which case its called an APR.
• LIBOR London Interbank Offered Rate - This is the interest rate offered by a specific group of London banks for U.S. dollar deposits of a stated maturity. LIBOR is used as a base index for setting rates of some adjustable rate financing instruments, including Adjustable Rate Mortgages. (ARM'S)
• Loss Payee - The Bank who provides the financing for a boat loan must be named as loss payee on the Marine insurance binder
• Points - Up front fee charged by a lender, separate from the interest rate but designed to increase the overall yield to the lender.
• Prepayment Penalty - Fee paid by a borrower to a bank when a loan or mortgage that does not have a prepayment clause is repaid before its scheduled maturity.
• Prime Rate - Base rate that banks use in pricing commercial loans to their best and most crfedit worthy customers.
• Principal - The face value of an obligation that must be repaid at maturity separate form the interest.
• Satisfaction of Mortgage - When a boat loan is paid a satisfaction of the mortgage is sent to the coast guard to satisfy the First Preferred Mortgage of Vessel
• Terms - Period of time which the conditions of a contract is carried out. Boat loan terms are usually fifteen ( 15 ) or twenty ( 20 ) years.
• Total Of Payments - The amount you will have paid after making all scheduled payments.
• Variable Rate - This is the interest rate on a loan that rises and falls based on a movement of an underlying index of interest rates.

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