How Much Can I Borrow For A Boat
It depends on your debt-to-income ratio, which you can find by dividing the total of all of your monthly debt payments by your monthly pre-tax income. For example, if you have a $250 monthly student loan payment and an $800 monthly mortgage payment, and you make $4,000 a month pre-tax, your debt-to-income ratio is 26.25%.
If your debt-to-income ratio is higher than 40%, then you probably wont qualify for a boat loan and should focus on paying down your current bills before trying to finance such a significant purchase.
Ideally, even with the boat, you should try and keep your debt-to-income ratio at or below 43%. In the above scenario, that means you could afford about $670 a month in boat loan payments.
The Bottom Line On Boat Loan Terms
If youre financing the purchase of a boat, keep in mind that your options vary along with your financial picture. As with any other loan, those who come bearing good credit and a decent chunk of disposable income will find more favorable boat loan terms than those with less-than-perfect credit and a tighter budget. In general, financing a luxury item like a boat may be subject to higher underwriting standards than a car or home.
A few things to be aware of:
- Simply getting approved for a loan and being able to make a down payment does not necessarily mean that you will be able to keep up with the obligation long term. Make sure you consult your budget and be realistic.
- When shopping for a loan, be sure to check your credit, pay down other debt and get prequalified so that you know the exact amount for which youll get approved.
- Dont get in over your head. Its tempting to buy a boat, but the better option is to make sure that you can afford the payments before giving into that temptation.
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Factors That Effect Boat Financing Terms
You need to be aware, however, that how long you finance a boat can also impact those other variables we mentioned earlier. If you double the term of a loan, for example, a lender is likely to want a slightly higher interest rate, or perhaps a down payment thats a higher percentage of the boats value. There are also some other factors a lender may take into consideration when determining just how long a loan term theyll be willing to consider. These commonly include:
- The size of the loan
- The type of boat
- The age of the boat, if its used
Boat Loan Size
Loan size has an important impact on how long a lender will be willing to stretch the loan. As a general rule of thumb, the larger the loan is the longer it can be financed. Many lenders will have minimum loan amounts for different specific term periods.
Type of Boat
Most modern powerboats can be lumped together, but there are some outliers that financers will treat differently.
- Boats with wood hulls, for example, or high performance boats, may be treated differently.
- Some lenders differentiate between sailboats and powerboats in general, and some consider multi-hull boats or pontoon boats differently.
- One big issue that arises from time to time is with liveaboards. Because of the laws regarding residences, home ownership, and home ownership escrow accounts, loans for liveaboards are treated very differently than common boat loans and some lenders wont make them at all.
Used Boat Age
Why Should I Finance My Boat Purchase
Financing can make Boating more accessible, which is why most boat buyers seek a Boat loan. A loan allows you to keep cash in your pocket and, in some cases, deduct interest expense on the Boat loan. Boat financing can make your life easy if you work with someone who understands the Boat loan process and can guide you through every step.
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Finding Your Perfect Boat
There is not one single best way to finance a boat. Financing ultimately depends on your situation. If youre just getting started on your boat search, use our helpful online tool. Whether you want to build the boat of your dreams and see what it costs, or build a boat that works within your budget, our boat builder gives you the opportunity to fully customize several different boat models online.
When youre ready to take the next step and take your boat shopping offline and into a dealership, Formula Boats has dealers located throughout the country ready to help you find your boat. Get started by searching for the closest dealer on our website.
Finally, as a boat manufacturer and dealer, we are very familiar with the process of financing boats. We understand purchasing a boat isnt something you do every day, and that the details can be overwhelming. If youre interested in one of our boats, but find yourself wondering how to finance it, please dont hesitate to contact us.
Using Boatsetter To Help You Decide
In addition to helping you try out the type of boat you may want to purchase, Boatsetter can help you get an idea of how much your dream boat is going to cost you. One of the best ways to experience a luxurious boat is to rent it out with a few friends. If you split the costs, youll get a reasonably cheap day out on the water, and youll get a better idea of whether or not you want to shell out the big bucks and buy a boat of your own.
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How Big A Down Payment Do I Need For A Boat
Unlike a home, the percentage you can expect to be asked to put down largely depends not only on your creditworthiness but also on the cost of the boat itself.
If you are purchasing a boat for less than $150,000, you will probably need to make a 10% down payment. If youre looking at a fancy boat that costs up to $250,000, you will need to put down 15%. For a yacht or a houseboat that costs up to $500,000, expect to put down 20%.
Of course, if you are deemed a risky investment by a financial agency, youll need to put more money down than you would otherwise.
How Do I Get A Boat Loan
Financing a boat starts with finding a lender that makes boat loans, having a conversation, and starting an application. Finding a lender that makes boat loans is not a difficult task, now that banks have discovered that most boat buyers are excellent clients for loans. However, there are a bunch of good reasons to work with a Boat loan specialist who devotes funding and staff for the purpose, rather than approaching a lender directly. We interact deeply with the customer on the application, the credit side, analysis, underwriting, and thereby take out the sting that can come with doing financing business with a bank.
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Best Overall: Bank Of The West
Bank of the West
Bank of the West is our top overall pick for a boat loan. The lender features low rates, flexible loan amounts, and widespread availability, making it a great choice for borrowers with good credit looking to purchase a boat.
Loans up to $5 million
Repayment terms between four and 20 years
Available in all 50 states
Full-time and liveaboard accepted
Fees can be rolled into loan
Rates as low as 3.59% APR
No cosigners allowed
Bank of the West is arguably one of the most popular watercraft lenders around. Founded in 1874, Bank of the West, also known as Essex Credit, operates and provides loans to creditworthy borrowers in all 50 states. Boat loans through Bank of the West can range from $10,000 all the way up to $5 million, with repayment terms from four to 20 years depending on the loan amount.
While the wide range of loan amounts and repayment terms is great, this lender wins our best overall spot because of the types of boats it accepts. Bank of the West offers to finance for boat model year 2001 or newer. Allowed boats include standard and custom power, sailboats, multi-hull boats, pontoon boats, electrical boats, high-performance boats, houseboats, and wood hull boats. One of Essexs few exceptions is boats that are capable of speeds of 99 mph or higher.
The Difference Between A Floating Home And A Houseboat
Youd think theyd be the same, a floating home and a houseboat. But while the terms sound interchangeable, there are some big differences.
Floating homes: Floating homes are exactly as they sound they are full homes that have a floating foundation. Theyre not meant to be moved, and theyre more permanently moored to their space than their houseboat counterparts. Theyre also often more spacious and luxurious in Seattle, floating homes have sold for $700 per square foot or more, according to local real estate agents. Common in other countries including the Netherlands, where there are districts of floating homes theyre catching on in a smaller way in U.S. cities such as Seattle and San Francisco. Floating homes have even been proposed as a solution to rising sea levels and increasing numbers of natural disasters, according to the National Association of Realtors.
Floating homes may qualify for floating home mortgages which resemble traditional mortgages, including a possible tax deduction on mortgage interest. According to broker Kevin Bagley of Seattles Special Agents Realty, floating homes mortgages often come in the form of 10-year adjustable rate mortgages. In terms of taxes, youll pay property tax, just like a traditional home. Its also likely youll pay homeowners association fees, particularly in a marina that owns your homes berth or slip and any parking or other common areas.
Heres a look at your options:
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Boat Loan Terms: How Long Can You Finance A Boat
Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Buying a boat? Before you gather your gear and take to the high seas, youll likely need to figure out how to afford your purchase. One of your key questions may be: How long can you finance a boat? Boat loan terms, unlike car loan terms, can stretch up to 20 years, nearly as long as a home mortgage. Whether you should borrow for that amount of time depends on several factors, including the cost of the boat, which can range from a new jon boat under $5,000 to million-dollar yachts. In general, the lowest interest rates are for the shortest loans, but your monthly payments would be higher.
Can You Get A Loan For A Used Boat
Just because loans are available for financing a used boat doesnt mean everyone will be able to obtain one. For almost any type of boat loan, creditworthiness will be a factor. This means a high FICA score.
Scores in the 700s or higher are ideal in some cases, loans may be approved for those with scores in high 600s, but all other aspects of the borrowers profile must be very strong. Lenders providing secured boat loans would hope to see a stable employment history and a strong history of successfully handling loans of similar size, as well as liquid assets sufficient to cover 12 to 16 months of payments, according to Boats.com.
Banks, in particular, will give the best consideration to those who have almost twice as many assets as debts because they see these individuals as potential customers for other services, says Boats.com. These loans also typically require a down payment of 10 percent to 25 percent of the boats value depending upon the lender and your credit profile.
Personal loans typically require higher credit scores than secured loans because they represent more risk to the lender. Loans using your home as security require good credit and a stable history as well as a sufficient amount of equity in the home to more than offset the amount of the loan.
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.
Shouldnt I Just Go With The Lowest Rate For My Boat Loan
A low rate on a boat loan is certainly seductive, but it is not the only factor to consider when securing financing. A Boat loan specialist can help you consider the big picture and factors that might affect your cost over the life of the loan, such as how long you intend to keep the Boat, what the terms are, and if there are any prepayment penalties. An experienced Boat loan Representative will make sure you dont miss the small print!
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What Is The Best Place To Get A Boat Loan
You have two options on how to search for a boat loan: in person at a boat dealership, or online.
If you’re looking to buy a loan from another individual also called a private party purchase searching for an online boat loan is likely your best bet. Online lenders will often allow borrowers to purchase boats from either a private individual or through a dealership. It’s a more flexible option that may open the possibilities to include more affordable, used boats.
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.
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What Is The Typical Down Payment For A Boat
The size of the down payment required will depend on the age, price, and type of vessel as well as on your credit profile. Expect to pay 15 to 20 percent down payment on most Center Console or Sportfishing Boats. A Boat loan specialist can help you with programs available through various manufacturers that could allow you to qualify for a lower down payment. They can also help you find lenders that offer lower interest rates for higher down payments.
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.
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