Best Boat Loans of 2022: How to Finance A Boat


Mortgages and car loans are debt that most borrowers will take on in their lives, as houses and vehicles are commonly owned in modern society. Because boats are a recreational purchase, boat loans often come with stricter credit requirements and should only be taken on by borrowers who have steady, disposable income.

Where to Get the Best Boat Loan

You can apply for a boat loan at your own bank or credit union, as well as other banks or credit unions in your community. You can also look to online lenders, marine finance companies and boat dealers themselves.

When making a big purchase with a decade-plus repayment term, it makes sense to shop around for your boat loan to ensure you get the lowest annual percentage rate (APY) and the best terms. Make sure loans for the type of boat you want to purchase are even offered at a lender before applying, and make note of their requirements around used boats; some lenders will not offer loans for boats that are 20 or 25 years old.

Best Boat Loans of 2022

Lender Starting APR Loan Amounts
Bank of the West 4.24% $10,000 to $2 million
LightStream 4.29% $5,000 to $100,000
Southeast Financial 4.09% $15,000 to $4 million
Trident Funding 3.99% $50,000 to $50 million
USAA 5.80% $5,000 to $100,000
iNet Lending Not disclosed $5,000 to $2 million

Bank of the West (Essex Credit)

Best Overall Boat Loan

Key Features

  • Flexible loan duration
  • Low interest rates
  • Wide loan amounts offered

Bank of the West boat loans are serviced by their Essex Credit Division. From flexible boat loan repayment terms and amounts to the live-aboard program to the transparent rates, Bank of the West leads the market in boat loans for new and used boats. You’ll need strong credit to qualify, but if you do, you can expect transparent practices and a streamlined loan process.

Bank of the West (Essex Credit)

Starting APR

4.24%

Loan amounts

$10,000 to $5 million

Loan terms

4 to 20 years

Credit scores

700+

Fees

Processing fees

More Information About Bank of the West

Bank of the West does a lot of things right. There’s no prepayment penalty and They come to their loan decision in one to two business days. Bank of the West is super flexible on loan amounts, starting at just $10,000 for new and used boats and $25,000 for live-aboard boats. (Not all lenders offer a live-aboard program.)

Bank of the West boat loans run the gamut, from standard and custom power boats and sailboats to wooden boats, houseboats and pontoon boats. We are big fans of their clearly detailed APRs. Rather than just advertise a starting APR, Bank of the West lays out rates by loan amount and loan term. The transparency instills confidence when applying.

LightStream

Best for Same-Day Funding

Key Features

  • Same-day funding
  • Unsecured boat loan
  • Low starting APR

LightStream really shines with their low loan amount ($5,000) and starting APY, but we’re most enamored with the same-day funding. Terms aren’t as flexible as some others, but for an unsecured personal loan, the loan options are still strong. There’s no minimum credit score requirement, but to qualify for boat financing from LightStream, it’s apparent you’ll need strong credit.

LightStream

Starting APR

4.29%

Loan amounts

$5,000 to $100,000

Loan terms

2 to 12 years

Credit scores

No minimum score requirement

Fees

n/a

More Information About LightStream

LightStream boat loans are unsecured loans, so there is no collateral required. There also aren’t any origination fees or prepayment penalties. You can get a loan amount as low as $5,000, but loans do top out at $100,000 (so no superyacht financing here). LightStream could be more transparent about credit scores, and while the starting APR (4.29%) is attractive, that includes an auto pay discount and excellent credit; APRs can climb as high as 20.49% for other borrowers.

Southeast Financial

Best for Bad Credit

Key Features

  • Low starting APR
  • Loans available for bad credit
  • Wide loan amounts offered

While Southeast Financial does not disclose its minimum credit score requirement, they cater to borrowers with bad credit, even those with bankruptcies in their credit history. These borrowers should expect less favorable loan terms, but if you are financially savvy now (i.e., able to afford a boat) and are still plagued by past credit mistakes, Southeast Financial might be the solution.

Southeast Financial

Starting APR

4.09%

Loan amounts

$15,000 to $4 million

Loan Terms

Up to 15 years

Credit Score

No miniumum score requirement

Fees

Not disclosed

More Information about Southeast Financial

Southeast Financial is great for borrowers with bad credit. The lender could offer more transparency around credit requirements, fees and interest rates, but it’s a good lender to turn to when your credit is keeping you from getting approved elsewhere.

You can get a boat loan from Southeast Financial for any kind of watercraft. Their mantra is “if it floats, we finance it.”

Southeast Financial strives for same-day approval on loans (often fewer than 3 hours), but the actual funding can take several business days.

Note: Southeast Financial as a lender is not affiliated with Southeast Financial Credit Union in Tennessee.

Trident Funding

Best for Expensive Boats

Key Features

  • Low starting APR
  • Largest loan amounts offered
  • Physical office locations nationwide

What Trident Funding has going for them is their strong industry reputation and customer satisfaction. While Trident Funding does not publish their fees or credit requirements, it’s clear that you’ll need strong credit to qualify.

Trident Funding

Starting APR

3.99%

Loan amounts

$50,000 to $50 million

Loan terms

Up to 20 years (25 with larger down payment)

Credit score

Not disclosed

Fees

Not disclosed

More Information about Trident Funding

Trident typically requires 10% to 20% for a down payment, and the lowest loan amount they offer is $50,000, which may immediately disqualify them from your consideration, depending on the price of your chosen vessel.

Trident Funding works with more than 40 banks and credit unions to find borrowers the best deal and can typically approve a loan within 48 hours. You cannot, however, get a live-aboard boat loan from Trident Funding.

USAA

Best for Military Community

Key Features

  • Flexible loan duration
  • Personal watercraft financing
  • Small loan amount available

USAA is only available to current and retired military members and their families. If this does not apply to you, you won’t be eligible for a boat loan. But for those who are eligible—especially those who already use USAA for banking and insurance—it can be a great option for a boat loan.

USAA

Starting APR

5.80%

Loan amounts

$5,000 to $100,000

Loan terms

12 to 180 months

Credit score

Not disclosed

Fees

Not disclosed

More Information about USAA

USAA has some of the most flexible terms available:

  • For 12 to 72 months, you’ll need approved credit and to finance at least $5,000.
  • For 84 to 120 months, you’ll need approved credit and to finance at least $10,000.
  • For 180 months, you’ll need approved credit and to finance at least $35,000.

APRs vary based on borrowed amount, credit history and loan term. USAA does not disclose a credit score requirement.

A bright spot of USAA boat loans: You can also get a loan for personal watercraft, like Jet Skis, Sea-Doos or WaveRunners

iNet Lending

Best for No Down Payment

Key Features

  • No down payment needed
  • Bad credit accepted
  • 75% approval rate

iNet Lending lacks transparency in its advertising, which can be off-putting to some borrowers. Spend a little time researching a boat loan, and it won’t be entirely clear what APR you’ll be offered, what credit score you need or what fees you’ll pay at closing. So why include it? The smaller loans don’t require a downpayment and that iNet works with borrowers with challenged credit.

iNet Lending

Starting APR

Not disclosed

Loan amounts

5,000 to $2 million

Loan terms

Up to 20 years

Credit score

Not disclosed

Fees

Not disclosed

More Information About iNet Lending

While it’s not clear to borrowers at the start of the process what even a ballpark APR might be for a boat loan with iNet, some borrowers are drawn to the no-down-payment option for boat loans under $100,000. Though iNet does not publish a minimum credit score requirement, they make it known that they’ll consider borrowers with challenged credit — and approve 75% of applicants.

The process is quick (funding comes in as little as 72 hours), and terms are flexible (up to 20 year). The minimum loan amount is just $5,000 and that’s a plus.

How Boat Loans Work

Most of us can’t afford to dip into our savings to buy a boat, especially more expensive options like houseboats, pontoon boats and yachts. That’s where boat loan lenders come in. But how does a boat loan work? A boat loan is quite similar to a car loan, so if you’ve already financed an automobile, the process should feel familiar.

And just like with cars, you can take out loans for both new and used boats.

Down Payments for Boat Loans

Like with auto loans, you should be prepared to make a down payment (the size of the down payment will depend on the requirements of the online lender and your own credit history; the higher the down payment, the more favorable your monthly payments will be).

You may be able to find an online lender offering boat loans with $0 down, but in general, offering a down payment affords you better monthly payments and sometimes even lower interest rates.

With your down payment at the ready, you can browse for the best boat loans and apply for a set loan amount and repayment term when you’ve found the best lender for you. Interest rates will vary and depend on the strength of your credit history.

Repayment Terms for Boat Loans

As you can see from our list of the best boat loans, repayment terms can vary widely. Most lenders cap typical boat loan terms at 20 years, though Trident Funding is willing to go up to 25 years with a larger down payment. The key here is that these are secured boat loans. A secured boat loan means you have offered collateral (more on that below).

If you get an unsecured boat loan (basically, a personal loan for a boat), you won’t need to put up any collateral, but repayment terms will be much shorter. You can expect repayment terms akin to the typical installment loan. (Take a look at our roundup of the best personal loans here.)

Annual Percentage Rate for Boat Loans

Like with auto loans, you will want to shop around for the lowest boat loan interest rates. The best boat loans on our list start at APRs hovering around 4%, but those are typically offered for the strongest credit scores and shorter loan repayment terms. The longer you stretch your loan out, the more you can expect to pay in interest.For example, Bank of the West boat loans start at 4.24% for $100,000+ over four years, but by seven years, the APR jumps to 4.99%. At 20 years, that same loan nets a 5.49% APR.

Types of Boat Loans

There are three types of boat loans: succeed, unsecured and home equity. A secured loan is the gold standard for a boat loan, but it’s not your only option. Let’s explore the different options to get a boat loan:

Secured Boat Loans

Secured boat loans mean that you offer up collateral. If you default on your boat loan, the lender can repossess that collateral as payment. Just like with a car loan, where the car you’re financing serves as the collateral, the boat you’re financing serves as the collateral for your structured boat loan.

So default on your loan — and that boat will sail off into the sunset without you. (And leave you marooned with bad credit.)

Unsecured Boat Loans

You can apply for an unsecured personal loan with no collateral. This works just like any other personal loan, but instead of using it for a home renovation, debt consolidation or a medical emergency, you’d be funding your boat purchase with it.

We generally recommend unsecured loans only for necessities, as interest rates are high. (Because there is no collateral, lenders consider personal loans to be riskier). But if you do not qualify for a secured boat loan and think you can manage the increased cost of an unsecured loan, unsecured boat loans certainly give you more options.

Home Equity Loans For Boats

A home equity loan is a second mortgage. These loans allow you to borrow against the equity you have in your home and are typically fixed-rate loans (though you can also apply for a home equity line of credit, or HELOC). Loan amounts are calculated based on the current market value of your home less the remaining mortgage balance.

Home equity loans are typically recommended for investments that will increase the value of your home, like an addition, a kitchen renovation or a major landscaping project. Because these loans are risky, they are not the best choice for financing a boat.

How to Apply for a Boat Loan

Finding the perfect boat is only half of the process (and, let’s be honest, it’s the more exciting part). Now that you’ve found the winner, you’ve got to go through the hoops of finding a lender and getting approved for the loan. Here’s how:

1. Shop Around for Boat Loans

If you’re buying from a boat dealership, they will likely show you some options for boat loans. But you don’t have to sign on the dotted line there. You can try to find a better offer from a bank or credit union or an online boat loan provider from our list.

2. Get Pre-Approved

Don’t apply for multiple boat loans, as this can have a negative effect on your credit score. But if any boat loan lenders offer pre-approval without hard credit inquiries, it can’t hurt to see what rates you can get.

3. Have All Your Paperwork Ready

Getting a boat loan requires a fair amount of paperwork, especially when the boat is more expensive than a new car. Things you might need for the loan application includes information about your assets and debt, two years of verifiable income history and your Social Security Number and/or Individual Taxpayer Identification Number.

How Boat Loans Affect Your Credit Score

Boat loans can have a positive impact on credit scores. As long as you make your payments on time and in full, you can expect your score to increase. Creditors like to see that borrowers can consistently make on-time payments. If you default on your boat loan, that will have a more negative impact on your score.

However, credit scores can be affected both positively and negatively by a boat loan. Applying for any kind of loan requires the lender to do a hard inquiry into your credit history. This does have a negative impact on your score, but the effect is minimal, and the inquiry falls off your report rather quickly. Just don’t apply for multiple boat loans, as this will result in multiple hard inquiries and a greater impact to your score.

Late payments can bring credit scores down. If you are hoping to improve your score with a boat loan, it is important that you make all payments on time. If possible, set up automatic payments from a bank account that you keep well funded, that way you don’t even have to worry about making monthly payments on time.

The True Cost of Owning a Boat

When deciding if you can afford a boat, there are more factors to consider than the purchase price. Here are the expenses you should consider:

Monthly Payments

You will be on the hook for monthly payments for the whole duration of the loan. This is potentially a 20-year commitment.

Down Payment

Lenders vary in their requirements, but it’s not uncommon to put 10% to 20% down. For a $100,000 boat, that’s a down payment of $10,000 to $20,000.

Fees

Many lenders charge loan origination fees or closing costs. Factor these into your purchase.

In addition, you will need to consider docking fees and land storage fees if you aren’t keeping the boat in your driveway.

Registration and Taxes

Just like with a vehicle, you have to pay an annual fee to register your boat. You’ll also pay taxes on it.

Maintenance and Repairs

Also like vehicles, boats require regular maintenance and upkeep. Factor in the cost of routine maintenance for the type of boat you are purchasing, plus the cost of unexpected, larger maintenance needs from time to time. Winterizing your boat also comes at an expense.

Towing

Will you need to purchase any equipment for your truck or SUV to tow your boat? Or, even more important, will you need to invest in a new vehicle to be able to tow the boat at all?

Fuel

Gas prices continue to rise. Some boats take petrol while others use diesel. Unless you’re purchasing a kayak or canoe (or a truly motorless sailboat), you’ll need to plan on fuel prices.

Boat Insurance and License

You might feel free with the wind whipping in your hair as you hit that clear lake water, but you’re never truly free. Owning a boat means you need to carry boat insurance, and you’ll also need to pay for a boating license.

New Boats vs. Used Boats

Deciding between a new or used boat for your watercraft? There are pros and cons to each and various implications for your boat loan.

Pros and Cons of New Boats


Pros

  • New boats are likely to have the latest technology and design.
  • You aren’t limited to the pre-owned market. You can buy the exact boat you want — with the customizations that serve your needs.
  • New boats are backed by a manufacturer’s warranty.
  • New boats are less likely to encounter problems within the first few years of service.


Cons

  • New boats are more expensive than used boats — both to buy and insure.
  • A new boat depreciates 5% to 10% in the first year.
  • It can be more challenging to get a loan for a new boat, depending on your credit score.
  • Not all new boats are winners. When you buy used, you can read customer and expert reviews of past models.

Pros and Cons of Used Boats


Pros

  • Used boats are cheaper to buy than new.
  • Used boats are cheaper to insure than new.
  • There is potentially a higher resale value because the depreciation is lower than a new boat.


Cons

  • Used boats will require more maintenance and upkeep right out of the gate.
  • You’ll have to pay for a marine survey if you require a loan.
  • You won’t always know what you’re getting.

Frequently Asked Questions (FAQs) About Boat Loans

Still have questions about boat loans? We’ve taken the most common questions readers are asking and provided some quick answers.

What Type of Loan is Best for a Boat?

Because boat loans are for recreational purposes — and not an investment, debt consolidation or emergency expense — a traditional structured loan, where the boat serves as collateral is the best.

Can You Get a 10-year Loan on a Boat?

Yes. While boat loans typically max out at 20 years, you can likely find multiple lenders who will give you a 10-year loan.

Can I Get Same-Day Boat Loan Approval and Funding?

Most lenders require multiple days for loan approval and funding, but some boat loan providers promise (or strive toward) same-day credit approval and funding.

Can I Get a Boat Loan with Bad Credit?

While many lenders require strong credit scores, some offer boat loans to borrowers with challenged credit. Just don’t expect to qualify for the competitive rates advertised on their site.

Do I Have to Finance my Boat Through the Dealer?

Dealers typically offer boat financing, but they’re not your only option. Review loan options from online lenders and your bank or credit union before making a final decision.

Timothy Moore covers banking and investing for The Penny Hoarder from his home base in Cincinnati. He has worked in editing and graphic design for a marketing agency, a global research firm and a major print publication. He covers a variety of other topics, including insurance, taxes, retirement and budgeting and has worked in the field since 2012.




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