How to Finance a Boat

Boat financing works similarly to financing a car or other major purchase. You borrow money upfront to purchase the boat and then pay it back with interest.

Here are the different options:

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1. Boat Loans

One of the most straightforward options is getting a dedicated boat loan from a bank, credit union or online lender. These secured loans use the boat itself as collateral, which allows you to qualify for lower interest rates compared to unsecured options.

As part of the application process, you must provide details on the boat, your finances, employment, and creditworthiness. Many lenders also require at least a 10-20% down payment.

2. Personal Loans 

Personal loans can be used for a variety of purposes, including financing a boat purchase. These unsecured loans don’t require collateral but have higher interest rates as a result. This is in contrast to an auto loan or a boat loan, which is secured by the boat itself. 

The advantage of a personal loan is that you can use the funds for any purpose, including a boat purchase. You could also use part of the loan for a boat renovation or another unrelated expense. The disadvantage of personal loans is higher APRs compared to secured boat loans. To get started, you can learn how to get a personal loan or compare the best personal loan rates here. 

3. Home Equity Loans

If you’re a homeowner, taking out a home equity loan or home equity line of credit (HELOC) can be an option for financing a boat. You borrow against the equity you’ve built up in your home, using it as collateral. 

With home equity financing, your home itself is used as collateral for the loan. This makes it a secured loan option, similar to a mortgage, allowing for the possibility much lower interest rates. Typical APRs on home equity products range from 3-8%.

However, your home is tied to the loan, so defaulting risks foreclosure. These loans may also have high upfront fees. 

4. Marine Financing

Some boat dealers and manufacturers offer their own financing programs called marine financing. It’s the same idea as an auto loan, just for boats.

The advantage of marine loans is convenience. Suppose you’re buying from that particular dealer. You can often get promotional rates or specialty loan terms. However, you’ll have fewer options compared to securing financing elsewhere. Lender credit score criteria vary, but usually, a credit score of 700 or higher increases your chances of loan approval.  

5. Credit Cards

Those looking to finance a smaller boat under $10,000 or so could use 0% introductory APR credit cards to pay for the purchase interest-free during the promotional period.

You should only use a credit card if you can pay off the boat before the intro APR expires and transitions to a higher ongoing APR. Otherwise, the interest can make this an extremely costly way to finance a boat.

The advantage of buying a boat with a credit card is that it’s convenient. You don’t need to apply for a loan, and you can get 0% APR financing for a set period. However, without a plan to pay off the charge before the high APR takes effect, you could risk paying much more in interest for the loan. 

6. Save Up and Pay in Cash

The most straightforward financing method is saving up cash and paying for the boat upfront. This avoids interest charges or loan payments. It also ensures you’re not taking on additional debt for the boat purchase. A high-yield savings account can be a convenient place to stash cash while saving for a boat. 

MoneyLion offers a convenient marketplace to compare high-yield savings accounts from our trusted partners that could help grow your money.

Make Boat Ownership a Reality

Owning a boat opens up a new world of fun out on the water. While they can come with a hefty price tag, financing can make that purchase much more achievable. From secured loans to paying cash, there are plenty of boat financing options to fit different budgets and needs. Do your research, explore all the financing paths, and plan to turn your boating dreams into a reality.

FAQs

How long should you finance a boat?

Some experts recommend financing a boat for no longer than 10 to 15 years for a new boat or 5 to 7 years for a used boat. If you can choose a shorter loan term, it can help minimize interest costs.

How old can a boat be to finance?

Boat age limits vary by lender. Many lenders have limits on the age of used boats they’ll finance, typically around 10 to 15 years old at most when you finish paying it off. Lenders usually won’t finance a boat older than 20 years. 

How hard is it to get boat financing?

Getting approved for a boat loan requires good credit, typically over 700. However, some loan options, like personal or home equity loans, may have lower credit requirements.

How to sell a boat that is financed?

If you sell a financed boat, you’ll need to pay off any remaining loan balance upon selling the boat. Some lenders may allow you to transfer the loan to the new buyer.

What credit score is needed to buy a boat?

Credit score requirements to buy a boat vary by lender and the financing option you choose. For the best rates on secured boat loans, you’ll want credit scores of 700+. Some lenders may approve borrowers with 650+ scores at higher interest rates.