The best boat loan rates in 2024 to help you get out on the water for less (2024)

Looking for the best boat loan interest rates? Rates for borrowers with excellent credit may start as low as 6.24% APR. The most competitive rates are typically reserved for well-qualified borrowers with newer boats. But don’t worry — even if you don’t fit that description perfectly, it’s possible to get approved at possibly competitive rates if you apply with a cosigner or make a large down payment.
Lorem ipsum
When looking to finance a boat, you have several options: You can use a boat-specific “marine” loan from a lender that specializes in recreational vehicles; an unsecured personal loan from a bank, credit union or online lender; or dealer financing. We’ve conducted an in-depth analysis of the best marine and personal loans on the market and narrowed the list to our top five picks so you can spend less time shopping around and more time out on the water.

How do boat loans work?

A boat loan is a type of financing that allows you to purchase a watercraft and spread the cost over an extended period. Like an auto loan, a boat loan typically comes with a fixed annual percentage rate (APR) and may require a down payment.

Boat loan terms can last anywhere from a few years up to 20 years. Loan amounts can be as small as $5,000 for small skiffs or as large as $4 million or more for luxury yachts. Many lenders prohibit the purchase of liveaboards or houseboats, and traditional boat financing typically requires a marine survey (a type of appraisal) to determine the boat’s condition.

If you use an unsecured personal loan — one type of boat loan — to finance your purchase, you can typically buy any boat you wish and skip the appraisal process. However, rates are often higher and loan amounts are smaller for personal loans, so this option is best for borrowers with excellent credit who want to purchase a smaller boat.

Where can I get a boat loan?

• Banks can be a convenient option, especially if you have a relationship with an institution that offers competitive boat loan rates. But don’t stop there —compare your bank to at least two other lenders to ensure you don’t overpay.
• Credit unions are similar to banks, but they’re known for having better interest rates and more personalized service. If you belong to a credit union, see if they offer boat loans (or whether they’ll allow you to use a personal loan to buy a boat).
• Online lenders like My Financing USA and LightStream have fast online applications and funding times and can be a good choice for borrowers with varying credit profiles.
• Boat dealerships often have partnerships with lenders and can facilitate financing directly. While convenient, you’re unlikely to get the lowest APR through the dealership, as they typically mark up your rate to make a profit.
• Marine lending specialists, like Trident Funding and My Financing USA, focus exclusively on boat loans and have a deep understanding of the marine industry. They may offer specialized expertise that other lenders don’t have, so they could be a good option if you have a unique boat loan situation.

Types of boat loans

Whether you’re buying a new or used boat, you have two main types of financing options: secured and unsecured loans.

Secured loans

These are backed by the boat, which serves as collateral. If you can’t repay the loan, the lender can repossess the boat. Secured loans often come with lower interest rates compared to unsecured loans because there’s less risk for the lender.

However, secured boat loans may have more restrictions, including limits on the type of boat you can buy, its age and whether you can live on it. Lenders may also require a down payment, usually between 10% to 20% of the boat’s value.

Secured loan repayment terms can be longer — often up to 20 years. Your credit profile is still a factor in determining your eligibility, but if you have bad credit, you’re more likely to be approved for a secured loan than an unsecured one.

Unsecured loans

An unsecured boat loan, also known as a personal loan, isn’t backed by collateral. This means the lender can’t repossess your boat if you default on the loan, but they can still take legal action against you. Your eligibility is based solely on your creditworthiness — the higher your credit scores, the more likely you are to qualify.

Unsecured loans typically have higher interest rates and shorter repayment terms compared to secured loans because of the increased risk to the lender. They also have lower borrowing limits, so they might not cover the full cost of your boat.

On the plus side, unsecured loans have fewer (or no) restrictions on the type of boat you can buy. If you’re struggling to find a lender to finance a liveaboard, for example, an unsecured loan may be the answer.

Common boat loan eligibility requirements

As with any form of borrowing, qualification requirements for boat loans vary by lender. But since a boat is considered a luxury purchase, standards are typically higher than those on, say, auto loans.

• Credit scores: Most boat loan lenders require minimum credit scores of 600 to 670 or better, although some offer boat loans for bad credit. Generally, the higher your scores, the better your interest rate and odds of approval.
• Income: Lenders want to see that you have sufficient income to comfortably make your monthly boat loan payments. You must provide verification documents, such as pay stubs or tax returns, and lenders consider your debt-to-income ratio to ensure you can afford the loan.
• Boat requirements: Unless you’re taking out a personal loan, your lender will likely restrict the type, age and condition of the boat you want to buy. For example, Trident Funding only finances boats up to 20 years old, while Southeast Financial doesn’t finance speedboats or houseboats.
• Down payment: Like auto loans, boat loans typically require that you make a down payment of 10% to 20% of the boat’s purchase price. Unsecured boat loans don’t have down payment requirements, and some secured loans even have no-down-payment options.
• Collateral: Secured boat loans use the boat as collateral, which means the lender can repossess the vessel if you default on your payments. Unsecured boat loans don’t require collateral but may have higher interest rates and stricter eligibility requirements.

Boat loans can be a great way to make your dream of owning a boat a reality without breaking the bank. By spreading the cost over several years, you can enjoy your boat while making predictable monthly payments.

But considering how expensive boats can be, it’s essential to weigh the cons. If you choose a longer repayment period, you’ll pay more interest over time. Also, boats tend to depreciate 15% to 20% in their first year and around 30% by the fifth year. This means you may end up owing more than the boat is worth.

6 steps to getting a boat loan

1. Save for a down payment

Not all lenders require a down payment, but having savings can reduce your borrowing amount and lower your interest rate. Aim to save at least 10% to 20% of the boat’s purchase price.

2. Check your credit scores

Since a boat is typically considered a luxury purchase, lenders place extra importance on your credit profile. Pull your credit reports from the three major credit bureaus (Equifax, Experian and TransUnion) and review them for errors or look for areas to improve. Check your credit scores and, if necessary, improve them by paying down debt and making all payments on time. Higher scores generally mean better loan terms.

Can I get a boat loan with bad credit?

Getting a loan with bad credit is possible, but expect higher interest rates and stricter terms. Lenders like My Financing USA specialize in bad credit boat loans for scores as low as 550, but they start more than eight percentage points higher than the rates you’d get with excellent credit. Given that, it’s almost always unwise to borrow a boat loan with bad credit — you’re better off getting your financial “house” in order before starting a new voyage.

3. Determine your budget

Consider all costs associated with boat ownership, including fuel, maintenance, storage, dock or marina fees, licenses and insurance. Use a boat loan calculator (like this one from J.D. Power) to estimate your monthly costs and ensure they fit comfortably into your budget.

4. Shop around

Research multiple boat loan lenders, including banks, credit unions, online lenders and marine lending specialists. Take notes of APRs, eligibility requirements, restrictions and fees. Local boat dealerships are also worth a check, as they often have relationships with lenders and may offer competitive financing options.

5. Get pre-qualified and compare offers

Pre-qualification gives you an idea of the boat loan terms you might receive without impacting your credit scores — most (but not all) lenders of various types offer pre-qualification, but keep in mind that it’s not a guarantee of loan approval. You’ll provide basic information about your income, debts and the boat you want to purchase. Then, compare offers based on interest rates and repayment terms.

Example: Let’s say you get pre-qualified for two $50,000 boat loan offers with different terms. Now you’re trying to decide which one to choose.

The first option offers a lower monthly payment, but you’d pay $4,890 in additional interest due to the longer term. If your goal is to save the most money over time, the second option would be the better choice. But if having a lower monthly payment is your top priority, Loan 1 may make more sense.

6. Apply

The last step is where you’ll formally apply, which you can usually do online. You’ll need:

• Proof of identity (such as a driver’s license or passport)
• Proof of income (like pay stubs, tax returns, bank statements and W-2 forms)
• Information about the boat you wish to purchase, includingmake, model, year and value

You may also need to schedule a marine survey when you apply to determine the boat’s condition if you’re seeking a secured boat loan — your lender can connect you with a marine appraisal company. This can also help you gauge how much the boat might cost to maintain. Approval times can take a few hours to a few days, depending on the lender and type of loan you’re applying for.

Should I get a boat loan?

You might dream of owning a boat, but approach this decision with a clear head and consider the financial responsibilities of boat ownership.

Boats can be expensive, not just in terms of the purchase price but also the ongoing costs. You can expect to spend about 10% of a used boat’s value on yearly maintenance alone. So, on a $100,000 vessel, that’s a minimum of $10,000 just in annual upkeep. That doesn’t include fuel, storage, insurance or issues that pop up. Unsurprisingly, new boats have lower maintenance costs: about 2% of the boat’s purchase price a year.

Plus, boats depreciate quickly, meaning their value drops over time. If you buy a brand-new boat, you can expect its value to decrease by 10% to 15% in the first year. So, a $100,000 boat might be worth $85,000 to $90,000 after just the first year. By year five, it can depreciate by 20% to 30%, making it worth only $70,000 to $80,000. Unless you make a hefty down payment, you could wind up upside down on the loan (or owing more than the craft is worth), making it difficult to sell the boat and pay off the loan in a pinch.

Before diving into a boat loan, take a hard look at your financial situation. Can you comfortably afford the monthly payments alongside your other expenses and financial goals? Do you have a stable income and a healthy savings account to cover unexpected costs? Would borrowing for a boat inhibit other, perhaps more critical financial goals, such as saving for retirement?

If you’re confident that a boat fits within your budget without causing financial strain in the short and long term, a boat loan can help you get out on the water. Just be sure to borrow responsibly.

Alternatives to boat loans

Taking on debt for a luxury item like a boat isn’t usually the wisest financial decision. Before committing to a boat loan, consider these alternatives:

• Pay cash: Saving up and paying cash for your boat can help you avoid interest charges and debt. It may take longer, but you’ll own your boat outright without the added cost of financing.
• Borrow a home equity loan: If you have enough equity in your home, you might consider using a home equity loan to finance your boat purchase. But be cautious — putting your house on the line for a boat can be risky. Only consider this option if you’re confident in your ability to repay the loan.
• Buy a less expensive boat: Instead of stretching your budget for your dream boat, consider purchasing a less expensive model. You can always upgrade later as your financial situation improves.
• Use a boat share app: It’s like Airbnb — but for boats! Apps like GetMyBoat allow you to rent yachts and other vessels from private owners without the commitment of buying a boat outright.
• Join a boat club: These members-only groups offer access to a fleet of boats for a monthly or annual fee. This can be a cost-effective way to enjoy boating without the responsibilities of owning one.
• Consider renting or leasing: This option can give you the boating experience without the long-term financial commitment. This might work well if you’re unsure about your long-term interest in boating or only plan to use a boat occasionally.

Methodology

Cruising the lake or sailing the high seas may be exciting — but before you step aboard, finding the best boat loan rates is essential. To help you narrow your search, CNN Underscored Money’s editors and data analysts sought to be as objective as possible when assessing 22 leading boat and personal loan lenders. We gave each lender an out-of-five star rating after analyzing 25 loan features across the following categories:

Loan cost (25%)

Boats can be expensive, so saving money on your boat loan is essential to staying under budget. In this category, we assessed each lender’s starting APR, as well as any fees or opportunities for rate discounts. The top-performing lenders offer the least expensive loans with the fewest additional charges.

Loan details (40%)

This category comprised eight key boat loan features, including available loan amounts, repayment term options and down payment requirements. We also considered whether each lender offers secured loans or allows private-party boat purchases.

Eligibility (25%)

Here, we considered not only borrower eligibility requirements, like minimum credit scores, but also boat requirements, like age or vessel type. Lenders scored higher if they lend nationwide and allow cosigners or co-borrowers.

Repayment experience (10%)

Since you might be repaying your boat loan for up to 20 years, finding a lender that makes repayment a seamless experience is crucial. In addition to offering weekend customer service availability and multiple modes of contact, we sought to assess each lender’s reputation with borrowers by leveraging independent data from institutions like the Better Business Bureau and the Consumer Financial Protection Bureau.

What didn’t make the cut

CNN Underscored Money’s editors considered 22 top lenders before setting our sights on the top five. Those that didn’t measure up fell short for various reasons, including:

• Laurel Road and Rocket Loans have small loan maximums, which would limit your search to inexpensive vessels.
• Patelco Credit Union, which ordinarily lends nationwide, only offers boat loans in California.
• Navy Federal Credit Union and USAA are only available to military members and their families.
• BMO Harris and Regions Bank only finance newer vessels (six years and five years, respectively).

Frequently asked questions (FAQs)