Finance your summer fun for years to come by comparing loans with low rates.
Looking to purchase a boat and need a little help covering the costs? There are a range of options available so you can hit the water in style.
Our top pick: Upgrade Personal Loans*
- Flexible loan options
- No prepayment penalty
- Quick turnaround
Our top pick: Upgrade Personal Loans*
- Min. Credit Score Required: 620
- Min. Loan Amount: $1,000
- Max. Loan Amount: $50,000
- APR: 7.99% to 35.89%
- Requirements: At least 18 years old, US citizen or permanent resident, verifiable bank account, valid email address
How does a boat loan work?
Boat loans are meant to finance the purchase of a boat. However, this can take different forms. Some lenders offer loans specifically designed for leisure vehicles, which are usually secured by the boat you’re buying. Many boat dealers also offer their own financing through a bank or private lender that typically works the same way. Or you could decide to use a personal loan to finance your boat, which are available in both secured and unsecured options.
What rates and terms can I expect?
Rates can be fixed or variable and typically start around 4%. However, only borrowers with stellar credit, high income and low debt-to-income ratios can qualify for the lowest rates. For everyone else, you can expect APRs up to 36%, though you’ll need to make sure such a high rate is legal in your state.
Boats can be expensive, so you’ll find these loans are typically for larger amounts and may allow you to pay over multiple years, rather than just three to five like your standard personal loan. Many lenders specializing in boat loans offer terms of up to 20 years. With a 20-year loan, your monthly repayments will be low, but you’ll end up paying much more in interest. To keep costs down, we recommend finding the shortest possible term that still allows for repayments you can comfortably afford to make each month.
Where can I get a boat loan?
It depends on the type of loan you’re looking for, but in general, you may be able to find a boat loan from:
- Dedicated boat dealerships
- Personal loan providers
- Peer-to-peer lenders
- Banks and credit unions
Keep in mind that not every lender will allow you to use your loan funds to purchase a boat. Be clear when submitting your application that you intend on financing a boat to avoid a surprise rejection.
What types of financing is available for boats?
Although you can finance your boat multiple ways, you’ll find the most common — and often most simple — options are generally enough to get you on the open water.
- Leisure vehicle loans. Some lenders like USAA offer leisure vehicle loans, which are designed to finance large vehicles like boats and RVs. Terms tend to be quite long, and you may find that the rates are more competitive because your loan is secured by your boat.
- Secured personal loans. Secured personal loans may require you to use your boat as collateral, but it could also request an item of similar value — like your home. Just like leisure vehicle loans, you may be able to score a better rate, but if you default, you’ll lose that collateral — making them much more risky.
- Unsecured personal loans. An unsecured personal loan won’t require you to use your boat as collateral, but this comes with its own drawbacks: You may not be eligible for as much financing as you need, and you’ll find that your rates are much less competitive than with a secured option.
- Dealer financing. Some dealers may provide their own financing, usually through a bank or private lender. These typically work the same as leisure vehicle loans, but you’ll want to keep an eye out for rates. Just like car loans, dealers have a tendency to increase a loan’s APR to make a few extra bucks off you each month.
Compare lenders to finance a boat purchase
How can I compare boat loans?
Finding the right financing for your boat is important. When you’re comparing your options, keep the following questions in mind:
- What is the interest rate? The interest rate for a boat loan varies depending on the lender, but rates for secured loans are generally lower. In addition, dealer financing may be more expensive than getting a loan in advance, so be sure to compare your rates before hitting the water.
- What is the repayment schedule? Boat loans generally have fixed interest rates, meaning you pay the same amount every month, but you may find some that have variable rates. Which you choose is up to you, but understand the difference between fixed and variable rates before investing in a boat.
- How much can I borrow? Just because you’ve found the boat of your dreams doesn’t mean you can find financing. Many lenders require a down payment of 10% to 20%, and most won’t offer more than $100,000 for a boat loan.
- How long will my loan term be? The longer the loan term, the more you’ll pay in interest. However, this also means you may have lower monthly repayments. Calculate how much you can afford to pay and negotiate terms that suit your budget.
- Is the loan secured or unsecured? Boat loans can be secured or unsecured, so you’ll need to consider which one offers you better benefits over the long run.
Must read: Be cautious when borrowing large amounts
Boats can be expensive, and that translates to a larger loan amount. To avoid over-borrowing, we recommend saving up for a down payment so you don’t need to borrow as much.
Once you figure out how much you do need to borrow, compare the APR you’re given with the term. If it’ll cost too much each month or if you’ll pay thousands of dollars in interest, keep looking for a better offer.
Remember that boats are more like cars than houses. Once you make a purchase, your vessel will begin to depreciate. If you’ve invested too much into a boat, you may end up paying more in the long run than it’s really worth.
How much does a boat cost?
Every boat has its own purchase price, but that isn’t the end of the costs. You’ll need to prepare you budget for the ongoing expenses of boat ownership before your set sail.
- The boat purchase. The actual cost of a boat can vary greatly depending on the type of vessel and its age. You can expect to pay anything from $25,000 for a new motorboat to well over $1 million 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 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. The older your boat is, the higher its maintenance costs. But all boats need regular maintenance to remain safe, so do your research when selecting a model and mechanic.
- Storage. Mooring fees are calculated by the length of your boat and if you store it in a high rate area.
- Boat insurance. Depending on the type of boat you have and where you store it, insurance can cost you $100 or more every year.
What types of boats can I finance?
What do lenders look for in a borrower?
There’s more to purchasing a boat than finding a good deal. Making yourself a good candidate for lenders will go a long way in getting you low financing for your big purchase.
- Steady source of income. The first thing every lender looks at is your income. How much do you earn? Can you afford a large monthly payment? These are important questions that may make or break your application.
- Low debt-to-income ratio. Your current debts will also play a role. Lenders want to make sure you won’t be overextending yourself — and putting yourself at risk of default — when you borrow a boat loan.
- Liquid assets. Some boat loans may not require security beyond the boat itself, but lenders will still want to see that you can handle payments should your employment or income situation change drastically.
- Good to excellent credit. A high credit score indicates you know how to handle your debts. Lenders look for borrowers with good to excellent credit because they know it means you pay your loan bills on time.
- Experienced boat owner. Experience with a boat isn’t a must, but it may make a lender more confident when issuing a loan. Having had a boat in the past means you likely know the full cost and are prepared for a new boat.
How do I apply for a boat loan?
While every lender will have its own unique application process, in most cases, you’ll need to provide the same information when applying for a boat loan.
- Start by comparing your options in the table above.
- Click Go to Site once you’ve found a lender with good terms.
- Fill out the application with details about yourself and your income.
- Apply for the loan and see if you’ve been preapproved.
- If you have, work with the lender to discuss your needs and finalize your loan.
Once you have financing, you can start to shop for a boat that suits your needs — just don’t let a salesperson talk you into buying more than you can afford.
Bottom line
A boat can be a major source of summer fun. From fishing to watersports, boats are versatile and may be a good leisure investment for your family and friends. However, the quick depreciation and large loan amount necessary to finance them may make it difficult to afford this type of luxury. Budget carefully and compare your personal loan options so you know you’re getting a good deal.
