How to Get a Boat Loan in 2022


Dreaming of long days spent fishing, sunbathing, and generally enjoying the magic of the wide-open water?

people jumping off a boat

Boat ownership could be the key to unlocking your seafaring dreams. But for most of us, slapping down tens, or possibly hundreds of thousands of dollars on the vessel of our dreams is simply not in the cards.

Fortunately, financing a boat can help you get your hands on the boat of your dreams without having to wait until you can afford it outright. But how do you get a boat loan, and who offers them? What kind of boat loan requirements and credit approval can you expect? And what do you do if you don’t have excellent credit?

Read on to learn everything you need to know to get sailing as soon as possible—without spending a fortune.

Different Types of Boat Loans

First things first: what kind of loan can you use to finance a new or used boat in the first place? Though auto loans are available far and wide, not quite as many lenders advertise boat loans.

However, there are several options available to those looking to finance their boat purchase. Here are some of the most common.

Secured Loans

A secured loan is similar to the one you might have on your car. You may be available to get one through the boat dealership. Like a traditional auto loan (and as the name suggests), the boat acts as collateral with this loan. So, if you default on your payments, the lender has the right to repossess it.

Home Equity Loans

A home equity loan is a loan that uses your home’s equity to take out a loan or line of credit. For example, you can use it for buying a boat, and it may be an excellent option, given that these loans are often tax-deductible. Home equity loans also typically offer a lower interest rate than credit cards and other types of unsecured debt.

Unsecured Loans

You can take out an unsecured personal loan for pretty much any purpose, given you have a high enough credit score. However, because these loans don’t have any collateral involved, they generally come at higher interest rates than other options.

Credit Cards

A credit card with a high enough limit to allow you to make a substantial down payment and regular monthly payments is another option, but we don’t recommend this approach. Revolving credit card debt comes at a high cost, with interest rates frequently reaching over 20% APR. That means you’ll be paying a lot more for your boat than the figure you see on the price tag!

Where to Get a Boat Loan

Now that we’ve gone over which types of loans you can use for purchasing a boat, let’s talk about where to get a boat loan.

  • Boat dealers may directly offer boat loans, just as you’d expect to find in-house auto loans available at certain car dealerships. These are generally collateral loans and may come with additional incentives, such as manufacturer deals and warranties. For example, Yamaha boat financing currently offers $0 down and 0 payments for 90 days. The APR is 2.99%. It’s wise to shop around and compare boat financing rates before you make a final decision.
  • Banks, credit unions, and other financial institutions may offer boat-specific loans, personal (unsecured) loans, and lines of home equity credit. A bank or credit union may have a better interest rate than the ones you’d find at the dealership. This could save you money even after you factor in those special “deals” the boat seller has on offer.
  • Peer-to-peer lenders, like Prosper and Lending Club, and other online lenders can help you secure a personal loan directly from a private individual. This might help you find a better deal than you would at a traditional financial institution.

Credit Requirements for a Boat Loan

As with any financing, when you’re shopping for boat loans, you should know that your credit scores can have a serious impact on your overall loan terms. It will also impact how much you’ll end up paying for your new boat altogether.

While many marine lenders will extend boat loans to those with poor or nonexistent credit history, these loans may come with high interest rates. That will likely further complicate your financial situation.

Have a Down Payment

You should also know that just about any boat loan will require a substantial down payment. So, you’ll need to come up with about 10-25% of the boat’s total cost out of pocket to initiate the sale.

You don’t want to drain your entire savings account on what ultimately amounts to a frivolous purchase, no matter how tempting it may be. It’s smart to look closely at your budget to determine how much boat you can afford and save up your down payment well ahead of time.

Make Sure Your Credit Is in Good Shape

If you’re already in debt or struggling with a lower credit score, your best option might be to repair your credit before submitting a loan application. Fortunately, we’ve got tons of tips and tricks to help you get out of debt as quickly as possible and improve your credit score. These tips can help you get a boat loan with a much better loan term. Here are a few simple steps to take to get you started on the road to better credit.

  • Pay each of your credit accounts on time, and contribute at least the minimum monthly payment amount. If you can afford to pay more than the minimum, always pay toward the principal loan amount if your lender gives you the option. This will decrease the total amount of interest you pay over the course of the boat loan.
  • Avoid closing any existing lines of credit, but don’t try to open a host of new ones at the same time, either. The total length of your credit history plays an important part in how FICO calculates your credit scores. Keeping old accounts open can be helpful even if you’re no longer using them.
  • Having a diversity of credit types can also be a helpful factor. But at the same time, there’s no need to open several new accounts at once. This can create multiple hard credit inquiries that can read as a red flag to bureaus. So, don’t go crazy trying to establish a bunch of new accounts at once.
  • Pay off your debts before taking out any new loans. Regardless of your credit score, revolving debt is costly and acts as a weighty financial anchor. You’ll enjoy your new purchase much more once you’re able to afford it without worrying about how to make ends meet!

Final Thoughts

Getting a boat loan is similar to financing a car (or any other object or project). It can be an effective way to get a boat today, even if you don’t have the money to pay for it in full immediately. However, shopping around to secure the best rates and repayment terms is an important step toward ensuring that your new toy doesn’t put you into a financial tailspin.

For more information on shopping for personal loans, check out our series of loan reviews, including the best personal online loans and the best personal loans for bad credit.

Bon voyage!

Jamie Cattanach
Meet the author

Jamie Cattanach is a freelance writer whose work has been featured at Fodor's, Yahoo, SELF, The Motley Fool, Roads & Kingdoms, and other outlets.