Boat Loans: Questions To Ask Before You Apply
How does the loan fit into my budget? Monthly payments on a boat loan should fit comfortably within a budget that covers all of your needs, wants, debt payments and savings. Use our boat loan calculator to see estimated monthly payments, interest costs and total payments.
Payments toward the boat loan combined with other debt payments shouldnt exceed more than 20% of your income.
What is the true cost of boat ownership? Buying a boat isnt your only new expense. Additional costs include fuel, licenses, insurance, storage, maintenance and repairs. Boats also depreciate over time, just like a car.
Does my boat have resale value? Its smart to buy a boat that is both affordable and popular, as this can attract potential buyers if you decide to sell it and pay off your loan at any point in the future.
How Much Does A Boat Cost
Boats vary depending on the type. You can expect to pay anything from $25,000 for a new motorboat to well over $1 million for a new yacht. Used models can go for even less.
Other expenses to consider
The boat itself is one of several costs that come with boat ownership. These include:
- Equipment. Consider the costs of decking out your boat. Electronics, water toys, accessories and safety equipment could set you back $1,500 or more.
- Operating costs. This cost will vary by the type of boat you choose and how you use it. However, the price of fuel should be a big part of your budget.
- Boat maintenance. All boats need regular maintenance to remain safe. Costs vary depending on your boats age, model and your mechanic.
- Storage. Mooring fees are calculated by the length of your boat and if you store it in an expensive area.
- Boat insurance. Depending on the type of boat you have and where you store it, boat insurance can cost you $100 or more every year.
Used & New Boat Loan Interest Rates That Work For You
Selecting Your Boat Loan
We offer Used & New boat loans with interest rates that can begin as low as 3.99% with excellent credit and sufficient loan to value equity. Other rates may apply based on the age of the boat, the finance amount, and your current credit scores.
The interest rate on a boat loan is based on the age of the boat, the total amount financed, your credit score, and boat valuation. We work with you to find the best rate possible for your situation.
Talk to us about what youre looking for in a boat and well provide you with the best boat loan financing options available. Give us a call and we promise to work towards a positive solution for your new or used boat loan. If we dont answer, well return your call the same day so please leave us a message.
Is Your Boat Covered
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Use A Boat Loan Calculator
The LendingTree boat loan calculator helps you determine your monthly payment using the loan amount, interest rate and loan term. Additionally, the calculator breaks down monthly payments by year, helping you plan ahead. Should you find that your estimated payment is a bit tight for your budget, the tool allows you to adjust the loan amount and/or boat loan term to find what best fits your needs. When its time to buy, you may fill out a single LendingTree form and receive up to five possible boat loan offers from lenders based on your creditworthiness.
What Is A Good Interest Rate On A Used Boat Loan
While used boat loans can occasionally have rates higher than those offered for new boats, this isnt always the case. In fact, many lenders offer the same competitive rates whether youre buying used, new, or even refinancing. Because of this, applicants can expect to find used boat loans with rates in the 4% to 5% APR range.
For instance, Bank of the West our overall top pickoffers interest rates starting at 3.59% APR for watercraft over $50,000, whether the boat is new or used.
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If It Floats We Finance It
With repayment terms of up to 15 years for a larger boat, we have leveraged the high volume of financing we do to deliver the perfect watercraft loan for you. Our network of banks and lenders specialize in financing a variety of waterborne vehicles.
We can secure an online boat loan for virtually any type of personal-use vessel that sits in the water. This includes:
- Bass Boats
- Wakeboard boats
- High-end Yachts
And our expertise doesnt end with boat financing. We can provide extended warranties as well as in-depth advice to effectively insure your marine vehicle. Add all this to our remarkable customer service and online efficiencies, and youve just bought yourself peace of mind and security to last the life of your boat.
Getting started is just a click of the Apply Now button away. Start exploring your options today to see just how efficient we can be.
Navy Federal Credit Union
Navy Federal Credit Union offers loans for new and used boats and personal watercraft, with terms of up to 180 months. Military members with direct deposit may qualify for a rate discount. Service members in all branches of the armed forces, along with their families and household members, are eligible for credit union membership.
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Down Payment May Be Required
Boat loan lenders often want to see a down payment, generally between 10% and 20%, depending on factors including the lender and the cost of the boat. Some lenders offer 0%-down loans but keep in mind that making a down payment can hedge against the boats depreciation, or loss of value over time, and help prevent a situation where you owe more on your boat loan than the boat is worth. A down payment may also lower your monthly payment and reduce the total amount of interest you pay on the boat loan.
Can I Use A Personal Loan Instead Of A Boat Loan
You can get your money faster without collateral and a down payment by applying for an unsecured personal loan. Generally, you need good credit and an income over $24,000 a year to qualify.
These come with similar rates as boat loans, though loan amounts usually max out around $100,000 and terms dont run longer than seven years.
Keep in mind that not every personal loan provider will allow you to use your funds to purchase a boat. Be clear when submitting your application that you intend on financing a boat to avoid a surprise rejection.
Are secured loans an option for a boat?
If you cant qualify for a loan without collateral, consider backing it with another asset like your home by taking out a secured loan. Typically, secured loans have lower APRs than unsecured loans and easier-to-meet requirements.
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Where To Find A Boat Loan
How long you can finance a boat may also depend on where you find financing. Here are some of the main venues where youll be able to find boat loans:
Dealer financing. About 80% of new boat financing deals take place through dealerships, according to Jim Coburn, a principal at Coburn Consulting Company and member of the Michigan Boating Industries Association. Banks have relationships with dealerships and dealerships have the customers, he said. They refer the boat loan customers to the banks.
Banks, credit unions and online lenders. Much of the remaining 20% of U.S. boat loans takes place directly through the lenders themselves. In researching rates from top boat lenders, we found APRs as low as 4.29% at online lender LightStream, a division of SunTrust Bank, and 4.29% at Essex Credit, a division of Bank of the West, as of publication. You also may be able to find competitive rates at credit unions or your own bank that may offer discounts to existing customers.
Shop around. If you do decide to buy a used boat, its important to make sure youre paying what the boat is worth. Consult an industry resource, such as NADAGuides to research values and prices in your area. Used or new, as youre determining which financing path works best for you, its crucial that you comparison-shop to compare rates and boat loan terms from a variety of lenders.
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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Are Boat Loans Hard To Get
Youll typically need good to excellent credit and verifiable income to qualify for a boat loan. If you have poor or fair credit and can wait to take out a loan, it could be a good idea to build your credit before applying.
Tip:
Keep in mind that with secured boat loans, the people applying for the loan typically need to be listed on the vessel title. This means that if you apply with a cosigner, theyll most likely need to be on the boat title.
Some manufacturers and dealers also offer their own in-house financing, which might be easier to qualify for. Be sure to consider all of your options to choose what works best for you.
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How Much Boat Can I Afford
Its important to carefully consider your budget to determine how much boat you can afford. Also keep in mind that on top of the boat itself, you might need to pay for insurance and accessories as well as provide a down payment.
Tip:
The table below shows how different interest rates, loan terms, and loan amounts could affect the total repayment cost of a loan. Keep in mind that the interest rates shown are solely for illustrative purposes and are hypothetical.
| Loan amount |
|---|
| $379,735 |
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Whats Considered A Good Credit Score For A Boat Loan
As noted, there are many different types of boat loans and different types of lenders that offer them. As a general rule of thumb, the higher your credit score, the lower your interest rate. This means that you will end up paying less over the term of the loan than someone with a lower credit score.
Typically, 700 is considered a good credit score for a boat loan. However, some lenders dont require a minimum credit score or will consider your debt to income ratio, work history, and the cost of the boat alongside your credit score.
Best Commercial Loan: Coastal Financial
Coastal Financial
Why We Chose It: Coastal Financial is our top choice for the best commercial boat loan because the company specializes in charter boat financing and will also take care of setting up charter management and boat insurance for you.
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Offers boat insurance and charter management
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No upfront rates
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No published loan fees
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You have to contact the company for borrower requirements
Coastal Financial offers a quick application process and fast funding. It finances new and used boats, charter boats, refinances, and RV purchases. It offers boat loans from $5,000 $5 million and approvals take less than 24 hours. You can apply online or over the phone.
In addition to boat loans, Coastal Financial also offers U.S. Coast Guard documentation, boat insurance, and a boat charter management program. Coastal Financial offers commercial loans for yachts, fishing boats, catamarans, and sailboats. Youll need to contact the company for loan fees and specific loan requirements and terms as they are not available on the website.
Once the borrower and vessel are approved for a charter loan, you put the boat in your companys LLC and you can enter it into a charter program. You can choose how often you want the boat chartered, and when you want to use it, and the company will handle the rest.
Coastal Financial has mostly positive customer reviews with customers appreciating the marine industry knowledge, easy application process, and fast funding times.
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Fallen In Love With A Boat Compared With Auto Loans Financing A Boat Can Be A Much Heftier Investment
Boats can be more expensive than a car, which means loan amounts can be higher and terms can be much longer.
Just how much you pay to finance a boat depends on a number of factors, including the type of boat loan you choose, the loan terms, your down payment and your credit.
Lets take a look at the different types of boat loans, your financing options and how to apply for a boat loan.
How Does A Boat Loan Work
A brand new boat could cost anywhere from $10,000 to $100,000+. Most people dont make purchases of that size with cash and, instead, will apply for a boat loan in order to finance their purchase.
A boat loan provides financing to purchase a boat. Just like any other type of financing, the loan-holer pays off the loan amount over an agreed upon timeframe.
You can also take out a boat loan to purchase a used boat.
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Where To Get A Boat Loan
Online loans
Online lenders typically offer unsecured boat loans only. These lenders may be able to approve and fund loans more quickly than other lenders. Online lenders also offer pre-qualification, which shows you what loan amount and rate you could get without affecting your credit.
Some tailor their loan products to borrowers with good or excellent credit , while others accept lower credit scores and focus more on factors like your monthly cash flow, education and where you work.
Bank loans
Youre more likely to find secured loans from banks. Banks may sometimes offer perks to existing customers, like discounts and favorable loan terms. If your bank offers boat loans, it may be a good place to start.
Navy Federal and First Tech both offer boat loans with 15-year repayment terms with rates starting below 10%.
loans from marine lending specialists
Boat loans from marine lenders have similar rates and repayment terms to personal loans. One advantage might be the ability to work with a specialist who understands the boating business, according to the National Marine Lenders Association.
These loans must be secured by the boat and require down payments from 10% to 20% of the purchase price. A bank may require a down payment or make it optional.
Alternative Ways To Finance Your Boat
If you need to finance an older boat and these options do not work, you also may consider obtaining a personal loan or using money available through a home equity loan or line of credit. The advantage of these types of loans is that because the boat is not used as collateral, its age will not be relevant to lenders.
Using these types of loans may enable you to borrow to buy a boat that is older than lenders will approve otherwise. Personal loans, because they are unsecured, require excellent credit and are more likely to be obtained for less expensive boats. They also typically will carry a higher interest rate than a loan secured with collateral. They also will need to be repaid in a relatively short period of time. Home equity loans and lines of credit use the equity in your home to buy the boat. Because this loan is secured with your home as collateral, the interest rate will likely be lower than many other financing options.
Depending on your tax situation, you may also be able to deduct the interest you pay. If you default on the loan, however, you will likely lose your home. These loans will typically require an appraisal of your home and may have additional fees, which some lenders will waive. Home equity loans are fairly straightforward you borrow a certain amount and begin repaying it over time.
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How Does Boat Refinancing Work
If you have taken out a boat loan in the past, you can refinance your boat. This means revising and/or replacing the current terms on your boat loan on more attractive terms that might reduce your interest rate and payment amount. There are lots of benefits to refinancing a boat loan in Utah:
- Benefit from a lower interest rate
- Spread the cost of your boat loan over a longer period
- Receive up to 100 percent financing.
How Do Boat Loans Work
Boat loans work by offering you funding for a new watercraft that uses your vessel as collateral. Its similar to a car loan: You can find a boat loan directly through a dealership or private lender.
If you finance through a lender, you can either have the funds sent to you or have the lender directly pay the dealership.
What gets me the lowest rates and longest terms?
To qualify for the most competitive deal, youll need to meet the following criteria:
- Strong credit. You generally need near-perfect credit and income well over the minimum requirements for the rates lenders advertise.
- Expensive boat. Higher loan amounts might come with lower rates and longer available terms, depending on the lender.
- New boat. Used boats tend to come with higher rates and more limited terms.
- Sign up for autopay. Often lenders offer a 0.25% discount for signing up for automatic repayments.
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