Boat Financing Basics and the Available Loan Options For You

Before, owning a boat seems like a very long shot. Having such an expensive vehicle is not accessible to everyone. But recently, things took a turn, and it has been observed that many interested individuals are now into purchasing private boats. Some use it for leisure activities, while others use boats for business purposes.

Purchasing a boat is a lot different when you purchase a car. They always come with a tag value that they’re expensive, which is likely true in many cases. Hence, boat financing is now offered in many institutions, such as banks, credit unions, and other types of lenders to make buying boats accessible. This way, interested buyers don’t need to pay the entire cost of the vehicle.

But what is boat financing? What does it incur when someone decides to take out a boat loan? We will discuss all pertaining questions that concern boat financing. We will also guide you on what you can do to secure a loan from your chosen lender.

What Is Boat Financing?

Boat financing is somewhat similar to car financing, but it’s heftier when it comes to the payment terms, with the process still being the same. You look for a lender where you can deal with purchasing a boat, get your boat as collateral to the loan, and the lender lends you money, which you’re responsible for paying back over time.

With how typical financing works, boat financing comes with no difference at all. The only thing that differs is the price value. The boat is an expensive vehicle so expect that the monthly repayments are higher than a car loan.

What Credit Score Should I Secure?

Like with any other loans, credit score matters as well with boat loans. Considering that a boat is a luxury vehicle, many credit institutions seek a borrower with a great credit score. A credit score of 500-550 can be considered a good credit score and can receive a loan strapped from 12% to 19% interest rate.

However, some lenders are too tight with their credit score requirements such as they require at least a 650 credit score up to 700. This credit score range is fair or near-prime. With this, the lender is assured that you have a good credit history and can trust that you’re going to pay back the loan amount on time.

But having a good score such as mentioned is somehow difficult for others, especially for the ones that are still trying to build their score. Many lenders, such as bank and credit unions, stressed out that individuals whose credit scores are at low can still apply for boat financing. However, expect that the interest rates are high and loan terms might not always be in your favour. 

So, if you’re highly interested in applying for a boat loan, you better work hard to make up for that credit score first. Build it up as your credit score will be the first thing that impresses your chosen lender.

What Loan Options Can I Choose From?

There is a wide range of loan options you can choose from when you apply for boat financing. Lenders are responsible for explaining the complete details of the loan service they offer. Borrowers have all the rights to ask questions about the loan service presented to them.

Secured Loan 

With a secured loan, you use your boat as the loan collateral. This means that whenever you miss paying the loan amount, the lender has all the right to take away your boat from your possession. Most boat loans are secured loans, and other lenders even require boat insurance, as they want to ensure that if there’s any damage on the boat, they’ll receive payment as the recognized lien holder.

Unsecured Loan

An unsecured loan is still an available option when you take out a boat financing. This is much of a carefree choice as you don’t have your possession used as collateral. But without the backing, rates are high, and payment terms are shorter with an unsecured loan.

Your boat isn’t at risk in any case you default in paying your loan. However, be ready to face the consequences such as damaged credit score and worse, garnishment when the lender decides to take you to court.

Fixed-Rate and Fixed Term Simple Interest Loan

Also, boat financing can make your life easy. You don’t have to go all through the process by yourself as many lending institutions can work them out for you. Even better as they have a financial specialist that can help and guide you through the entire financing process.


This type of loan option is the best-recommended type of loan when you take out a boat financing.

It’s easy to understand as payment terms maintain the same monthly payment during the loan term. In short, you pay the same monthly repayment amount until you cover the entire loan amount.

Refinancing a Loan

Refinancing a loan is a tricky loan option, but if you did your research and studied how to do it right then maybe it fits you.

Refinancing a loan allows you to take advantage of the lower rates once available. However, when you refinance a loan, you’re essentially starting over. So, make sure that the terms of your previous loan are the same when you refinance it. You must be highly detailed-oriented when you opt to choose this type of loan option.

Why Financing Your Boat Makes Sense? 

Just try to think of it, a boat is already a luxury vehicle and you’re not only responsible for carrying the obligation to pay the upfront payments such as the down payment. But you also need to consider the other expenses that you will incur the moment you have the vehicle in possession. You need extra cash to cover maintenance, preliminary repairs that are so common with brand new vehicles, gas, and other expenses that might exist one day.

Having a boat is like wishful thinking for many. Unlike with cars, purchasing a boat can be a long shot, and to be honest, not everyone can afford it. The good thing is that boat financing became accessible for many, and now there’s an increase of interest shown by the public.

Just like with car financing, you need to choose the right dealership, work with the right people, choose the best loan options for you, and agree with the loan terms presented to you. When you’re done with it, you’re now ready to set sail and go on in an adventure or even have it generate sales for you -whichever floats your boat.

Author Bio

Lauren has been writing for various blog sites and is an active contributor to popular business and news sites. She manages her WordPress account, where she publishes her writings covering her recent adventures, personal experiences, and anything non-business related. Lauren is a passionate writer as well as a free-spirited adventurer. She goes on a long drive and visits places along with her puppies. In her downtime, Lauren loves to bake pastries and home-made cakes and is a confessed Harry Potter fan.

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