Financing a boat is faster and easier than you might think, and arranging boat financing usually isn't very different from financing a new car.
To finance a boat, you can go in one of three directions:
- Arrange financing through your boat dealer.
- Get a loan from your bank.
- Take out a loan with a lender specializing in marine financing.
Most people simply work through their boat dealer, since dealers have plenty of experience setting up boat loans. Plus, it’s in the dealers’ interest to make sure the process is smooth, fast, and painless. Still, some other buyers will opt for financing the boat by taking out a home equity line, second mortgage, or a personal loan from their bank. This can lead to a lower interest rate but the down-side to this option is that it can also add paperwork and make the transaction a bit more complex. It may be worth considering, however, because you might also enjoy some tax benefits by structuring the deal this way.
You may also find the best deal by working with a third-party lender who specializes in boat loans. Members of the National Marine Lenders Association focus on financing boats, and may be able to arrange a deal with lower down payments, faster decisions, longer financing terms, or lower monthly payments. Our How to Get a Boat Loan guide has more details on all of these aspects of boat financing.
Boat Financing Requirements
If you qualify for a car loan, you’ll probably qualify for a boat loan. Marine lenders will take the same sorts of factors into account:
- Credit rating
- Debt to income ratio
- Job and home ownership stability
- Net worth
Again, when considering all these factors a company specializing in boat loans generally acts more or less the same as a company making loans on new cars. Take your credit rating, for example. If it’s 700 or above, that box is a cinch to check. If it’s in the upper-600-range you still shouldn’t have a problem getting financing but you may get charged an extra nickel on the interest rate. Scores lower than that can become problematic. As for the other factors, you may have to provide some information (such as a personal financial statement, or verification of employment).
Modern Boat Financing Options
Even if you have the cash to buy a boat on the spot, it’s important to consider your loan options. Financing can help you maintain liquidity, but more importantly, it might also help you get into a more expensive “dream boat” that might otherwise seem out of reach. And boat financing today is much different than it was in the past. Boat loans used to be more limited in duration, but today terms of 10 to 20 years are quite common. Interest rates are amazingly low. And the down-payments required these days can range anywhere from no-money-down to 20-percent.
Remember, however, that if you can swing shorter terms and a higher down payment, you’re likely to get even more favorable interest rates. Larger loans often get a more favorable rate, too—so in some ways, buying the more expensive boat can actually “save” you money. At least, that’s one way of looking at it. But in our humble opinion, all of these aspects of boat financing and boat loans are a lot less important than the bottom line: you, friend, get a brand-new boat—and life is about to become a whole lot better. Now that’s what we call “favorable terms.”