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Jet Ski Financing: How Does It Work?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

jet ski financing
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Do you have your heart set on a new jet ski this summer? With prices stretching to nearly $15,000 apiece — and you may want more than one for families — you may be busy researching jet ski financing options to turn your daydreams into reality.

Getting jet ski financing isn’t difficult. In fact, it’s similar to financing most other recreational vehicles. But some methods are better than others, depending on your particular situation. We’ll walk you through some affordable ways to finance your purchase and some options you would probably be wise to avoid. Keep reading to compare your choices using our side-by-side chart.

How to finance your jet ski

As with any type of financing, the better your credit rating, the more attractive the options you may have available to you.

  • Manufacturer financing
    Vehicle manufacturers are known for offering attractive interest rates for well-qualified borrowers as an incentive to purchase certain products or models. Whether you’re buying a jet ski or another type of vehicle, financing through the manufacturer will often be the most affordable way to go — if you have good credit. In fact, with good credit scores you might even be able to score 0% APR financing through a manufacturer, albeit likely for a shorter loan term (e.g. 12 months) or introductory period. Keep in mind, that low initial APR could jump to a much higher rate if you need more time to pay off your loan.
  • Powersport loans
    Banks, credit unions and online lenders will offer loans for jet skis under different names including specialty vehicles, sport or leisure vehicles. These loans may have higher rates than manufacturer financing incentives but typically come with lower interest rates than personal loans, which we’ll talk about next. If you’re comparing rates on powersport loans with manufacturer loans, remember that your rate on a manufacturer loan may change over time. Calculate your total interest over the life of the loan to see which option may give you the lowest cost for financing. We recently found powersport loan rates as low as 4.29% APR with more offers around 5% and 6% APR though again, the best rates tend to go to those with the best credit and for the shortest terms.
  • Personal loans
    Many banks and online lenders offer personal loans which can be used to finance a jet ski purchase. If your credit scores are in less-than-perfect condition, you might have an easier time qualifying for a personal loan (depending upon each lender’s requirements) when compared with other borrowing alternatives. However, if your credit scores are in great shape, there’s a chance you might be able to find a more affordable way to finance your jet ski purchase.A personal loan also might be your best bet if you’re looking to buy a used jet ski that you can’t — or don’t want to — pay for with cash. Some banks may have minimum amounts for powersport loans but lower requirements for personal loans.
  • Credit cards
    Although it may technically be possible to use a credit card to finance your jet ski purchase, it’s usually not a good idea. Unless you have an attractive introductory rate offer, credit cards are a notoriously expensive way to finance big purchases. Also, if your debt-to-limit ratio climbs higher because of an expensive purchase, your credit scores could suffer until you’re able to pay down your card balance. “Putting a big, fun purchase on a credit card is tempting, but it may be a costly mistake,” said Eric Rosenberg, founder and editor at Personal Profitability. “Unlike a mortgage or a car loan, where you get a lower interest rate because the loan is secured by the vehicle, that isn’t true with a credit card. You could easily find yourself paying 20% or more to pay off that jet ski. No amount of fun is worth that cost.”

Which type of jet ski financing is right for you?

The best way to finance a jet ski is going to be different for different people. Here’s a side by side comparison to help you compare the features of the four jet ski financing options above.

 Average Interest RatesChanging Interest RatesCredit RequirementRisk of Credit Score Damage from High Utilization
Manufacturer LoanInterest rates may start as low as 0% for qualified borrowersRates sometimes start out low and increase over timeGood or better to qualify for the best offersNo
Powersport
Loan
APRs usually lower than personal loansRates are typically fixed over the life of the loanVaries — the higher your score, the better your interest rateNo
Personal
Loan
APRs usually higher than powersport loansRates are typically fixed over the life of the loanSome lenders have options beginning at a minimum credit score of 525 (though you probably won’t get the best interest rates).No
Credit CardsAverage APR is 16.86%Rates may change over timeN/A if your account is already openYes

*Note: The chart above is a helpful guide, but you should always check with individual lenders to compare the specific rates and terms available when shopping for any type of financing.

What to look out for when financing a jet ski

It’s true that owning a jet ski can be a lot of fun. However, you shouldn’t finance any recreational vehicle unless there’s room in your budget to afford it.

Rosenberg recommends that you “never let this type of purchase put you under financial pressure. It isn’t worth the cost if you’ll miss other bills.”

Not sure how much jet ski you can afford? This helpful payment calculator from LendingTree can help you to figure out the answer. LendingTree is MagnifyMoney’s parent company.

The bottom line

Can you afford to purchase your jet ski in cash? If so, you might want to think twice about taking out a loan and paying interest to a lender. (Of course, if you qualify for a 0% or low introductory offer through a manufacturer, you could always take advantage of the low-intro rate and then pay the remaining balance in full when it expires.)

There’s also something to be said for saving your money in order to avoid high interest on a major purchase through your credit card. It might mean putting your purchase off until next year, but the money you could save on interest could be a great trade-off for your wait.

If you prefer to take out a loan so you can enjoy your jet ski now, focus on the interest rates and fees charged by different lenders. We found some of the lowest rates at credit unions and online lenders. Shop around and don’t forget to check with your own bank — many offer discounted rates to existing customers who use autopay. Also, don’t forget that you may be able to make extra payments to wipe out the debt more quickly and potentially lower the amount of interest you’ll have to pay in the long run.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Michelle Black
Michelle Black |

Michelle Black is a writer at MagnifyMoney. You can email Michelle here

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How to Avoid Buying a Lemon Car: The Complete Guide

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Lemon Car
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Dealing with a lemon car — a vehicle that has problems right after you buy or lease it — can leave a sour taste in your mouth and make you bitter from the buying process. Depending on the state in which you live, its laws may or may not provide much protection, so it’s best to avoid buying a lemon vehicle in the first place. Here’s how.

Research the car

While you don’t have to follow all of these steps to avoid buying a lemon car, they’re good to know.

Read online reviews. If you don’t already have a certain car — or cars — in mind, reading as much as you can about the pros and cons of different types of vehicles may help you narrow down a wide field of new and used cars. Ask yourself these five questions. Then, pick out a few to research, checking on any sales, deals or incentives in your area.

Search by the exact year, make and model — 2015 Toyota Camry, for example — and the word “reviews” for posts from current or former owners. You could also look up the car on sites such as Kelley Blue Book and Edmunds, which have in-depth expert reviews and consumer reviews, as well as overall government safety scores.

Does the car have any recalls? You can check a car’s recall status and history for free.

A recall is when an automaker or the National Highway Traffic Safety Administration determines there is something wrong with a car and owners may have the problem fixed free of charge (the automaker pays for it). Several recalls on a young vehicle may be a warning sign that the car will continue to have problems.

Ask for a vehicle history report. If a car is used, it should have a vehicle history report. Many dealers and online car-buying sites such as Carvana provide one for free. You could obtain your own vehicle history report through such sites as Carfax for a fee. Here is what you should look for in a vehicle history report:

  • Regular servicing. A car with standard oil should have an oil change about every 5,000 miles. A car with synthetic oil should have an oil change every 7,000 miles.
  • Minor or no accidents. Any accident reported to the police should be on the vehicle history report. If any accident is listed as major or as causing frame damage to the car, that’s a red flag.
  • Few owners. If the car had several owners in a short amount of time, such as three owners in two years, that may be a sign the vehicle has problems that are so expensive to fix, the owners sell it rather than fix it.

Looking for auto financing? Check out these top picks for the best auto loans in 2019.

The ins and outs of buying a used car

Here are ways you can check to see if the car has any leaks, been in an unreported accident and that its equipment works. You may not need to do all of this if you are looking at a new car, but these steps may be especially helpful if you’re buying a used car from a private party.

If the car passes the tests that you perform, consider getting an independent mechanic to check it out even further. They should be able to tell you whether the car will last another 100,000 miles or if it’s about to have an expensive problem.

The exterior. Run your hands along the car to search for any signs of an accident that may not have been reported: dents, bumps, different colors of paint, and irregularly-spaced gaps. Things that may be hard to see may be easier to feel, so don’t be afraid to touch the car.

  • Engine frame. Pop the hood and look at the beams between the engine and the painted body of the car. There should be no kinks or wrinkles in them. If there are, the car may have been in a front-end crash.
  • Spare tire well. If the vehicle has a spare tire compartment in the trunk or cargo area, take a peek to see that there are also no asymmetries or other signs of damage in the frame of the compartment. If there are, the car may have been in a rear-end crash.
  • Gaps and seams. Run a finger along the gaps where the doors, hood and trunk top, if there is one, meet the body of the car. If the gaps change in size noticeably from one end to the other, the door may have been re-hung, meaning it may have been in an accident.
  • The tires. A big giveaway that the suspension is bad is when the tires have uneven wear. Look at the flat part of the tire where the tread is. If one part is almost bald compared with the other parts, the suspension may be off. The tread should be an even depth across the tire — you could check it by inserting a penny in the tread at different points.

The interior. When you’re sitting in the car, you can pick up a lot of clues about the vehicle’s health by paying attention and doing the following:

  • Take a deep breath. If you smell rust, mold or mildew, don’t buy it.
  • Wiggle in the seat. Does the seat sag or complain? That can be a sign of wear and tear.
  • Look for missing pieces. Are there any knobs or switches missing?
  • Lightly stomp on the floorboard. Is it firm or does it feel shaky?
  • Check the seat belts. Are they frayed or have friction burns?
  • Turn everything on. Does the AC work? The heat? Check the windshield wipers, the lights, the radio, the locks, the heated seats – if they’re a feature – and everything else.

Invest in a vehicle code reader. A vehicle code reader plugs into a car’s computer system, unlocking information about possible problems. You could buy a code reader yourself (they are available for under $20 online), or ask a mechanic or auto supply store to run a diagnostic scan for you. Car part stores often do it as a free service.

If the code reader turns up problem spots, that may be a reason to pass on the car or negotiate a lower price with the seller.

The engine
Perhaps the most important part of the car is the part that makes it go. If you are looking at a used car, this section may be especially important for you.

  • Oil. The engine oil should be dark black and feel smooth when you rub it between your fingers. It should reach the “fill line” on the dipstick. It should not be a light color or feel gritty.
  • Transmission fluid. The transmission fluid should be bright red, not reddish brown or a darker color. It should not smell burnt or have anything floating in it.
  • Belts. The engine belts should be flexible, not stiff or frayed.
  • Exhaust. The exhaust coming out of the back of the car should be clear and not smell of anything. Blue, white, gray or black smoke means trouble. Some water condensation is normal.

For a more in-depth guide, check out our used car buying checklist.

Drive it like you stole it

Well, not really, but do put the car through its paces on the test drive.

1. Listen when you test drive the car. Squeaks or squeals when you go over a speed bump or pothole point to bad suspension. Pinging or knocking noises point to a bad engine. Grinding and whining noises point to a bad transmission. A lot of wind noise when you go faster may mean the car cabin isn’t water-tight.

2. Observe how smooth the ride is. Do you bounce up and down in the car at the slightest bump? Do you feel every turn sharply even when it’s a smooth curve?

3. Drive it hard. The purpose of a test drive isn’t to take a leisurely cruise, but to test the car. Accelerate hard, brake hard, turn left and right sharply.

What to do if you think you bought a lemon car

The first two things to do if you think you bought a lemon is to talk to the seller and to look up your state’s lemon car laws — the Better Business Bureau tracks them here. An agreement with the seller is probably preferable to going to court and it may be that the seller covers all or part of the repair cost or accepts the car as a return. At the same time, it is important to know what your rights are in your state. You should be aware that some state lemon laws only cover new cars while others don’t cover leased vehicles.

The bottom line

Do your research. Don’t be afraid to check everything, ask questions and test drive a car, maybe more than once. Strongly consider getting a professional mechanic to check it out. Doing these things will make your chance of buying a lemon drop sharply, which may make life a little sweeter.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jenn Jones
Jenn Jones |

Jenn Jones is a writer at MagnifyMoney. You can email Jenn at jennifer@magnifymoney.com

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Should I Pay Off My Car Loan Early?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Pay off car early
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The average new car loan term is nearly six years (5 years, 8 months), with used car terms right on its heels at nearly 5 years and 5 months. At the same time, those loans are becoming more expensive as car prices and interest rates creep upward.

A long-term auto loan sounds tempting — it may make the car you want seem affordable thanks to a relatively low monthly payment. But you may receive a higher APR than you would with a short-term loan and you’ll most likely pay more in interest in the long run.

There’s a way to avoid this. Paying even a small amount toward your loan principal could shorten your loan. If you can afford to pay off the entire balance, here are some points to consider.

Pros and cons of paying off a car loan early

Here are four benefits to paying off your car loan early:

  • Saves money on interest
  • Simplifies bill paying
  • Never have to worry about owing more on the car than it’s worth
  • Makes it easier to sell car

Here are four downsides to paying off your car loan early:

  • May deplete your cash reserves
  • You may have a lower interest rate on your car loans than on other debts
  • Missed opportunity to build credit history by making car payments
  • Possible prepayment penalties

How much could you save by paying your car off early?

If you are paying even moderately high interest on your car loan over an average amount of time, you might be surprised by how much that loan may cost you. For example, a borrower who buys a $30,000 car (sales tax excluded) on a 5-year loan at a 7% rate will pay an estimated $5,642 in interest. Compare that to $4,483 if they paid it off in just four years — that’s a difference of $1,159. If they take out a 3-year loan, the savings are even greater — only $3,347, with a difference of nearly $2,300 from the original 5-year loan in our example.

Even if you can’t afford the higher payments that come with a shorter-term loan or you aren’t able to pay the entire balance off right now, here are some ways you could pay off your auto loan this year.

When paying off a car loan early makes sense

You should consider paying off your car early if:

  • You have no other debt besides your mortgage, and you want to be rid of monthly car payments so you can free up money for other things.
  • You have a lump sum available or enough leeway in your monthly budget that you could pay off your loan without sacrificing your emergency fund or other important financial goals.
  • You want your monthly expenses to be lower by a certain point; for example, before you expand your family or by retirement age.
  • You need to improve your debt-to-income ratio; for example, if you are planning to apply for a mortgage.
  • Making a goal to pay off your car debt will motivate you to take charge of your money and start reaching toward other financial goals.

When paying off a car loan early might not be a good idea

Consider sticking to your original payment plan if:

  • You have insufficient backup cash for emergencies. “The first thing you have to look at is if you have an emergency savings fund built up, with a minimum three months in living expenses,” said Kris Alban, executive vice president of San Diego financial wellness company iGrad. “You have to have that emergency savings before you start to look for areas to cut down on debt.”
  • You are paying higher interest rates elsewhere. As secured loans, some car loans have low interest rates. “If it’s a low interest rate, under 5 percent, I would look to do other things with that money,” said Alban. “You’re probably better off using that money to invest in your retirement.”
  • You want to build your credit report by making car payments. Making car payments can help your credit report in two ways. It adds to your history of on-time payments, and improves what FICO calls your credit mix — your history of having credit cards, installment loans, and other accounts. “People think more than one credit card will fix their credit mix, but no,” said Alban. It especially helps to have more than one type of credit if you don’t have much else on your report.
  • Your initial car loan period is relatively short. If you signed up for a three-year payment plan when you purchased your car, for example, you may be perfectly happy paying it off as planned. You’re already minimizing your total interest expense, and you may be able to drive your car for years after you’ve forgotten what car payments are like.
  • Your car loan agreement includes prepayment penalties. “Always check the prepayment terms for your loan,” said Alban. “Prepayment penalties used to be a lot more common.” If you do make extra payments, be sure your lender applies them to the principal amount of the loan.

More ways to replace your car loan

Paying off your car loan isn’t the only way to save on interest expense. If you have a high-interest car loan, instead of paying off your loan, consider one of these options:

  • Draw on a low-interest line of credit. If you have a home equity loan with a lower interest rate than your car loan, for example, you may want to take cash from your line of credit to pay off your auto loan. Be aware, however, that you can generally no longer deduct interest from a home equity line of credit on your tax return, unless you use the proceeds to buy, build, or substantially improve your home.
  • Borrow from a relative or friend., If you’re paying 6 percent, say, on your auto loan, and your mom gets less than one percent on her savings account, perhaps you can work out a deal. You can borrow from her and pay her a better rate of return than she is getting at the bank. You should only borrow from relatives and friends if you have a solid relationship, and if you are not endangering their financial well-being if you should lose your job or something else goes wrong. Be sure to put any financial agreements in writing.
  • Refinance your car. This can be especially helpful if you have improved your credit since you purchased your car, and you now qualify for better rates, or if interest rates in general have gone down. Consider starting your auto refinance shopping with LendingTree, where there are dozens of lenders waiting to compete for your business.
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LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sally Herigstad
Sally Herigstad |

Sally Herigstad is a writer at MagnifyMoney. You can email Sally here

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