Boat Loan Financing: What You Need to Know
Boat loans are specialized secured loans where the watercraft serves as collateral. Unlike auto loans, boat financing has unique characteristics: longer loan terms (up to 20 years for larger vessels), higher minimum loan amounts, and stricter collateral requirements. Boats over $25,000 typically require marine surveys and documentation.
Interest rates on boat loans generally run 1-2 percentage points higher than auto loans due to faster depreciation and higher default risk. New boats receive better rates than used vessels, similar to auto financing. Loan terms vary by purchase price: boats under $25,000 typically qualify for 5-7 year terms, while boats over $100,000 can extend to 15-20 years.
Down payment requirements are typically higher for boats than cars. Most lenders require 10-20% down for new boats and 20-30% for used boats. Larger down payments may qualify you for better interest rates and demonstrate financial stability to lenders. Some specialty marine lenders offer lower down payment options for well-qualified borrowers.
Boat loans involve additional costs beyond the purchase price. Sales tax, registration fees, documentation fees, and marine surveys add 5-10% to the total cost. Many buyers include these costs in their loan, increasing the amount financed. Factor in ongoing costs like insurance, storage, maintenance, and fuel when determining affordability.
Loan-to-value ratios are critical in boat financing. Lenders typically won't finance more than 80-90% of the boat's appraised value. For used boats, appraisal values from NADA Guides or BUC determine maximum loan amounts. Buyers seeking higher loan amounts may need to provide larger down payments or consider less expensive vessels.