Bank of the West offers a low and high maximum boat loan
Having a boat is a dream for many people, but the dream often comes with a significant price label. Therefore, many boat purchases are financed with the assistance of boat loans. For borrowers who do not have enough cash to buy a new ship, ship loans can help them cover this purchase cost. There are many different loans and lenders to choose from, depending on whether you plan to buy a new or used ship, how much your ship cost, and how you plan to use it.
The best boat loans have an area availability, low rates, and flexible down payment payments and time period limits. This lender also charges several costs and punishment and has a high ranking of industrial financial strength, shows a stable and prominent company. Finally, the best boat lender has a high history of customer satisfaction ratings and provides excellent customer service.
The Best Boat Loans 2022
- Best Overall: Bank of the West
- Best for Bad Credit: Southeast Financial
- Best for Quick Funding: LightStream
- Best for In-House Financing: Mountain America Credit Union
Final Verdict
There are lots of options when it comes to boat loans. Some lenders work with borrowers who have poor credit, some feature extremely low rates, and others offer additional perks like same-day funding. Overall, our top pick for a boat loan is Bank of the West.
Bank of the West offers boat loans with low rates, flexible loan amounts, and flexible repayment terms. Rates currently start at just 3.74% APR, and borrowers can access loan amounts of up to $5 million. Loans from Bank of the West are available in all 50 states, and the lender offers boat loans for a wide range of watercraft, including standard and custom powerboats, sailboats, multi-hull boats, pontoon boats, electrical boats, high-performance boats, houseboats, and wood hull boats.
Compare the Best Boat Loans 2022
| Company | Starting Interest Rate | Minimum Credit Score | Loan Terms (range) | Maximum Loan Amount |
|---|---|---|---|---|
| Bank of the West Best Overall | 3.74% | 700 | 4 to 20 years | $5,000,000 |
| Southeast Financial Best for Bad Credit | 3.74% | None | Up to 15 years | $4,000,000 |
| LightStream Best for Quick Funding | 4.49% | None, but good credit recommended | 24 to 84 months | $100,000 |
| Mountain America Credit Union Best for In-House Financing | 5.49% | None | Up to 15 years | Not stated |
Guide to Choosing a Boat Loan
Understand the Costs of Owning a Boat
Boat loan down payments typically range from 10% to 30%, so make sure you have enough money saved up to cover the cost of the down payment before you apply for a loan. Once you own a boat, you’ll also have to cover maintenance and related costs. Some of the expenses you’ll need to cover as a boat owner include:
- Trailer to transport and store your boat: If you don’t plan on storing your boat near the water, you’ll need a trailer to transport it from your home.
- Boat insurance: Boat insurance can protect you in the case of an accident or if anything happens to your boat.
- Marina fees: If you dock your boat at a marina, you’ll typically have to pay monthly fees for the privilege.
- Registration: Just like a car, many states require boat owners to register their boat. Costs vary widely from state to state.
- Winter storage: If you live in an area where weather conditions aren’t suitable for boating year-round, you’ll need to store your boat in the winter.
- Maintenance: Routine maintenance costs include painting, cleaning, and replacing small parts.
- Gas: If your boat is powered by gas, you’ll need to fill it up regularly.
Compare Boat Loan Lenders
When applying for a boat loan, there are a few factors that you should consider, including rates, loan amounts, and term limits.
- Rates: You should look for lenders with the lowest possible rates that you qualify for. Low rates mean that you’ll pay less in interest over time.
- Loan amounts: Depending on what kind of boat you plan to buy, you should look for a lender with flexible loan amounts. Some lenders offer loans of up to $5 million.
- Term limits: Term limits refer to the amount of time you’ll be paying back the loan. While longer term limits can result in smaller monthly payments, they also mean that you’ll pay more in interest.
- Credit requirements: Some lenders have credit score requirements that restrict what borrowers they will lend to. If your credit score is on the edge, consider taking steps to boost your score before applying.
- Down payment requirements: Most lenders require a down payment of around 10% to 30% of the total loan amount. Make sure you have enough saved up before you apply for a loan.
- Funding time: If you need immediate financing, you should look for a lender with fast funding times. Some lenders offer fast funding as soon as the same day.
- Boats covered: Not all lenders offer boat loans for all types of boats. If you have a specific boat in mind, make sure that the lender covers that particular type before applying.
- Customer satisfaction: You should also look for a lender with a history of high customer satisfaction. Lenders prioritizing customer happiness and offering robust customer support make for a more pleasant borrowing experience.
Applying for a Boat Loan
There are a few steps you’ll need to take in order to apply for a boat loan. These include:
- Decide on a boat: Whether you’re interested in a sailboat, motorboat, or houseboat, what boat you want to purchase will influence what type of loan you need from a lender.
- Compare rates: When shopping for a loan, you should compare rates from multiple different lenders. This can help to ensure that you get the best deal possible.
- Review your credit score: Some lenders have minimum credit score requirements, while others reserve the most competitive rates for borrowers with excellent credit. Make sure your score is in a good place before applying.
- Make sure you have enough for a down payment: Typical down payments range from 10% to 30% of the total loan amount.
- Complete a loan application: To apply for a loan, you’ll need to provide information about yourself and the boat you want to buy, including your name, address, social security number.
Frequently Asked Questions
What Are Typical Boat Loan Terms?
You can often expect boat loan terms to include a repayment period of 15 to 20 years. Down payments may range from 10% to 30%, depending on the amount borrowed, and typically the boat is considered collateral for the loan. Boat loans often start out as low as $5,000, with some lenders offering financing up to $4 million.
Keep in mind that the terms involved with the average boat loan will vary based on a number of factors. These include whether the boat is new, used, or being refinanced; how old the boat is; how much you plan to borrow; and whether the boat is for full- or part-time use.
Can You Get a Boat Loan on an Old Boat?
Getting approved for a boat loan on an older watercraft 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. If the boat is of high value, you may even find lenders willing to finance a watercraft as old as 25 or 30 years.
Expect that interest rates for old boat loans may be higher than those for newer boats, and you may even encounter higher down payment requirements.
If you’re unable to find a lender willing to finance your old boat purchase, consider taking out a personal loan instead.
What Is a Good Interest Rate on a Used Boat Loan?
While used boat loans can occasionally have rates higher than those offered for new boats, this isn’t always the case. In fact, many lenders offer the same competitive rates whether you’re buying used, new, or even refinancing. Because of this, creditworthy applicants can expect to find used boat loans with rates in the 4% to 5% APR range.
For instance, Bank of the West (Essex Credit)—our overall top pick—offers interest rates starting at 3.74% APR for watercraft over $50,000, whether the boat is new or used.
Is Financing a Boat a Bad Idea?
As a general rule of thumb, you should ensure that any purchase you finance will be paid down faster than it depreciates. If the purchase’s value decreases at a faster rate than your loan balance, you run the risk of going “upside down” on the loan, or dealing with negative equity.
While this is most often talked about in terms of new cars, it’s also a concern with watercraft, especially since boats are quickly depreciating assets.
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 on the hook for the difference between the remaining loan balance and the insurance company’s valuation/payout. Negative equity can also come back to bite you if you ever want to trade in the boat or sell it, as you’ll wind up owing your lender out-of-pocket in order to finalize the transaction.
Lastly, it’s important to recognize that financing a purchase will cost you more than the sticker price, no matter how competitive the interest rate you obtain. Between loan processing fees and finance charges, the added expense can be significant.
While financing a boat is not a bad idea in and of itself, it’s important to strike a balance between your purchase price, down payment amount, and loan repayment terms. This will help maintain a healthy loan-to-value (LTV) ratio and ensure that you don’t pay significantly more for your purchase over time than if you’d paid in cash.
Methodology
In order to determine the best boat loan providers, we compared a number of key factors. We wanted lenders that could provide a loan in the majority of states. Other factors considered included looking at the kinds of boats these lenders are willing to finance and what size loans are available.
We also considered each lender’s availability and interest rates, how quickly loans are financed, and whether or not collateral is required. Lastly, we looked at what is required from borrowers, such as a credit score threshold and a minimum down payment.
