The 5 best boat loans of 2021
What are the typical conditions for a boat loan?
More often than not, you can expect the terms of a boat loan to include a repayment period of 15 to 20 years. Down payments can range from 10% to 30%, depending on the amount borrowed, and the boat is usually taken as collateral for the loan. Boat loans often start from $ 5,000, with some lenders offering financing up to $ 4 million.
Keep in mind that the terms for an average boat loan vary depending on a number of factors. These include whether the boat is new, used or in the process of being refinanced; how old is the boat; how much you plan to borrow; and whether the boat is intended for full-time or part-time use.
Can you get a boat loan on an old boat?
Getting approved for a boat loan on an older craft can be tricky, but it is certainly possible. Some lenders (including one from our list above) will offer used and refi loans on boats as old as 19 years old. If the boat has a high value, you can even find lenders willing to finance a boat that is 25 or 30 years old.
Expect older boat loan interest rates to be higher than newer boats, and you may even experience higher down payment requirements.
If you can’t find a lender willing to finance the purchase of your old boat, consider taking out a personal loan instead.
What is a good interest rate on a used boat loan?
While used boat loans can sometimes have higher rates than those offered for new boats, this is not always the case. In fact, many lenders offer the same competitive rates whether you buy used, new, or even refinanced. For this reason, creditworthy applicants can expect to find used boat loans with rates in the range of 4% to 5% APR.
For example, Bank of the West (Essex Credit) – our top overall pick – offers interest rates starting at 3.59% APR for boats over $ 50,000, whether the boat is new or used. .
Is financing a boat a bad idea?
As a general rule, you need to make sure that any purchase you finance will be paid off faster than it depreciates. If the value of the purchase declines at a faster rate than your loan balance, you run the risk of “messing up” the loan or facing negative equity.
If we talk about it most often about new cars, it is also a concern for boats, especially since boats depreciate quickly.
Negative equity can be a serious concern with a high value investment such as a boat. If the boat were to be stolen, totaled, etc., you would be responsible for the difference between the remaining loan balance and the valuation / reimbursement by the insurance company. Negative equity can also come back and bite you if you ever want to trade in the boat or sell it, as you will end up having to pay your lender back in order to complete the transaction.
Finally, it’s important to recognize that financing a purchase will cost you more than the price of the sticker, no matter how competitive the interest rate you get. Between loan processing fees and finance charges, the additional expenses can be significant.
While financing a boat in itself isn’t a bad idea, it’s important to strike a balance between the purchase price, the down payment amount, and the loan repayment terms. This will help maintain a healthy loan-to-value (LTV) ratio and ensure that you don’t pay much more for your purchase over time than if you paid in cash.
How we choose the best boat loans
In order to determine the best boat credit providers, we compared a number of key factors. We wanted lenders who could make a loan in most states. Other factors taken into account include the types of boats that these lenders are willing to finance and the size of loans available. We also took into account each lender’s availability and interest rates, how quickly loans are funded, and whether or not collateral is required. Finally, we looked at what is required of borrowers, such as a credit score threshold and minimum down payment.