Before financing a boat, you’ll need to do some legwork to find the loan that best fits your budget and financial position.
Like cars, the value of a new boat depreciates the minute it leaves the showroom, as much as 15% in the first year. Buying a used boat can cut down on that drop in value and save you money.
As with any new loan, you’ll need to determine your budget and make sure your credit score is in tip-top shape.
You can find used boat loans with banks, credit unions, online lenders and through your boat dealer. If a boat loan isn’t the right choice for your financial situation, you can also pay for a boat using a personal loan, home equity loan or home equity line of credit.
The average boat costs between $60,000 to $75,000, but the price really depends on the type of boat you buy. For example, a large, luxury yacht can cost more than $3 million, while a base-model outboard speed boat may only cost about $20,000. If you want something basic for fishing, the average jon boat is $5,400.
Borrowers with strong credit may find boat loan rates as low as 5.75% APR, but many lenders’ rates start around 7%.
Yes — you can lease a boat, but leasing may be more expensive than boat ownership. Renting a boat for a short period of time may be the most cost-effective option.
You may be able to get a mortgage loan on a boat if it qualifies as your main home or second home. The IRS defines a home as a property with sleeping, cooking and toilet facilities.
Yes, you could qualify for a boat loan with a 600 FICO Score. There are boat loans for bad credit available, but you’ll save money by improving your credit before applying. To qualify for the lowest rates, you usually need a credit score of 700 or above.
Boat loan terms can be as long as 20 years, and some lenders allow you to pay off your loan early without charging a prepayment penalty. If you want to buy an inexpensive boat for a shorter term, consider using a small personal loan that can be repaid over six months or more.