Save with smaller loans
The less you borrow, the cheaper your boat loan will be. Here are two common strategies for cutting down on the upfront cost of your boat loan.
- Strategy: Sarah saves up an extra $10,000 for her down payment.
- New cost: $794.60 monthly payment and $89,028.88 in total interest.
- Savings: $147.15 per month and $16,486.83 in total interest.
- Time invested: Months to years.
- Strategy: Sarah buys a used model for $60,000.
- New cost: $647.46 monthly payment and $72,542.05 in total interest.
- Savings: $294.29 per month and $32,973.66 in total interest.
- Time invested: A few days of research and due diligence.
Save with the right loan term
Shorter loan terms are a smart financial move if you can handle higher monthly payments. On the other hand, stretching out your boat loan means lower monthly payments — but they come at the cost of a more expensive loan in the long run.
- Strategy: Sarah shortens her loan term to 10 years to pay less interest overall.
- New cost: $1,073.68 monthly payment and $64,841.59 in total interest.
- Savings: $40,674.12 in total interest, but Sarah will pay $131.93 more per month. This is a smart financial move, but only if Sarah can handle the higher monthly payments.
- Time invested: None.
- Strategy: Sarah stretches out the loan term to 20 years to get lower monthly payments.
- New cost: $892.32 monthly payment and $150,158.00 in total interest.
- Savings: $49.43 per month, but it will add $44,642.29 in total interest. This is a bad financial move for Sarah.
- Time invested: None.
Save with lower rates
Your rates can make or break the bank when it comes to your boat loan. Here’s how to get lower rates so you can set sail without being anchored down by hefty monthly payments.
- Strategy: Sarah improves her credit score from “fair” to “very good” and prequalifies for a boat loan with an interest rate of 8.30%.
- New cost: $622.75 monthly payment and $48,095.52 in total interest.
- Savings: $319 per month and $57,420.19 in total interest.
- Time invested: Months to years.
- Strategy: Sarah uses a marketplace like LendingTree to shop for the best rates. She compares offers from different boat loan companies until she finds the cheapest one, and she snags a lower rate of 14.04%.
- New cost: $854.04 monthly payment and $89,726.32 in total interest.
- Savings: $87.71 per month and $15,789.39 in total interest.
- Time invested: A few minutes.