How does the boat loan calculator work?

The boat loan calculator above will tell you your monthly payments as well as the amount you can expect to spend on interest. Simply input the size of the loan, the loan terms, and the interest rate attached to your loan.

What are boat loan rates?

Boat loans work similarly to personal loans, and in fact, prospective buyers can use personal loans when purchasing a boat. Because of this, there is a range of interest rates that buyers can expect when taking out a boat loan. Loan rates can start as low as 3% and go all the way to 36%, with the average loan rate sitting at about 10.5%.

The interest rates charged on a boat loan will contribute to the overall amount you end up paying back over the life of the loan, so lower rates are better. If you can secure a boat loan with interest rates below 10.5%, you’re on the right track.

What are boat loan terms?

Referring to the number of years or months that it will take to repay the loan, boat loan terms can also vary widely. Some factors that determine the length of the loan are the borrower’s financial standing, the price of the vessel, and the size of the down payment.

In the U.S. and Canada, boat loan terms can be anywhere from 10-20 years. During that time, the boat could be considered collateral. If the borrower fails to make payments on time, the lender could take the boat from the borrower.

How do boat loans work?

Boat loans, depending on the lender you work with, can either be secured or unsecured. A secured boat loan means that there is some sort of collateral backing the loan. If you fail to make your payments on time, the lender can take the collateral from you. Collateral could be your car, your home, or even the boat itself.

An unsecured boat loan is not backed by collateral. In this case, none of your items can be taken from you if your payments lapse. However, unsecured boat loans will often require borrowers to have good financial standing and a higher credit score. Unsecured loans might also have higher interest rates, depending on each borrower’s situation.

Where can I get a boat loan?

There are many lenders that offer financing options for boats. Large banks, credit unions, boat dealers, and specific marine finance companies are all viable options. Boats are often more expensive than cars, so working with the best lender you can find is incredibly important.

Most lenders will require a 10% – 20% down payment, though there are lenders that offer 0% down financing options. However, the bigger the down payment, the lower your monthly payment will be and you’ll end up paying less interest through the lifetime of the loan.

Can I get a boat loan with bad credit?

There are lenders that work with low-credit borrowers, but the final loan package will likely have higher interest rates, costing more in the long run. Applicants that have a credit score of 680 or higher, with no major credit issues in recent history, should have an easy time securing an affordable boat loan.

If your credit score is less than 680, or if you have experienced a recent bankruptcy, foreclosure, or other incidents, you may have to work with lenders that specialize in high-risk borrowers.

Is financing a boat a good financial decision?

Just like cars, boats depreciate almost immediately as soon as you take them home. Depreciation is when the value of an asset goes down, and it’s almost always faster when you’re purchasing new boats or cars.

In some cases, because of depreciation, your loan could end up being worth more than the boat itself, leading to negative equity. To avoid this situation, only buy a boat that fits within your financial means. Then, work with your lender to determine the best payback schedule possible.

Financing a boat works well for many individuals, as long as they are financially ready to do so. Buying a boat is just the first step; you’ll also have to pay for regular maintenance, storage fees, and insurance costs. If you have bad credit or don’t feel comfortable enough to take the plunge, consider waiting until you can secure a loan you feel good about.