To get a boat loan, you should check your credit and shop around for a boat and boat loan that will fit within your budget. Lenders consider boats to be luxuries, not necessities, so unless your credit score is relatively high and your debt-to-income ratio relatively low, you may find loan approval difficult or face high rates.
Borrowers with strong credit can expect boat loan interest rates in the 4% to 5% APR range for new and used boats.
Boat financing makes sense if you qualify for a fair rate at terms you prefer. If your credit is poor, you could: Postpone your boat purchase until you’ve had time to improve your credit; buy now and refinance your boat loan once you’ve improved your credit; or pay cash.
Used boats could offer huge savings over new ones. Still, prices can vary considerably, even for similar boat types, model years and history. Use an industry guide like J.D. Power to check a boat’s value against the sales price to be sure you’re getting a good deal. Check out our guide on how to get a used boat loan.
You could lease a boat, but beware that boat leasing may be more expensive than boat purchasing. Renting a boat for a shorter period of time may be more cost-effective. Here’s more on boat leasing and alternatives.
You may be able to get a mortgage on a boat if it qualifies as your main home or second home. The IRS defines a home as a property with sleeping, cooking and toilet facilities.
Yes, you could qualify for a boat loan with a 600 FICO Score. As we mentioned earlier, there are bad credit boat loans available, but it may pay off to improve your credit first. To get your best boat loan rates, you usually need a credit score of 720 or above.
Boat loan terms can stretch for as long as 20 years, due to loan amounts that can reach into the millions. But just because you can finance a boat for that long doesn’t mean you should. It’s possible to finance even large amounts for relatively short terms — that said, it might be difficult to find terms for less than two years, even for inexpensive boats. Here’s more on how long you can finance a boat.
Yacht financing is available. However, like any type of financing, borrowers have to qualify for the loan based on their ability to repay it. The average cost of a 100-foot yacht is around $1 million.
Use a boat payment calculator to see what your monthly payments might look like and make sure you’re aiming for a payment that is comfortable for you. Keep in mind that the payments are only part of the ownership costs — you may need to pay for docking, storage, maintenance, fuel, licensing, boating lessons, a towing vehicle, a towing trailer and safety equipment.
Boat loan terms can be as short as two years or as long as 20 years. If you want to buy an inexpensive boat for a shorter term, it’s possible to use a small personal loan that can be repaid over six months or more.
A secured or unsecured personal loan could be a great way to buy a new or used boat, but it’s not the only way. You could instead use a home equity loan or line of credit (HELOC), both of which might have lower rates, but carry the risk of losing your home if you can’t repay the loan.