Used Boat Loans: Rates, Tips and How To Find One
- You will usually have to pay a higher interest rate on a used boat loan than on a new boat loan.
- Good credit and a sizable down payment, as with any loan, can help you qualify and get a lower interest rate.
- Most used boat loans have terms of 10 to 20 years.
For some, owning a boat is the epitome of the American dream. But if you’re not in a position to buy a used boat outright, you’ll need a loan to finance it. To get a loan for a used boat, check your credit, review your budget and prequalify with multiple lenders.
Whether you prefer the tranquility of a lazy float or the adventure of wakeboarding, here’s how to cruise into boat ownership.
How to get a loan for a used boat
If you’ve ever gotten an auto loan, the process is quite similar to getting a boat loan. A lender will want to make sure that you have a track record of paying back money and that you can afford to make the required payments. Here are the basic steps in the process:
- Check your credit: If you’re applying for any type of loan, including a used boat loan, you’ll want your credit in tip-top condition. Not only will this help you get approved for the loan, but it will also snag you a lower interest rate. Although you could potentially get approved for a bad credit boat loan with a credit score of at least 550, having a good or excellent credit score of 670 or higher will qualify you for the best rates.
- Decide on a budget: If you borrow more than you can truly afford, you could fall behind on payments and default on the loan, potentially losing your boat. Avoid this scenario altogether by making a realistic budget. Don’t forget to include all of the extra and hidden costs that come with owning a boat, as described below.
- Prequalify for multiple offers: Prequalifying for a loan involves lenders running a soft credit inquiry to see if you meet their initial standards. This will not affect your credit score and is a good way to see if you can qualify for a used boat loan. If you prequalify for multiple offers, you can compare them to get the best rate.
- Sign your loan offer: Once you’ve decided on the best loan offer, sign your loan contract where required — but not before reading and understanding all of its ramifications. For example, there might be clauses in your loan about prepayment penalties, late fees or other factors that could catch you off-guard and cost money in the future.
During the loan process, you’ll have to provide certain personal and financial information to your lender. Typically, you should expect to supply the following basic details:
- The make, model and year of the boat
- The total cost of the purchase, including upgrades, accessories and equipment
- Proof of your income, debt and employment situation
- If requested, a marine survey
To find a boat loan, you can use reputable online sources like LendingTree to search for the best offers from a wide variety of lenders.
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Used boat loan calculator: Find your estimated monthly payment
Used boat loan rates
Although some lenders don’t discriminate between used and new boat loans, many charge higher interest rates for secondhand boats. Each lender also sets its own interest rate for boat loans, and these can vary from bank to bank.
This is why it pays to comparison shop when you’re looking for a used boat loan. Here’s a look at the rates that are currently available on boat loans from several lenders.
| New boat loan APRs | Used boat loan APRs | |
|---|---|---|
| Affinity Plus Federal Credit Union | 5.49% | 6.49% |
| Digital Federal Credit Union | 9.99% | 9.99% |
| KeyBank | 8.00% | 8.00% |
| Navy Federal Credit Union | 8.45% | 8.95% |
| SouthState Bank | 7.79% | 8.05% |
Practical tips for used boat borrowers
To make the entire loan process smoother — and to ensure that you understand how much your used boat loan will cost you — take the following steps before applying.
Budget for hidden costs
The good news when you’re financing a boat is that you don’t have to put up cash for the entire amount. However, you should anticipate making a down payment of at least 10% to 20% of the sale price.
Beyond the actual cost of the boat itself, however, there are numerous fees and costs that you may have to cover, either out of pocket, as part of your total loan balance, or as ongoing expenses. These commonly include some or all of the following:
- Sales taxes
- Registration fees
- Dealer fees
- Lender fees
- Insurance
- Fuel
- Marina, storage and/or slip fees
- Transportation costs
- Additional equipment and safety costs
These costs can add thousands of dollars to the actual cost of your used boat. State use taxes alone can add 8% or even more to the cost of your boat, depending on your state of residence.
Hire a marine surveyor
A marine surveyor is a specialist who performs vital services when it comes to transferring the ownership of a boat. These services include verifying the boat’s registration number, assessing its condition and providing an estimated value.
In many cases, a lender will require this step before it will evaluate a loan. But even if it doesn’t, hiring a marine surveyor is a good standard practice to confirm that you’re buying the boat you want, that it’s in seaworthy condition and that it’s being sold at fair market value.
Two good places to look for a marine surveyor in your area include the Society of Accredited Marine Surveyors and the National Association of Marine Surveyors.
Research eligibility requirements
Before you apply for a boat loan, be sure that your financials and credit history are sufficient to qualify. Although many banks don’t publish their exact lending criteria, you can find out what information they need by looking at their loan application.
Beyond that, expect that any potential lender will pull your credit report and investigate your capacity to pay back the loan. This will include a review or some or all of the following:
- Debt-to-income ratio
- Credit score
- Credit history
- Net worth
- Status of home ownership
- Job stability and history
Your lender will also do some research on the boat you intend to purchase, including its age, condition and value.
According to the latest data from LendingTree, Floridians were the most interested in buying boats. Across the nation, 1.9% of financing queries on LendingTree were for boat loans, but that rate doubled in Florida, to 3.8% of inquiries.
The rate in Alaska and South Carolina, the second- and third-most popular states for boat loan inquiries, was 3.5%. Overall, seven of the top 10 states for boat loan inquiries were in the South.
Alternatives to used boat loans
If you’re looking for ways to finance your boat other than with a traditional, collateralized loan, here are some options to consider.
Personal loan
A personal loan can give you a bit of flexibility when it comes to financing your used boat purchase. Personal loans can be used for any purpose, from buying a used boat to paying off personal debt.
As personal loans are unsecured, if you fail to make payments, the lender can’t repossess your boat. While a lender might not be able to seize your boat, debt collectors can still sue you for nonpayment and get the go-ahead from a court to garnish your wages or put a lien on your assets. Your credit score will also suffer as a result of missed payments.
Another downside with a personal loan is that, since it’s unsecured, it will typically come with a higher interest rate. If you have top-tier credit, you might be able to get a personal loan rate in the 7% to 9% range, but with bad credit, that rate could skyrocket as high as 36%.
Home equity loan or HELOC
If you have equity in your home, you may be able to borrow against it and secure the money you need to buy your used boat. In many cases, you can snag an interest rate lower than with a used boat loan.
- A home equity loan is the more traditional option, with a structure familiar to most borrowers. If you take out a home equity loan, you receive a lump sum of cash and then make principal and interest payments for a fixed term.
- A home equity line of credit, on the other hand, is more like a credit card that’s backed by the equity in your home. With a HELOC, you’re given a credit limit that you can access or pay back whenever you want. You’re only charged interest for the time that you carry an outstanding balance, during which you’re usually only responsible for interest payments. After a set draw period, typically around 10 years, you begin making principal and interest payments as with a traditional loan.
The downsides of both home equity loans and HELOCs is that you’re putting your home at risk if you can’t make payments, as opposed to simply losing your boat.
HELOCs may also charge variable interest rates that could spike your payments, and many charge additional monthly fees or closing costs as well.
Frequently asked questions
You might find it more difficult to get a used boat loan than a new boat loan, but that doesn’t mean the process is difficult. If you have good credit, enough income to manage the payments, and get all your paperwork in order, the process can be relatively smooth.
Interest rates on used boat loans fluctuate, so it’s a good idea to check rates at a site like Lending Tree regularly. Currently, a good interest rate for a used boat loan would be less than 8%.
Yes, you can get a boat loan on an old boat. However, most lenders have an age limit of up to 20 years. Beyond that, you’d likely have to get an endorsement from a marine surveyor saying that a boat is in tip-top condition and capable of safely operating for additional years.
Boat loan terms are usually 10 to 20 years.
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