Dedicated lenders offer low rates and long loan terms.
Rates starting at a low 5% and terms as long as 20 years set boat loans apart from your typical personal loan. The best rates tend to go to expensive, new vessels — though you can still find a good deal if you have a credit score over 670 and can afford a down payment of at least 20%.
Boat loans work by offering you funding for a new watercraft that uses your vessel as collateral. It’s 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, you’ll 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.
How much can I borrow?
How much you can borrow generally depends on the price of your boat. Typically, you can fund 90% to 100% of the value of your boat. Minimum loan amounts can start anywhere from $2,000 to $15,000, depending on the lender.
Don’t forget the down payment
Like car loans and mortgages, boat loans often require a down payment. Generally, you’re required to cover at least 10% of the cost. But lenders tend to favor applicants that can front at least 20% of the boat’s cost. To avoid over-borrowing, we recommend saving up as much as you can for a down payment so you don’t need to borrow as much. The less you borrow, the less interest you’ll pay.
Remember: Boats are more like cars than houses. Once you make a purchase, your vessel will begin to depreciate. If you borrow a large amount with a lengthy term, you may end up paying more in the long run than it’s really worth.
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 don’t 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 can’t 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.
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 boat’s 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.
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:
Boat dealerships
Banks and credit unions
Online lenders
Peer-to-peer lenders
How can I find a good deal?
Comparing offers from lenders is the best way to find the best deal you can qualify for. Asking yourself the following questions as you shop around can help:
What is the APR? This includes interest and fees you pay each year you have your boat loan and is the quickest way to compare costs.
What kind of APR is it? Is it fixed or variable? Most boat loans are fixed, but there’s a chance you’ll get a variable rate that changes over time.
Do I need a down payment? Make sure you have enough saved up to meet a lender’s minimum down payment requirements.
How long are the terms? Boat loans can come with terms as long as 20 years, though typically, those are only available for the highest loan amounts.
How much does my boat cost? Make sure the amount you need to finance falls within a lender’s range.
How much will I pay each month? Once you have an idea of the loan amount, APR and term, use a boat loan calculator to learn how much your loan will cost each month.
What do lenders look for in a borrower?
Making yourself a good candidate for lenders will go a long way in getting you low-cost financing for your big purchase.
Steady source of income. You need to show you have enough regular income to afford monthly repayments after bills and debt obligations.
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. Lenders often want to see that you can still handle payments should your employment or income situation change drastically.
Good to excellent credit. Lenders look for borrowers with good to excellent credit because it shows a history of paying your bills on time.
Experienced boat owner. Experience with a boat isn’t a must, but it may make a lender more confident. Having had a boat in the past means you likely know the ropes.
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 — you can begin with the table above.
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.
Will I need to know what boat I want before I apply?
It depends on the lender. Some might ask for a model and make, while others might allow you to apply for a ballpark amount, based on your budget. If you’re unsure, ask your lender what’s required ahead of time.
How else can I pay for a boat?
If you can’t find a boat loan near you — or would rather not use it as collateral, you might want to consider these alternatives:
Leisure vehicle loans. Some lenders offer leisure vehicle loans that cover a wide range of vehicles — from jet skis to RVs — and include boats.
Save up. Not in a rush? Saving up is the cheapest way to buy a boat since you won’t have to pay any interest or fees.
Rent a boat. Marketplaces like GetMyBoat act like Airbnb for watercraft, letting you reserve one when you need it.
Find a boat club. Boat clubs give you access to fleets of boats in exchange for a monthly or annual payment — and you won’t have to foot the bill for insurance and maintenance.
Bottom line
Boat loans can help cover up to 100% of the cost of a new vessel and come in higher amounts and longer terms than your typical personal loan.
But if you need less than $100,000 and don’t want to use your boat as collateral, check out our guide to personal loans to find out if it’s the right choice for you.
Frequently asked questions
Can I deduct my boat on my taxes?
It depends on the type of boat. If it has a bed, galley and head, it may qualify as a second residence. Otherwise, you likely won’t be able to deduct your boat or your boat loan from your taxable income.
How much is boat insurance?
Insurance rates typically hover around 1.5% of your boat’s value. Rates are higher in areas prone to weather-related disasters like hurricanes.
Do I need a title to register my boat?
Boat registration varies by state. Generally, smaller boats or boats that don’t have a motor don’t need to be registered at all (though in Utah you need to register even small boats like canoes). Some states require all boats to be titled in order to register them, others have exemptions. Check your local DMV website (make sure it’s .gov, not .org or .com) to find more specific details.
Do I need a license to own a boat?
It depends on which state you live in. Florida, for example, doesn’t technically require a license. But anyone born in 1988 or later who operates a motorboat of at least 10 horsepower is required to have a Boating Safety Identification Card. Typically, you’re required to take a boating safety course. Once you have this ID card, it likely won’t expire.
What’s the difference between a boat loan and a boat title loan?
Boat loans can be either secured or unsecured and are used to purchase a boat. On the other hand, a boat title loan is a type of short-term financing that uses the lien-free title of your boat as collateral. These tend to come with very high rates, and you risk losing your boat if you default.
Anna Serio is a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY.
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