S In The Process Of Boat Financing
Shopping for a boat loan overlaps with the process of buying a new boat. Here are the basic steps:
Know and understand your financial abilities and your credit rating. Check your credit with the major credit reporting bureaus and correct any inaccuracies.
When you apply, be ready with tax returns and bank statements that show your financial ability to repay. Be prepared to submit those materials to speed up the review process.
Be aware of special use limitations. If you want to live aboard your boat, use it for commercial purposes such as charters or as a fishing guide or to cruise internationally, tell the lender. Not all lenders will loan money on a boat used for those purposes.
How Did We Choose The Best Boat Loans
Personal Finance Insider’s goal is to help smart people make the best decisions with their money. We combed through the fine print of many boat loans and lenders so that you don’t have to. We considered the factors that are the most important to boaters, including:
- The type of boats financed: We searched for lenders that offered loans for the most shapes and sizes of boats, from houseboats to sport boats.
- Interest rates: We compared the starting points of interest rates from many banks, and compared ranges where available.
- Few or no fees: We looked for lenders that offered boat loans with the fewest amount of fees on each loan.
- Loan amounts: We chose lenders with the widest variety of loan amounts available to help everyone find a loan for their boat-buying budget.
- Widespread availability: Lenders we considered have loans available in almost all 50 states, if not all.
Youre Our First Priorityevery Time
We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.
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Qualifies As Second Home
- If your boat qualifies as a “second home there may be advantages to financing your boat purchase instead of paying cash or liquidating assets to do so. 3/1 ARM fixed for 36 months and adjusts annually for the remaining term of the loan. Subject to loan program requirements and credit approval. Rates and terms may vary with market conditions and are subject to change without notice.
Average Length Of Boat Loans
While you can technically obtain a boat loan anywhere from 12 months to 20+ years depending on the lenderthe average boat loan is between 2-15 years. Boat loans, unlike home loans, are typically going to be less than $100,000 which means the payoff period will be shorter than say a 30 year mortgage. However, you can still get a great rate below 4% with great credit and can hit the water sooner than you thought possible!
The rule of thumb when obtaining a boat loan is the more money you borrow, and the quicker you can pay it off, the better your rate will be. For example on the low end, if you borrow $10,000 on a 5 year loan you will be paying a much higher interest rate than borrowing $100,000 on a two year loan. Why? It basically breaks down to your lender maximizing cash flow while also minimizing risk. In order to obtain a $100k loan, the bank knows your credit and ability to pay it back is higher than borrowing $5000 over two years.
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Understand The Costs Of Owning A Boat
Boat loan down payments typically range from 10% to 30%, so make sure you have enough money saved up to cover the cost of the down payment before you apply for a loan. Once you own a boat, youll also have to cover maintenance and related costs. Some of the expenses youll need to cover as a boat owner include:
- Trailer to transport and store your boat: If you dont plan on storing your boat near the water, youll need a trailer to transport it from your home.
- Boat insurance: Boat insurance can protect you in the case of an accident or if anything happens to your boat.
- If you dock your boat at a marina, youll typically have to pay monthly fees for the privilege.
- Registration: Just like a car, many states require boat owners to register their boat. Costs vary widely from state to state.
- Winter storage: If you live in an area where weather conditions arent suitable for boating year-round, youll need to store your boat in the winter.
- Maintenance: Routine maintenance costs include painting, cleaning, and replacing small parts.
- Gas: If your boat is powered by gas, youll need to fill it up regularly.
The Boat’s Age And Condition
The age of the boat you’re looking to buy can have a significant effect on the term a lender is willing to offer you. In most cases, the newer the boat, the longer the term. Many lenders place a cap on the age of boats they consider for financing, and others will only finance new boats. However, even if you want to buy an older boat, you still have financing options.
Many lenders may be willing to fund older boats as long as they’re high quality. While a lender may not finance an older boat that costs $30,000 and is worth $30,000, they may finance an older boat that costs $30,000 but is ultimately valued at $40,000.Keep your future boat’s age and condition in mind.
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How Expensive A Boat Can I Afford
Unless you plan on living in a houseboat year-round, a boat is a luxury or leisure item, not a necessity. As such, you need to set realistic expectations of how much you can afford to pay month to month, and how much you have to set as a down payment. Considering that youll also have to account for moorage, maintenance, and fuel costs, definitely give yourself some padding in your budget.
Can I Finance A Boat With Bad Credit
Yes, you can finance a boat with bad credit. Southeast Financial is proud to offer bad credit boat loans for those who may not qualify with other lenders. We base our qualifications on several factors and do not have a minimum credit score requirement. We work hard to offer a loan approval that works for your budget, even if you have bad credit.
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The Best Boat Loans Of September 2021
|Check rates > >
*With auto-pay discount
The best boat loan depends on your budget, the type of boat you’re purchasing, and the age of the boat. From financing for small ski boats to full-size yachts, there’s a loan out there for most things that float. But they’re not all the same.
Once you’ve narrowed down the type of boat you’re interested in buying and what model year you’re looking for, you can start shopping for a boat loan. Many lenders will only finance certain types of boats, or require a boat to be newer than a certain model year. To make sure you make the most of your shopping, know this going into it.
There aren’t as many lenders offering boat loans as there are auto loans. But there are still a few to choose from.
Here are Insider’s top picks for boat loans in September 2021.
Types of boats financed: LightStream doesn’t list any specific requirements
4.29% to 10.39% APR, with auto pay discount
Loan amounts available: $5,000 to $100,000
Watch out for: High credit score requirements. LightStream only works with borrowers with good or better credit, so anyone with a low credit score may not qualify.
LightStream boat loans are a strong option for most borrowers looking for an inexpensive boat and fast funding.
LightStream is an online lender backed by Truist . With a completely online experience, same-day funding available, and many loan types offered, LightStream is one of our picks for the best RV loans and best personal loans.
Other Lenders We Considered
- US Bank: This lender’s loan interest rates weren’t the most competitive, starting at 5.24% for a new boat. The bank states that rates may be higher for private party boat purchases, loans under $25,000, and used boats. Ultimately, lower rates may be available elsewhere.
- USAA: USAA is only available to people with military affiliations, limiting the number of people who can access these loans. However, even those eligible could get a better rate from one of our top picks interest rates start at 5.25% with USAA, about a percentage point higher than a LightStream loan.
- Navy Federal Credit Union: Like USAA, membership with this credit union is only available to certain people. However, a starting interest rate of 5.95% for new boats and 7.45% for used boat loans mean there are better deals to be found elsewhere.
- Boat US: This online boat loan marketplace didn’t beat interest rates offered by other lenders. A high minimum loan amount of $25,000 also may be more than many borrowers need.
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Alternatives To Boat Loans
If you would rather not go the traditional route or your credit is challenged, there are other methods of financing your boat purchase. These include:
Home equity loans or lines of credit. Since these loans are secured by an asset your home you may be able to find competitive rates. At the time of publication, APRs for home equity loans and HELOCs of $25,000 could be found for 6%, slightly higher than the 5.59% APR for the same amount from Essex Credit. However, an advantage of a home equity loan is that rates are typically fixed. Be aware that if youre tapping the equity in your home for a pleasure purchase, be certain that youll be able to repay the debt, or you risk losing your house. Furthermore, you may find yourself paying pricey closing costs and other fees, though some lenders will waive these fees.
A typical home equity loan has terms from five to 15 years, which may be longer than you need for a relatively inexpensive boat. HELOC terms vary but may last up to 20 years. An advantage of a HELOC is that you only pay interest on what you borrow but interest rates may be variable. You can read more about home equity loans versus HELOCs. Remember that good credit is vital here you typically need a FICO score of at least 680 to qualify for either a home equity loan or a HELOC.
Financing Options For Boat Buyers
Like other major discretionary buys, funding a boat purchase often requires financial resources beyond cash on hand. Banks, credit unions and other traditional lenders furnish payment options for boat buyers, who rely on various forms of financing to get the job done. People with cash savings may choose to put the boat on a credit card to secure points. Buyers with a strong credit score might consider a personal loan. Homeowners with significant equity might consider a home equity loan. Boat buyers also turn to dedicated financing from maritime lenders, specializing in marine craft credit.
Buyers with good credit references tap collateral loans to pay for boats, in much the same way cars are funded. Once approved, funds are issued and the boat itself serves as collateral for the loan. Failure to make timely payments can result in repossession, allowing lenders to seize and sell boats to recoup their losses.
Another form of funding with versatile applications uses the equity in your home to guarantee repayment. Home equity loans and lines of credit can be used for various purchases, including recreational watercraft. In order to initiate equity credit, most lenders require a current appraisal. In addition, home equity lines carry closing costs similar to conventional mortgages. Because the loans are backed by real property, however, interest rates are lower than those associated with other forms of funding.
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Financing A Boat With Tom George Yacht Group
At Tom George Yacht Group, our goal is to simplify the financing process, secure the best financing terms for our clients and help buyers clearly understand the financing options available to them. We take an educational approach to financing with an aim towards long-term relationships.
Our finance professionals will educate you on your options and help ensure you make the right decision for you. With an emphasis on your long-term satisfaction, Tom George Yacht Group is focused on building relationships with customers that regularly recommend TGYG to friends and family.
If you have any questions on boat loans or financing a boat, please contact us today.
Your Current Financial Status And Long
Before you take out a used boat loan, get prequalified. By doing so, youll know exactly how much youll get approved for and have a good idea of the types of used boats you can buy. When you apply, the lender will evaluate your credit score, debt-to-income ratio and net worth. How stable you are in your job and homeownership will play a role in whether you are approved for a used boat loan.
In addition to evaluating your current financial status, youll want to think about your long-term goals before investing in a boat. For example, buying a used boat today may mean you have to work an extra year or two before retiring.
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Best For Quick Funding: Lightstream
- Minimum credit score: None, but good credit recommended
- Loan terms : 24 to 84 months
For borrowers looking for fast funding for a boat loan, LightStream is a great option. The lender offers same-day approval and even same-day funding in some cases.
Funds deposited as soon as same-day
Rate Beat program
No fees or collateral required
Available for buying or refinancing a boat
Offered in all 50 states
Loans cap out at $100,000
Maximum rates can be high
As part of the Truist bank family, LightStreamalong with SunTrust and BB& Tprovides a variety of banking products and services to customers across the country. This bank operates in all 50 states, offering loans on new, used, and refinanced boats to qualified applicants ages 18 and over.
We chose LightStream as best for quick funding because this bank offers not only same-day approvals but same-day funding in many cases. You can choose your own funding date once approved for your boat loan, even if its the same day you applied.
Boat loans through LightStream are offered from $5,000 to $100,000 with repayment terms ranging from 24 to 84 months. Current interest rates range from 4.29% to 11.89% APR with a 0.50% auto-pay discount. They also offer a Rate Beat program, which promises to offer a rate thats 0.10% lower than the rate offered by a competing lender within the last business day.
How Long Can You Finance A Used Or New Boat
Boats come in many shapes and sizes to suit a wide range of personal budgets and to give the owner access to specific recreational activities — say, fishing, sailing or racing. Many banks, credit unions and other traditional lenders lend money for boats, and boat dealerships can often arrange a loan through their preferred lending institutions.
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How Many Years Can I Finance A Used Boat
Like a new boat, you can finance a used boat for as long as 20 years. The financing options for used boats may differ from options for new boats. If a model is old, a lender may not be willing to offer financing whatsoever, as a lender typically needs collateral for a secure loan. While you may see a boat that’s cost-effective and ready for a makeover, your lender could see an unreliable asset.
Fortunately, if you find a used boat that suits your needs and preferences, My Financing USA can help you find the financing option that’s right for you.
Applying For A Boat Loan
There are a few steps youll need to take in order to apply for a boat loan. These include:
- Whether youre interested in a sailboat, motor boat, or houseboat, what boat you want to purchase will influence what type of loan you need from a lender.
- Compare rates: When shopping for a loan, you should compare rates from multiple different lenders. This can help to ensure that you get the best deal possible.
- Review your credit score: Some lenders have minimum credit score requirements, while others reserve the most competitive rates for borrowers with excellent credit. Make sure your score is in a good place before applying.
- Make sure you have enough for a down payment: Typical down payments range from 10% to 30% of the total loan amount.
- Complete a loan application: To apply for a loan, youll need to provide information about yourself and the boat you want to buy, including your name, address, social security number.
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How To Get A Boat Loan
Whether you’re buying a house, a car or a boat, lenders look for stability and consistency in your employment history, income, and assets.