Boat Financing: Tips and Top 5 Boat Loans for 2022

Boat Loans

Summary: Boat loans are structured similarly to vehicle loans, with a defined loan amount that you pay interest on over a specified period of time. Boat funding may be obtained via banks, credit unions, boat dealers, or marine finance businesses. Subprime boat loans are also available, but you’ll need a significant down payment and a low debt-to-income ratio to qualify. Before you commit to a boat loan, think about if the loan, as well as continuing maintenance, storage, insurance, and fuel expenditures, fits into your budget.

Have you fallen in love with a boat? Buying a yacht might be a significantly larger investment than financing a car. Boats may be more costly than cars, thus loan amounts will be larger and durations will be considerably longer.

The amount you pay to finance a boat is determined by many variables, including the sort of boat loan you choose, the loan terms, your down payment, and your credit.

Let’s look at the many kinds of boat loans, your financing alternatives, and how to apply for a boat loan.

Boat Loan Varieties

Financing choices include secured and unsecured loans, depending on whether you want to buy a new or old boat. Each sort of loan has advantages and disadvantages.

Secured Loans
A secured personal loan is one that is backed up by assets. If you fail to repay the loan, the lender may seize the collateral as payment.

If you stop making payments on your automobile loan, the lender may repossess it in several states. Similarly, with a secured boat loan, the boat serves as collateral, which means the lender may be able to repossess it if you fail.

Unsecured Loans
The yacht — or any other item or property — is not used as security for an unsecured personal loan. Because unsecured loans aren’t tied to a particular asset, lenders consider them riskier and demand higher interest rates than secured loans. However, as compared to a secured boat loan, you may have greater flexibility in how you employ an unsecured boat loan.

The second mortgage
If you don’t want to take out a personal loan, you might consider a home equity loan, which is a form of a second mortgage. Your house would be used as security for this form of financing for your boat loan. Secured loans often have lower interest rates than unsecured loans. However, since the stakes are so high, home equity loans may be extremely risky: if you fail on the loan, the lender may be able to seize your property.

The Basics of Boat Loans: Typical Boat Loan Terms

If you’ve ever had a vehicle loan, you have a general grasp of how a boat loan works. You may apply for a loan amount (less any down payment) as well as a repayment period. Depending on your credit score, the lender may provide reasonable rates if you are authorized.

Repayment conditions for a boat loan
Depending on the loan size and lender, you may normally qualify for a secured boat loan with a loan duration of up to 20 years. Unsecured boat loans, which are personal loans, often have shorter periods (typically no more than five to seven years). The longer your loan period, the more interest you’ll pay in total.

A deposit may be needed.
Boat loan providers often need a down payment, which ranges between 10% and 20% depending on the lender and the cost of the boat. Some lenders offer no-money-down loans but bear in mind that putting a down payment may protect you against the boat’s depreciation, or loss of value over time, and assist you avoid owing more on your boat loan than the boat is worth. Down payment may also lessen your monthly payment and the total interest you pay on the boat loan.

The interest rate
Boat loan interest rates are normally fixed and might vary greatly depending on the lender and your credit history. As of August 2021, several lenders provide beginning annual percentage rates, or APRs, for secured boat loans ranging from around 4% to about 6%. However, variables such as the kind and model year of the boat, your credit history, loan length, and loan amount will all have an impact on your rate.

Where can I get a boat loan?

If you wish to apply for a boat loan, you have many lender alternatives, including banks, credit unions, and yacht dealers. Furthermore, maritime financing firms specialize in these sorts of loans. The following are some banks and credit unions that provide boat loans.

Unsecured maritime loans are available through SunTrust, now Trust. LightStream, the bank’s internet lending branch, offers loans ranging from $5,000 to $100,000 with maturities ranging from 24 to 84 months — but the lender claims you’ll need outstanding credit to get the lowest rates.

Bank of America
U.S. Bank offers up to $150,000 in loans for new or used boats, as well as refinancing. To qualify for the bank’s best rate, you must finance a new boat with a loan of at least $25,000 (but no more than 100% of the boat’s worth) and a period of 48 months or less. You’ll also need to set up recurring payments from a personal checking or savings account at a U.S. bank.

Bank of the West

provides secured and unsecured loans for new and old boats and personal watercraft. The minimum loan amount is $10,000, and credit ratings of at least 700 are preferable, according to the bank’s website.

Navy Federal Credit Union
Navy Federal Credit Union provides loans for new and secondhand boats, as well as personal watercraft, with periods ranging from 12 to 180 months. Military personnel who use direct deposit may be eligible for a rate reduction. Credit union membership is open to service personnel in all branches of the armed services, as well as their relatives and household members.


USAA provides loans with maturities of up to 180 months for both boat acquisitions and refinancing. Jet skis and personal watercraft are also financed by the firm. You must be a USAA member to apply for a boat loan. Membership may be available to current and past military personnel, as well as their wives and children.

What you should think about when applying for a boat loan

Here are some things to think about before you start making arrangements to set sail on your new boat.

Your credit

Some lenders may make a boat loan available to clients with bad credit, but they may still need a down payment and a low debt-to-income ratio. Remember that if you have poor credit, you will most likely be given a higher interest rate than if you have good credit.

The overall cost of boat ownership
Don’t forget to include charges other than your boat loan’s monthly installments when calculating your boat budget. Slip fees, winterizing, towing, land storage, gasoline, boat insurance, repairs, maintenance, registration, and taxes are examples of continuing expenditures.

Whether or whether you’ll need a maritime survey
When you apply for a secured boat loan, the value of the boat will be considered in determining how much you may borrow.

If you are not purchasing a new boat, you should have a maritime survey performed. An inspector will evaluate the vessel, engine, and trailer during a marine survey, detailing the boat’s condition, noting any repairs required, and determining if it is safe to go on the water.

How to apply for a boat loan

Applying for a boat loan is much like applying for a personal loan or a vehicle loan. First, you’ll need to locate a loan. In certain situations, you may be able to apply online. You may also be able to apply in person at a bank or credit union.

Following that, you’ll usually be required to supply information such as the loan amount, the purchase price of the boat, the kind of boat, and the age of the boat — as well as job details and other personal information regarding your assets and obligations. This, like personal and vehicle loans, may result in a hard credit inquiry to verify your credit report (note that this may lower your credit scores by a few points).

Then you’ll have to wait for clearance, which might come as quickly as the following business day or take a few days depending on the lender you’re dealing with.

Next Steps to follow

Experienced boaters go to great lengths to be prepared on the water, and it’s a good idea to do the same with a boat loan. Here are some ideas to help you get the funding you need.

  1. Shop around and compare offers from several lenders to discover one that meets your financial requirements.
  2. Fill out an application for a boat loan.
  3. Before signing, please read the terms. If it’s a go, prepare to sail the high seas.

If you can’t locate a boat loan after receiving a few quotes and reviewing your alternatives, consider spending some time building your credit, paying off debt, and saving for a down payment. Remember to include ownership expenditures in your entire boat budget to prevent future financial difficulties.

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