If you’re looking to purchase a boat but need a little help covering the costs, there are many different financing options available for you to consider. One such option is a personal loan, which offers long loan terms, competitive interest rates and affordable repayments.
Read our guide to learn how to find the best boat loan for your financial situation.
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A secured personal loan that is designed to specifically finance a boat.
A more general secured loan that allows boats to be used as collateral.
An unsecured personal loan with no collateral.
Boats can be expensive, so you will find these loans offer larger loan amounts and may give you longer repayment terms than loans used for other purposes. If you’re looking for a competitive interest rate, you may want to consider using the boat as security for the loan.
Compare lenders to finance a boat purchase
Representative example: Barbara gets a boat
Barbara has a cottage on Salt Spring Island and has wanted a boat for many years. Her neighbour is selling a used Angler boat for just $15,000.00 – which is an absolute bargain in Barb’s eyes. Barbara only has $7,000.00 on hand to spend on a boat at the moment, but she doesn’t want to pass up on the opportunity, so she decides to take out a loan to cover the remaining $8,000.00. Barb has an excellent credit score, so she compares both traditional and non-traditional lenders. She finds that her bank offers the lowest rate and best terms, where she will be approved for a loan of $8,000.00 with a 5.00% APR and a 2 year loan term.
Cost of used boat
Interest rate (APR)
Origination fee of 3% ($240.00)
Total loan cost
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
How can I compare boat loans?
Finding the right financing for your boat is important. When you’re comparing your loan options, keep the following questions in mind:
What is the interest rate? The interest rate for this type of loan varies depending on the provider you choose, but rates for secured loans are generally lower. Make sure you select a loan with a competitive interest rate that will help you save money in the long run.
Are there fixed repayments? Some boat loans offer fixed repayments. It’s important to think about whether you want fixed repayments or if you prefer a variable rate loan to take advantage of market fluctuations.
What is the loan limit? The maximum amount of your loan also varies with providers. Have in mind a rough estimate of how much money you need to borrow and find a boat loan that meets these needs. Don’t borrow more money than you actually need since you’ll pay interest on the amount borrowed.
How long will your loan term be? Choose your loan term by figuring out how much you can afford to repay each month. Do your calculations to figure out how long it’ll take to pay off the amount you want to borrow with the annual percentage interest rate (APR) you might qualify for.
Is the loan secured or unsecured? Boat loans can be secured or unsecured, so consider which loan type better suits your financial situation. A secured loan is risky since you can lose the collateral if you don’t make your repayments, however you can usually get a lower interest rate than with a secured loan.
What kinds of rates and terms can I expect?
Boat loans are usually personal loans, meaning rates start at around 4% and increase to 36%, sometimes higher. Will you actually qualify for that 4% APR? It’s not likely. Only those with an absolutely stellar credit history, six-figure income, low debt-to-income ratios interested in borrowing large amounts can qualify for the lowest rates.
For borrowers with a good to excellent credit history, rates will likely sit around the 9-12% mark.
Lenders will likely offer terms from one to seven years, depending on the value of the boat, however if the boat is worth a lot, you may find terms up to 20 years. A 20 year loan will mean you pay a lot in interest, so be aware of this before you sign on the dotted line.
It’s important to understand the cost of a boat, and the on-going costs, before you apply for financing.
The boat purchase. The actual cost of a boat varies greatly depending on which type you select. You could expect to pay anything from $25,000 for a new motorboat and well over $1,000,000 for a new yacht.
Boat 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 also vary depending on the type of boat you choose and also how you use it.
Boat maintenance. You will be stuck with a higher maintenance cost the older your boat is and the less you take care of it yourself. You can slow down wear and tear, for instance, by washing the hull with fresh water after taking your boat out.
Storage. Mooring fees are usually calculated by the length of your boat and will increase if you store it in a high traffic area or popular area.
Boat insurance. Depending on the type of boat you have and where you store it, insurance can cost anywhere from $300 to $500 usually. Keep in mind you may not need insurance in your province or territory, however the marina you store your boat at may require you to have insurance.
What are the benefits and drawbacks of financing a boat purchase?
Specialized loans. While some loans are standard secured personal loans that allow boats as security, there are other options available that are specially designed to finance a boat or vehicle.
You could get fast loan approval. Loans usually have a quick turnaround time once you complete the online application. The application process is relatively easy and you can have the finances for your boat within one to ten business days.
Access to competitive interest rates. Some boat loans have competitive interest rates available which tend to be lower than other credit options. If you know that you specifically need a loan for a boat, a boat loan is a great way to potentially save money.
Large loan amounts are required. Boats are usually quite expensive and that translates to a larger loan amount. Make sure you choose a term that keeps your monthly repayments affordable.
Can’t use a secured boat loans for costs other than the boat itself. You need to consider ongoing boat maintenance, boat insurance, marine equipment and storage fees as well as the cost of the boat. These costs usually cannot be added to a secured loan since the loan may likely have to pay off the cost of the boat only.
What types of boats can I finance?
A small boat that’s designed to fish bass or other panfish. It usually comes with features such as swivel chairs, storage bins for fishing equipment and a live well to store any fish that you might catch.
Called so because of their roomy bow area, this is a boat ideal for water skis and wakeboards.
Similar to a bowrider except for its top cabin, these boats offer creature comforts such as water heaters, power generators and even heaters and air conditioners.
Known as “cats”, these boats can be small vessels designed for sailing and fishing up to naval ships. These boats come with two hulls.
These boats are made for fishing adventures. You’ll usually find a bait well, as well as fish lockers and a cabin.
Cuddy refers to a small room or cupboard on this boat, which is used primarily for fishing, watersports and other family boating activities.
These small boats can be towed by larger boats into shallow waters or as the main boat for fishing in calm water.
Also built for shipping, this is a larger boat that can come equipped with cooking galleys and sleeping berths to make the boat comfortable for longer trips.
This is a type of vessel that’s used primarily as a home, whether for vacationers or permanent dwellers. Many of these are not motorized because they’re kept moored at a specific location.
“Sailboat” can refer to various types of sailing craft, but the common feature is their reliance on the wind for movement.
You won’t usually find a cabin on a runabout, which is a smaller boat designed for tow sports or fishing.
You’ll find various amenities on this boat, which is designed for ocean cruising. Sleeping berths, air conditioning, plumbing and galleys are usually standard.
If you’re looking for a boat for watersports and tow sports, this is the type of vessel for you. The propulsion on these small boats allows for water-skiing jumps and tricks.
You can use a trawler for commercial fishing or recreation, but you’ll see a distinction between the two. Fishing trawlers will always have a displacement hull but you’ll only find a semi-displacement hull on trawlers designed for recreation.
Called such because you can walk the full way around to anywhere on the boat, these medium-sized boats come with stowaway seating and a central cabin.
Before applying for a loan, consider the following:
Unlicensed credit providers. Signing up for a loan with an unlicensed provider is a dangerous mistake. There are plenty of scams operating in the online world, so be sure the lender you choose is legitimate and licensed to operate.
Getting into a debt spiral. Getting buried in debt can be an easy thing to do once you start borrowing money, especially if you have multiple debts. Make sure you know your limits and seek help if you are having trouble with repaying your debt.
Deals that seem too good to be true. If you find a deal online or otherwise that’s in a different league than the competition, do some poking around – it could be the sign of a scam.
How to apply for a boat loan
Once you’ve compared a variety of lenders offering boat loans, head to the specific lenders website to begin your secure online application. Some lenders may additionally allow you to apply over the phone or in person if they have physical stores. You will need to make sure you meet the eligibility criteria and have the necessary documents on hand to apply. The process usually takes less than ten minutes.
These may vary from lender to lender, however you will usually need to:
Be 18 years of age, or the age of majority in your province or territory
Be a Canadian citizen or a permanent resident with a valid Canadian address
Have proof of an income
Meet any credit score requirements
Have a working bank account
Meet any income requirements
You will need the following documents on hand when applying:
Personal details like your name, address, Social Insurance Number (SIN), phone number and email.
Income details including pay stubs or bank statements.
Employment details including your employer’s name and contact details.
Banking information like your bank’s name, address and transit number, as well as your personal bank account number.
Typical insurance rates for boats sit between $300 to $500 a year. However, rates may be higher or lower depending on specific factors like the province or territory you are in, the body of water your boat is in and how often you use it throughout the year. Boat insurance is not mandatory in all provinces and territories.
Boat registration is not required in Canada, however there are benefits to registering your boat. If you decide to register your boat, you will receive features such as proof of ownership, a boat number, a unique name and the right to fly the Canadian flag, among others.
Yes, it’s federal law that when operating a powered water craft you must have – and carry on you – your boating licence. Licence costs and course lengths vary between provinces and territories. You can get a license online or in person at specified locations by completing a multiple choice test. You must achieve at least 75% in order to pass and receive your boating licence.
Aliyyah Camp is a writer and personal finance blogger who helps readers compare personal, student, car and business loans. Aliyyah earned a BA in communication from the University of Pennsylvania and is based in New York, where she enjoys movies and running outdoors.
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