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Boat Loans and Financing
Whether you live by the ocean, lake or bay, a boat can transform those hot summer days into an aquatic adventure that the whole family can enjoy. However, boats are not a cheap investment, and many owners look to boat loans to foot the bill.
Whether you choose a personal loan or a special boat loan, financing can be a great way to make the boat of your dreams a reality. Our SimpleScore methodology is the easy way to identify which loan will work best for you, using industry rankings, expert analysis and customer reviews to provide 2020’s best lenders for a boat loan.
The 6 best boat loans of 2021
- Best for Military Members: USAA
- Best for Same-Day Decision: U.S. Bank
- Best No-Collateral Loan: Lightstream
- Best for Easy-to-Reference Rates: Good Sam
- Best for Deferred Payments: Southeast Financial
- Best for Existing Customers: Wells Fargo
Boat loans at a glance
|USAA||Starting at 5.75%||$5,000–$35,000||12–180 months|
|U.S. Bank||Starting at 5.24%||$5,000–$150,000||12 months–20 years|
|Good Sam||4.49%–8.39%||$10,000–$2M+||48–240 months|
|Southeast Financial||Starting at 4.49%||$20,000–$4M||Up to 15 years|
|Wells Fargo||5.99%–24.49%||$3,000–$100,000||12–120 months|
What is a boat loan?
A boat loan is similar to other kinds of loans because it is money that you borrow and then repay in regular monthly intervals. The exact terms of your loan will vary from lender to lender, but most lenders will give you up to 10 or 15 years to make repayment in full. Your loan requirements will depend on the kind of loan that you need and whether you will be using a secured or unsecured loan. Your credit score and history will also determine your APR and repayment terms.
How boat loans work
When you want to take out a loan for a new or used boat, bank financing is not the only option you have. You could also benefit from working with an online lender, credit union or marine lending specialist, all financial specialists who can help you pay for your new purchase.
There is also the choice of a secured loan versus an unsecured loan. Both are popular ways of financing a new boat, but they are completely different. A secured boat loan uses your new boat as collateral on the loan. This means that if you fail to repay your loan, the lender can take your boat as payment. If you choose an unsecured loan, you won’t have to bargain with your boat, but you will likely face higher rates from the lack of collateral and may need a better credit score to qualify. You should also consider a lender that offers loans for bad credit.
Large loan amounts
Buying a boat is significantly different than buying a car. It is not an everyday purchase but a large and very expensive investment that requires some pretty serious funds upfront. Boats don’t hold their value as well as other types of property, like your home, so it is important to know that you are not likely to get your money back if you decide to sell later.
You will also face higher monthly payments than you would with other kinds of purchases. Boat loans are no small investment, and interest and fees will only make the payments increase that much further. Before you commit to a new boat loan that can last ten or twenty years, you should run the math to see what you can afford and what will work for you long-term.
The arrival of COVID-19 brought an entirely new demand to the U.S., driving a thriving new demand for all things marine-related with the rest of the world shut down. The lower interest rates present an incredible opportunity for stable boatowners to refinance their boat loan so they can become debt-free that much sooner. Boat refinancing has always been a popular solution for those who want to leverage low market rates. By refinancing your boat loan at a lower interest rate, you can save yourself tons of money that will help you eliminate your financial obligation sooner rather than later.
Boats are very expensive purchases, which is why many borrowers opt for secured and unsecured loans. If you don’t want to take out a loan or cannot be approved for one, there are still other ways to make your boating dreams a reality.
There are many popular boating clubs and groups, such as Freedom Boat Club, that act as a timeshare system for boats. You buy in to own a boat with other people and share the use of the boat, much like a condo timeshare for vacation. Finally, you can always pay cash. While it may take some time to gather the funds necessary, you will also have the ability to buy your boat outright and can pocket the cash you otherwise would have paid in interest.
How to choose the best boat loan for you
- Calculate what you can afford. Just because you want a certain boat doesn’t mean that you can actually afford it. Before you begin shopping for a boat loan — or even a boat, for that matter — you should have a solid understanding of what you can afford. Take the time to calculate your monthly expenses so you know how much disposable income you can afford to put toward your boat.
- Consider additional expenses. Once you buy your boat, there will be even more expenses waiting. You will need to register and title your boat maintenance and repairs to keep things running the right way. There is also the cost of insurance, as well as your trailer and all of the insurance. Consider all of these expenses when calculating your monthly budget.
- Shop carefully. While you don’t want to commit to the very first loan you receive, you do want to take the time to thoroughly explore your options. There are many different types of loan structures and options, with some benefitting you more than others, depending on your exact situation.
- Read the fine print. While APR is an important factor of any loan, there are other things you should pay attention to before you choose a loan. If it’s an expensive boat loan, you are likely to want more time to pay off your loan. This is where it becomes critical to review loan terms, because these can vary significantly from lender to lender. It is also important to pay attention to fees and penalties that can eat into your loan and cost you far more than you actually received.
We welcome your feedback on this article and would love to hear about your experience with the boat loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.