How Hard Is It To Get A Boat Loan


How do boat loans work?

When applying for a boat loan, you will normally need to make a down payment between 2010% and 2020% of the purchase price, though some lenders may offer 0% down as an incentive. Following the purchase, you will pay back the loan over a predetermined period of time in fixed monthly installments.

Conventional boat loans are usually secured, meaning that the boat is pledged as security. This frequently results in a lower interest rate, but the lender may seize the boat if you don’t make your payments.

Prospective buyers may choose to finance their purchase using a personal loan or a home equity loan in addition to a traditional boat loan:

  • Personal loans: Unlike secured boat loans, these loans usually have shorter repayment terms and higher interest rates. However, they are typically unsecured, so you don’t have to worry about repossession.
  • Home equity loans: Since your home is being used as collateral, home equity loans usually have low interest rates. But, they may also impose hefty closing costs, and the lender may foreclose on your house if you are unable to pay back a debt.

Typical boat loan terms

Boat loan conditions can change depending on your creditworthiness, the lender, and the boat. Having said that, the normal length of a boat loan is between four and twenty years. Boats can cost significantly more than cars, so that’s a lot longer than a typical auto loan. It’s also far longer than a personal loan’s repayment period, which some lenders allow to last up to seven years.

With the fluctuation of interest rates, the average boat loan terms in mid-2022% normally began at 5% to 7% annual percentage rate for buyers with the best credit. The lender, your creditworthiness, the boat itself, the amount you’re borrowing, and the down payment will all affect your terms.

It’s crucial to calculate how much a loan would cost you overall in terms of interest and monthly payments as you compare boats.

Additionally, Solomon advises including ownership costs in your overall boat budget. Your ownership costs may increase due to maintenance, a trailer, boat insurance, storage fees, marina charges, equipment and accessories, and licenses.

Where to find boat loans

In the event that you determine that a boat loan is what you need, you can obtain one from a number of lenders, such as banks, credit unions, marine finance firms, and even boat dealers. Here are a few instances of respectable choices to think about:

You can check out the National Marine Lenders Association website for additional options. When making a significant financial decision, it’s crucial to take your time, shop around, and compare terms and loan kinds from several lenders before choosing one.

Strategies to avoid boat loans

It could be a good idea to stand back and consider your alternatives if you’re worried that a boat loan might be too costly.

According to Solomon, “most people who own cars do so out of necessity because they need them for school, the grocery store, or for commuting.” On the other hand, boat ownership is considered a luxury since, with very few exceptions, most people do not need one. ”.

Here are a few possible strategies to stay away from a boat loan:

  • Save money: Although it might take some time, putting money down for a boat can help you avoid paying for a boat loan’s financing. Maybe you could find some space in your budget for a monthly savings target.
  • Purchase a less costly boat: Although you may have your eye on a brand-new watercraft, it might be wiser to hold off until it’s more within your budget. A used boat that is less expensive could still work while you wait.
  • Instead of buying, consider leasing a boat. Similar to leasing a car, boat leases may have lower monthly payments than boat loans. However, you should think about any potential constraints or limitations before continuing.
  • Rent rather than buy: You might dream of having your own boat and spending a lot of time on the water. Nonetheless, in order to decide if a boat is the right choice for you, it could make sense to rent it a few times and see how often you actually use it.

Frequently asked questions (FAQs)

Without a doubt, boat lenders will provide borrowers with loans for both new and used boats. However, bear in mind that older boats might come with higher interest rates, and lenders might not always be willing to finance older models (this also applies to cars).

Lenders frequently demand a credit score of at least 700 in order to approve a boat loan. Even with a lower credit score, you can still get a boat loan. Just remember that the interest rate increases with your score.

It can be a little harder to qualify for a boat loan than for a car loan because boats are typically more expensive than cars. However, each lender may have different qualifying standards, so you should shop around to find lenders that meet your needs.

Not an investment advisor, Blueprint is an independent publisher and comparison service. The information offered is solely intended for educational purposes, and we strongly advise you to consult with qualified professionals for individual guidance on any financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The Blueprint editorial staff alone is responsible for the opinions, analyses, reviews, and recommendations expressed in this article. Blueprint adheres to strict editorial integrity standards. The data is correct as of the publication date, but for the most recent information, always visit the provider’s website.

Ben Luthi is a freelance writer who specializes in travel and personal finance. His work has appeared in dozens of online publications. Ben, his two kids, and their two cats reside in Salt Lake City.


What credit score is needed for a boat loan?

Eligibility requirements vary depending on the lender you apply with. A FICO score of 670 or above can increase your chances of getting approved. A lot of lenders prefer it if your monthly debt is no more than 36% of your gross monthly income.

Is it easier to finance a boat than a car?

Boat loans may have stricter qualifying requirements than auto loans because they are (usually) granted for higher values. This implies that in order to be approved, you’ll need to meet higher requirements for income, credit score, and even debt-to-income (DTI).

How do most people finance a boat?

Boat loans can be obtained as unsecured loans, which frequently have lower borrowing limits and a higher interest rate, or as secured loans, which need collateral. Online lenders, credit unions, and conventional banks are your options for obtaining a boat loan. Comparing prices can help you find the best deal on this purchase.

What is the average boat loan term?

While boat loan terms can be as short as a few years, they usually range from 10 to 20 years. %20Lending%20may%20change%20from%20one%20lender%20to%20the%20next,%20but%20in%20general,%20the%20following%20is%20what%20you%20can%20expect%20when%20financing%20a%20boat:< %20APR%20range: Prime loan rates may start at 6% to 7% APR for borrowers with excellent credit.

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