What Is the Best Way To Finance A Boat?

Are you thinking about buying a new boat? if so, you might be shocked to learn just how expensive boats are today. As a result, many new boat owners rely on boat loans to finance the purchase of their new (or used) boat.

I am going through the process of purchasing a new boat, and thought you may benefit from understand some of the ways to finance a new boat.

What Is the Best Way To Finance A Boat?

There are various types of loans provided by several organizations. The best loan option will vary from one person to another based on the type of boat you want to purchase and budget. You can secure a loan through a boat dealer, directly from a lender, or from unsecured financiers. Read on to gain more insights.

What Are the Available Boat Loan Options?

Securing a boat loan is similar to that of a car. You can go into a dealership, choose a boat that you like, and if you qualify for a loan, you should head home soon with the boat. The most common types of boat loans include:

Secured Loans

A secured loan requires collateral. In case you fail to repay the loan, the lender takes the collateral as a form of payment. For most states, if you stop making your loan payments, the lender can reprocess the boat. Such loans have a higher loan limit and lower interest rates.

Unsecured Loans

People with an outstanding credit score can opt for unsecured loans. You won’t need to use the boat or provide any other asset as collateral. Lenders find this type of loan riskier, so they charge higher interest rates. Although the lender can’t repossess the boat, failing to repay your loan can affect your credit score. The lender can also take you to court.

Boat Loan

Boat dealers and manufacturers offer this type of loan. The boat is usually the collateral, but some dealers may ask for other forms of security. One main benefit of the boat loan is that you might get a repayment period of up to 20 years, depending on the boat you purchase.

Also, secured boat loans have lower interest rates. However, be prepared since some dealers may require a 10% or 20% deposit of the loan amount for the down payment. Also, the interest rate will vary from one state to another. In case you default paying your loan, you risk losing the boat.

What Is the Best Way To Finance A Boat?

Home Equity Loan

For this type of loan, you use your house as collateral. You will enjoy a more extended repayment period, but you might have to pay higher interest over time. This option only works for people with a big enough home equity that can finance your preferred boat. Even people with bad credit can benefit from this loan type, and you can borrow up to 85% of the value of your house. The main disadvantage of this option is that you risk losing your house if you default payment.

Personal Loan

You can also apply for a personal loan, and if you have excellent credit, you can qualify for lower interest. It’s unsecured, and you can still be eligible for the loan even if you have bad credit but at a higher interest rate. The repayment period is a maximum of seven years, which is a short time to repay a large loan.

Where to Get Boat Loans

After deciding what boat loan you want to apply for, there is a wide range of lender options to consider. Some of them include:

Credit Unions

Credit unions provide a variety of financing options. For buyers who qualify for a loan in such institutions, you will enjoy lower interest rates. Each credit union has specific boat loan credit requirements. You might need to become a member before qualifying for a loan, live or work in particular counties.

An example of a credit union offering boat loans is the Mountain America Credit Union. The institution provides competitive boat financing for new or old boats purchased through a dealership. They serve six states in the USA on a strict membership eligibility requirement.


Banks offer boat loans just like they do for other automobiles. They often provide perks for their existing customers, including discounts and better terms. An example of a bank offering boat loans is the Bank of the West. It serves all 50 states. The bank requires at least a 10% down payment, and you can get a loan of about $10,000 to $5 million. They prefer people with a credit score of 700 or higher. You will also need to submit information about your other existing debts, asset information, amount of savings, and a minimum of two years’ income history.

The U.S Bank also avails loans to 25 states, so first, confirm whether there are branches close to your area. The bank provides from $10,000 to $150,000 for both new and old banks. For those in the military or their families, they are eligible for a loan of $5,000 to $35,000 from the USAA. No down payment is required, and you are even legible for a 0.25% APR discount.

Online Lenders

With 70% of consumers looking for consistent online mobile and banking services, various lenders provide loans digitally. Most online dealers offer unsecured loans, and they even approve the loans faster than other methods. Some lenders will determine your loan worth based on your credit score, while others look at your income flow or job.

One leading example of an online lender serving all 50 states is the Lightstream. They offer boat-specific loans, with quick approval and even same-day funding for most applicants. The repayment period ranges from 24 to 48 months. There are numerous online lenders available, so do your research and pick one who best suits your needs.

Marine Lending Specialists

Various financial service companies aim at helping buyers secure funding from other financial institutions. One main advantage of this option is that you will get a chance to work with a specialist who understands the boating industry and business. The loans require a down payment of around 10% to 20% of the purchase price.

Sun Trust is a member of the National Marine Lending Association with various marine specialists who can help you navigate the loan process. The institution also offers marine loans from $100,000 to $4 million with a repayment plan of up to 240 months. Sun Trust finance boats at least 25 feet long, not used more than 15 years.

How Do Boat Loans Work?

If you have had a car loan before, then you might have a basic understanding of how boat loans work. It’s an instalment loan with fixed monthly payments. When you apply for the loan, the lender will let you know of the boat loan credit requirements first. If you meet their conditions, you can then agree on repayment plans.

You could be asking, how do boat loan payments work? Usually, you can apply for up to 20 years loan term depending on the amount lent. Keep in mind that the longer the repayment period, the higher the interest. When you get the loan, your lender may also require that you make a down payment.

It protects the buyer from losses over time, so you don’t owe the lender more money than the boat’s value once it starts depreciating. The interest rate varies greatly depending on your credit score, loan type, income level, and loan size.

What Is the Best Way To Finance A Boat? How Do Boat Loans Work? Is it Hard to Find Boat Financing?

Is it Hard to Find Boat Financing?

For those still asking, is it hard to find boat financing? Well, the process is faster and easier than many people think, provided you do enough research. Arranging for boat financing is not any different from that of a car. It’s just that boats are usually expensive than cars, so you might require a little more financing depending on the model you intend to purchase.

In today’s market, it’s so easy to obtain finances, provided that you meet the boat loan criteria. However, lenders are pretty strict when it comes to issuing such loans, and some of the things that affect the ease of getting boat financing include:

Credit History

When you apply for a boat loan, the lender will first run a credit check. The better the credit score, the higher the chances of getting approved for a boat loan. There are, however, exceptions for people with higher income and a large share of liquid assets.

Even for people with a mid-range of 500 credit score, it’s possible to acquire a boat loan. However, be prepared for a higher interest rate, a down payment, and additional fees. For people with bad credit, the lenders may also have restrictions on the amount you can borrow, which affects the type of boat you can buy. You might also need to meet a specific debt to income ratio.

Loan Amount

The lenders will consider boat specifications, market price, and other market evaluations to determine the amount they are willing to lend to you. If you are getting financed by the dealership, they are more likely to sell the boat at their rates. It’s still a good idea that you shop around rather than settling for the first financing option you come across.

How Do Loans on Used Boats Work?

Just like there is a market for second-hand vehicles, you can buy used boats. There is an average sale of up to 45% of used boats, which creates a different market where buyers can bargain a good deal. However, most lenders will want to see proof of ownership from the seller if you wish to buy a second-hand boat.

You are more likely to get quick finances for a lower value boat below three years old. If you want to buy a relatively expensive model, the lenders will require a survey from an accredited marine specialist to assess the condition of the boat. If the boat you intend to purchase doesn’t meet the market standards or has complex issues, it might be challenging to get a huge loan.

How to Apply for a Boat Loan

The procedure of applying for a boat loan is similar to that of other automobiles. You can either apply in person at the bank, credit union or fill some online forms. You need to provide basic information like the price of the boat, loan amount, profession, boat age, assets, and debt condition. The lender will go through your details, and after the application, all you have to do is wait for approval, which may take a few days.

How to Get a Loan With the Best Terms

Like in any other major purchase, you need to do some prior preparations to make boat financing and purchasing a bit easier. First, decide on the type of boat you want to buy to guide you in choosing the right financing option. We all consider specific specifications when purchasing a vehicle, and this too should apply for a boat. Most lenders will ask you some questions about the boat, so you need to gather the necessary information.

Next, decide the best loan option that will suit your needs. Search for various lenders who offer finances for the type, size, and shape of the boat you want to buy. Compare the interest rates of different options, and check their boat loan requirements. From your list, pinpoint those lenders that charge a little or no boat loan fee. Also, consider institutions that offer a wide variety of loan amounts to accommodate your budget. It’s also a good idea that you confirm that the lender you pick operates within your state.

Check your credit situation early enough to know where you stand. Review the credit reports, and you can dispute any errors. Confirm if you have any existing debts and try clearing most of them to decrease your debt to income ratio. Paying off your unpaid balances before submitting your loan application can help boost your credit score to allow access to better loans at favorable terms and rates.

Bottom Line

Buying a new boat is usually pretty exciting, especially if you get the right financing option. You should, however, review various financiers to ensure that you aren’t paying higher interest and fees while there are better options out there. By following the guide above, you should get the best possible lender to finance your boat purchase project.