Do you find yourself gazing at your dream boat in magazines, at boat shows, or scrolling endlessly online? A boat can get you to untold new adventures. However, if you don’t want to put down a boatload of cash up front, then financing may be for you.
Boats can provide great access to fishing, hunting, vacation, and recreation spots you’d never otherwise get to. For example, think of all of the camping grounds and recreational areas that are accessible only to boaters – even designated for boaters only – such as in the San Juan Islands in Washington, Florida Keys, Great Lakes, large rivers such as the Delaware River in New York, Pennsylvania and New Jersey, or off the coast of Nova Scotia. You could be gaining access to places you have only dreamed of before.
Do You Really Need Financing?
A brand-new boat will be awesome, that’s for sure. But before you dive in headfirst, be sure to first look at your options to keep your total cost or monthly payments down.
In some places, boats can be rented, for example at large marinas and reservoirs. Houseboat rentals are increasingly popular for vacations, and there are even time share programs for yachts. However, you’ll be limited in how long you can have it, and where you can take it. On the other hand, buying your own will create an adventure always ready to happen. Before you look at financing, you’ll first want to think through the features you need vs. what you want, and what you can realistically afford. If the price tag knocks the wind out of your sails, regroup and consider buying less. The fastest, biggest, flashiest boat may be what we want, but it is not necessarily what we can afford. Remember, having a boat that you can easily make payments on is more important than having an expensive boat that you can’t afford to use. If you still want to look into ways to cut costs, consider purchasing a used boat or going in together with a family member or friend to share the cost.
For buyers interested in used boat finance options, it can be a good idea to use a boat loan finance calculator. How to finance used boats is similar to new boats, but some financing options like dealer financing might not be available. You also can be restricted by how old of a boat can you finance.
If you have decided on the boat that you can comfortably afford, but don’t have a lake full of cash on hand, you can consider financing. The key is to live the life you want and have fun, without breaking the bank or by struggling with how many years can you finance a boat or pay it off.
If you are interested in financing your boat, keep reading for some general tips and some important dos and don’ts. We will help you answer your key questions like: What is best way to finance a new and used boat? How long can you finance a new boat loan for? For how long can you finance a boat? And even – how to finance a boat with poor credit? Since we aren’t representing a manufacturer, dealer, or boat show, you’ll find our advice is objective and unbiased. Read on, this is a definitive guide with everything you need to know.
How Much Do Boats Cost?
As you know, boats come in a wide variety of types, specifications, and cost. Of course, like any sport, you can get into a starter or basic entry-level model. Or, you can go all-in by getting the maximum amount of features, size, and power. Before you commit to a purchase, you’ll want to think through how you are going to use it, and what you really need vs. want.
For a sense of just how wide the range of options is, here are representative quotes for several types of retail priced new boats (of course prices depend on model, length, and installed features, electronics etc. so be sure to do your own research):
General Recreational Motorboats
Sea-Doo 180 Challenger – $25,000
Tahoe Q5i – $29,000
Crestliner 1850 Super Hawk – $30,000
Glastron GS 209 CC – $32,000
Yamaha SX210 – $34,000
Bayliner 215 BR – $35,000
Blue Wave 2000 Pure Bay – $40,000
Bass & Freshwater Fishing Boats
Tracker Pro Team 190 TX – $25,000
Ranger Z175 – $30,000
Crestliner 1750 Bass Hawk – $30,000
Bass Cat Puma FTD – $65,000
Nitro Z21 – $60,000 – $75,000 (Elite)
Skeeter FX21 LE Bass Boat – $70,000
Nitro ZV21 – $73,000 (multi-species)
Marine & Large Freshwater Boats
Ranger Z520Ci Intracoastal – $70,000
Sea Chaser 26 LX – $70,000
NauticStar 265 XTS – $86,000
Everglades 253 CC – $150,000
Robalo R302 – $162,000
Cobia 280 DC – $165,000
Belzona 327 – $310,000
Regulator 28 – $315,000
Scout 355 LXF – $365,000
Catalina 22′ – $2,500
Island Packet 26′ – $25,000
Ocean Cruiser 35′ – $38,000
Luxury Yacht 40′ – $166,000
OK why not dream for a paragraph? A yacht is technically over 24 feet in length, although most people reserve the word for boats 40 feet and up. Average new yacht prices are in the range $8-10 million, with the price of larger yachts usually starting at around $1.5 million (for a small or older yacht no less) and rise in price for every variety and length (usually in increments of 10 feet) to a $600 million, which is how much Azzam, the largest yacht in the world at 590 feet cost to build.
OK back to reality. If you think about it, buying a boat is usually not that different than pricing out a car, truck, RV, or ATV. Being prepared and educated about the boat that you want to buy will be your best tactic for finding a killer deal. It is no secret that a dealer will try to talk you into the
Pro Tip – do your research on prices and financing options BEFORE you go to a show or dealer, so you know what a good deal is and don’t get pulled in to unfavorable terms.
most expensive boat with everything but the kitchen sink (and if you’re buying a house boat, it might even have one of those). However, if you know what you need in terms of speed, power, size, and add-ons, you will be able to negotiate and will feel confident that you know the best way to finance a boat.
Before we jump into the specific options for financing your boat, here’s a little primer on how boat financing works and common questions.
Where can I get boat financing?
The types of financing we are discussing here are available from banks, credit unions, boat dealers, boat brokers, marine finance companies, mortgage brokers, and occasionally private boat seller financing. Importantly, these different financing sources will have different terms, such as how long can you finance a boat for.
Isn’t financing a boat just like your car?
Yes and no. Certain types of boat financing are very similar to a car, with a down payment, fixed interest rate, and payment horizon of 5 years (sometimes up to 7 years for boats). However, many people use other forms of financing, such as personal or private loans, a second mortgage or home equity line of credit, or even credit cards depending on the cost of the boat and the terms you can qualify for.
What types of boat loans are there?
Secured loans are backed by collateral such as the boat itself. If you stop making payments (called a default) then then lender can repossess the boat.
Unsecured loans on the other hand, have the advantage of not being tied to any specific asset of yours, so they don’t put anything else at risk if you were to stop making payments. However, the flip side of this is that because lenders view this as a riskier type of loan, you’ll typically be paying a higher interest rate than with a secured loan.
Mortgages, such as a second mortgage or Home Equity Line of Credit (HELOC), are another option. They are secured (against your home), so probably carry the lowest interest rate, but also the highest consequence if you default – think carefully about this – you could lose your home over not paying for your boat.
For how long can you finance a boat?
This is a very good and common question, because it is a key factor in determining how much your monthly payment is, and how long it’ll take you to pay it off. If you are wondering “how long can I finance a boat for?” in general, a boat with a secured loan can get a longer payment horizon, as long as 20 years, while those with unsecured loans are shorter, usually 5-7 years. How long can you finance a used boat for, or how to finance a used boat if at all, depends entirely on the seller and there are no standard guidelines.
What kind of terms can I get?
Of course, this depends both on the type of loan, and on your credit score and history. To give you an idea, as of mid-2019 some representative financing quotes are:
Secured loans: 10 – 20% down payment (occasionally a 0% down offer), 5 – 20 year payment term, 4 – 8% interest rate
Unsecured loans: 20 – 30% down payment, 5 – 7 year payment term, 7 – 25% interest rate
Second Mortgage / HELOC: No down payment, 15 – 30 year payment term, 4 – 9% interest rate
Can I get financing with bad credit or poor credit?
If you are wondering how to finance a boat with poor credit, the good news is yes, generally you can get financing, unless you have a history of frequently defaulting on payments or not paying back loans that had to be cancelled. Just be aware that the terms won’t be as favorable as if you can improve your credit score first.
Fun Fact: 62% of boat owners have a household income of less than $100,000, according to the National Marine Manufacturers Association
Financing Options for Boats – Pros & Cons
Once you’ve had a chance to do your homework, and not only narrow down the possibilities but nail down what you want to get, you are ready to move to the financing stage. You might be concerned about your options and asking, “how hard is it to finance a boat?” or “ How do I find the best boat finance companies?” and “Are there options for owner finance boat contracts?” We know it may seem the easiest to snag the first financing option that you find and buy the boat of your dreams, but take a moment to reconsider. We all want to get on the water as quickly as possible, but financing will leave you with added interest throughout the life of the loan, increasing the total cost of your boat. Depending on the terms you get such as interest rate and amount of time for the loan life, the total cost to own the boat can go up considerably.
If you’ve crunched the numbers and financing still makes sense (which is possible since current boat finance interest rates are low), you can pay off the loan gradually over time. We’ve listed some financing options below in an implied decreasing order of preference, based on how attractive the terms typically are. However, there is no thing as “one-size-fits-all-funding.” What option you choose can depend on things like, how many years can you finance a new/used boat, new boat finance rates (check out a boat finance rates calculator online), and particular needs if want to finance a boat with poor (bad) credit. So, be sure to look at all of the options. Depending on your credit rating and other features we describe below, any of these could work for you:
Personal or private lender loans
Home equity lines of credit (HELOC)
Dealer or retailer financing
Personal Loans or Private Financing
Personal and private loans are an independent form of financing. This means they have excellent flexibility that you can use for just about anything you want. Once you’ve qualified for a personal or private loan, you can then choose to apply it to a boat or other purchases depending on the amount you qualified for and how much you can prudently spend. Personal and private loans typically have more flexible terms and better interest rates than dealer financing, boat show offers, or credit cards.
It’s important to note that personal loans rely heavily on your credit score for approval. You can potentially be approved for thousands of dollars (usually maxing out around $30,000), but only if you meet the requirements. The repayment timeframe (usually 1-5 years) and the interest rate can also depend on your credit rating.
Even though the interest rates (APR) on personal loans can vary, once you get approved they are usually fixed. This means the rate won’t change over the life of the loan and your payment won’t change randomly from month to month. Having a set interest rate, monthly payment, and repayment term allows for easier budgeting and helps to ensure you will be able to make your payments.
When to use personal loans:
You want to know what you will pay each month- fixed interest rate and repayment terms.
You have good credit that qualifies you for the best rates
You are looking for pre-approved financing to get your plan buttoned down before you shop for a boat. This way you will know the terms prior to making your purchase
Advantages of personal loans:
Potential for low interest rates with a qualifying credit score
Multiple lenders to choose from since most banks and credit unions will offer personal loans.
Lenders are typically transparent with loan information and you can easily compare online
You can create a stable budget and repayment plan since the interest rate and monthly payment will be fixed
Personal loans are unsecured, meaning if you don’t pay they won’t take the boat back.
Personal loans can be used for almost anything.
Depending on how much you get approved for you could use the excess funds for other needs.
Disadvantages of personal loans:
Interest rates are subjective to credit scores, while this might be an advantage if you have good credit; it is a major disadvantage if your credit is poor.
Personal loans can require application fees or origination fees, which will increase your overall cost. Be wary of offers to waive these fees since it usually results in a higher interest rate.
Private lenders are less willing to approve loans since they are not directly benefitting from your purchase (like a dealer would). It can be more difficult to get approved for the funding that you need.
Home Equity Line of Credit (HELOC)
If you have never seen a home equity line of credit (HELOC) suggested for financing a boat, you are not alone. This option is commonly left out of financing tips because it comes with big risks. If you default on a HELOC, you are putting the security of your house on the line. However, we want readers to be aware of all options and trust that you can make the choice that suits your situation best.
If you decide to look into a home equity line of credit for financing, be aware of the terms of your loan. Check to make sure that your lender approves this type of purchase. Some HELOCs are restricted to home improvement projects or other purchases that would increase the equity of the home. However, some have no restrictions at all, once approved the money is yours to use as you see fit.
When to use a home equity line:
If you are already approved for a HELOC
If you have already taken out the line of credit for a different purchase but have additional funds for the boat.
If you are interested in securing the line of credit for a large purchase in the future. The boat could be a good first purchase especially if it not too expensive.
Advantages of home equity loans:
You may already have one.
You can have additional credit capacity beyond what you will need for a boat.
You can use a line of credit for financing other things outside of the boat
They typically come with lower rates than other forms of financing.
Disadvantages of home equity loans:
Usually you will have a variable interest rate- this makes it hard to know what your payment will be each month.
You have are placing your home at risk if you default on the line of credit.
Like all credit based financing, it can affect your credit score if you are unable to make payments.
Dealer or Retailer Financing
If you are browsing the showroom floor at a boat retailer or dealer, you may decide right then that this seems like the best place to finance a boat. Luckily, many retailers/dealers offer onsite financing, such as Yamaha boat finance. However, financing options can be limited to specific boats models or other promotions that the retailer is running. One common promotion example is a 0% annualized (APR) interest rate. This obviously sounds like a great deal, but the reduced interest usually only lasts for 3-6 months. After it expires, the interest rate can just to 15% and sometimes even to 30%.
You may even be eligible for a credit card that would accompany the dealer financing. The card will typically carry the same reduced interest rate and you will get discounts on fuel and other boat related purchases. However, just like the loan, the reduced interest rate will expire and if the balance is not resolved then the amount you owe will rise significantly. To sum it up:
When to use dealer financing:
You are offered special promotion financing such as a discounted price or 0% interest rate for a period of time.
You want to receive financing approval quickly while shopping
You are confident that you will be able to make payments and are not concerned with the possibility of having the boat repossessed if you default.
You are unable to secure other forms of financing
Advantages of dealer financing:
It is convenient and processed onsite with a dealer
Because the dealer is motivated to sell the boat, they may offer promotions such as 0% APR.
Retailers typically work with multiple lenders making it easy to apply and compare options.
Bad credit does not prevent you from being approved since the boat will be used as collateral. This makes dealer financing a fall back option if none of the other financing types work out.
Disadvantages of dealer financing:
You may be restricted to finance boats or models that are chosen by the dealer.
Requires a trade-off of the boat that you want or preferred financing options.
The interest rates are very high, even though they will sometimes start out low with certain promotions.
The required minimum payment each month will not have the boat paid off before the promotional period is over. It will be up to you to calculate how much you would need to pay each month to avoid interest charges.
For buyers with poor credit, the interest rates are insanely high. You should only use this form of funding if you are completely confident that you will be able to make payments.
If you are unable to make payments, your boat will be repossessed.
Funding your boat through the use of a credit card might seem a little strange. There is a reason that it is the last option on our list and only recommended under certain circumstances. Since the typical interest rate ranges from 17%-18% it can be an expensive option. However, if you are able to get a lower interest rate due to your credit history or if you are able to secure a promotional offer such as 0% APR, it can be a viable option.
When to use credit cards:
If you have great credit that allows for a low interest rate (under 9-10%)
If you are able to make large monthly payments and resolve the balance before any promotional interest rates or offers expire.
If you are most concerned about having flexible payment amounts and are open to a higher interest rate.
If you have exhausted all other options and feel confident that you will be able to pay off the credit card before accruing too much interest.
Advantages of credit cards:
The monthly minimum payments are typically low and you are allowed to pay as much as you want over the minimum. This provides flexibility from month to month.
With new credit cards, there are often promotional offers. You could potentially pay off the boat without accruing interest using a 0% APR promotion.
There is a lot of information on the different credit cards that are available. This makes comparing them easier.
You might already be approved for the amount you need if you currently have a credit card, so you would not need to complete a new application.
Can be used for other necessary purchases in the future, like to finance a boat motor, boat gear, or maintenance.
Disadvantages of credit cards:
For most buyers, financing with a credit card will cost a ton more in interest over time. Only those who have really low interest rates will benefit.
Even if you qualify for a low interest rate, they are often promotion and will expire in 6-12 months. After that, the interest rate grows as high as 25%.
The minimum payment required will not make a huge impact on the amount you owe. Even if you make you payment every month, it can take over 5 years to pay off the balance plus all of the added interest.
If you are still scratching your head thinking about, “can you finance a boat”? Tackle it the same way you would a vehicle, ATV, or RV loan. We understand the desire to skip the waiting time and get into the outdoors as soon as possible. Any of the financing options we mentioned can help you do that. However, be responsible in the one that you choose. Do your homework, read the fine print, and go into any negotiations confident that you know what you want. Take advantage of boat finance online resources such as a boat finance calculator to help you estimate your payment and determine your budget. Use caution when you are considering buying a boat on the spot. This is especially true with bad credit boat finance can be trickier. As fun as it is to be impulsive, the financial choices that you make today will stay with you for years to come. You owe it to yourself to understand the financing before committing so that you can make the smartest choice possible. As long as you do that, it will be smooth sailing.