Financing FAQ's

Boat financing can be a confusing topic, especially for first-time buyers. Buying a car? Straightforward. Buying a house? Straightforward. Buying a boat… slightly more complicated. Buying a boat requires a little more effort because it is seen by lenders as a want versus a need. The options are much like those offered for a car or RV, but still can be difficult to navigate; what's good for one person might not work for a different financial situation. No matter what your bank account holds, we are here to help you understand your financing options and make the right choice.

Here are a few common Questions and Answers regarding purchasing a boat:

Q: What Type of Boat Is Eligible for a Loan?

A: Financing is available for every type of vessel: bass boat, cuddy cabin, pontoon, bowrider, deck boat, powerboat, express cruiser, cabin cruiser, pleasure boat, wakeboard boat, yacht, open bow, ski boat, cruiser, sailboat, runabout, fishing boat, trimarans, catamarans, center console, houseboats, electric boats, classic boats… You name it. If you find a boat you want, there's a lender out there that can handle the financing.

Q: Should I Get a New or Used Boat?

A: Of all the frequently asked questions about buying a boat, this one is possibly the most important. It's the biggest money-related decision to make when buying a boat. As with most assets, boats follow a 'hockey stick' curve. Expect 10 percent depreciation in the first year. Prepare for a further six to eight percent during the subsequent four or five years. Depreciation slows after this period. Eventually the price of the boat will slowly climb if kept in good condition and has a good pedigree. Financially speaking, buy a used boat that's at least five years old. That's the sweet spot.

Q: How many years can I get a boat loan for?

A: Boat loan terms are usually available in 5, 10, 12 or 20 Years. The loan terms depend on several factors; mainly the amount of the loan and the age of the boat. Generally, the maximum loan term is 20 years for boat (model year not older than 5 years) on loan amounts of $50,000 or greater. As the age of the boat increases, the possible term of the loan will decrease. Also, as the loan amount decreases, the possible term of the loan will decrease (For example: the maximum loan term for a loan amount of $20,000 would be more like 12 years).

Q: What are the current rates for a boat loan?

A: This is constantly changing, as all loan rates do. It is best to check specifically when you are looking to make the purchase. We encourage our customers to look into all of your options and compare several rates from different lenders to ensure that you find a loan that works best for you a the best rates. Check with your boat dealer, your bank and credit unions to get the most current rate for your circumstances.

Q: What Types of Boat Loans Are Available?

A: Getting a boat loan is similar to getting a home loan in that there are many loan types: Simple interest loans are the most popular way to buy a boat. This is a fixed-rate, fixed-term loan. You could instead choose a variable rate loan. Variable rate loans typically have a low introductory interest rate. The rate is tied to an index such as the LIBOR. Interest rates can either change sporadically or at a predetermined period. A boat can also be had using the balloon payment method. This means that the entire balance of a loan will come due at a predetermined future date.

Q: What Do Boat Loan Agreements Look Like? Any Hidden Surprises?

A: First, you will need to provide the following to the lender:

• Your name, address, phone number
• Employment information
• Tax information for the past two years
• List of monthly bills
• Personal financial statement taking into account all assets and liabilities (this is used to examine your net worth in case you lose your job but still have a boat with a loan)
• Year, make, model, power, options, upgrades done to the boat
• Total cost of asset including purchase price, additional accessories
• Sales tax
• Registration and title (or document showing these expenses)

Most boat sales are subject to sales and/or property taxes. Proof of full payment or a payment plan is required before getting the loan. Lenders also want to make sure their money is going toward a quality purchase. The lender will need to compare the sales price with similar boats on the market. This may mean dialing a few boat experts. A marine survey by a professional surveyor will likely take place. Surveyors typically charge $11-$13 per foot. The lender will run a typical loan-to-value calculation.

Q: Can I Get a Loan That Also Covers Extra Equipment, Insurance, and Maintenance and Repairs?

A: Many lenders, specifically marine lenders, will finance extras. This can include optional equipment, electronics, life and/or liability insurance, and maintenance and repair plans. Repairs and maintenance alone typically cost five to 10 percent of the vessel's value annually. Insurance costs about one to three percent of the value of the boat per year.

Q: Can I get a boat loan with bad credit?

A: Many lenders will allow some maneuvering room on bad credit boats loans depending on the liquidity the consumer has after making the down payment. Lenders typically require at least 10 to 20 percent down, depending on the total value of the boat. Check with your lenders for your situation.

Q: How much is boat insurance per month?

A: The type of boat, its length, and the expected use of the boat will largely dictate your boat insurance rates. Whether you have a speedboat, a small fishing boat or yacht, will make a big difference in what you pay. In general, boat insurance costs typically range from $300 to $500, on average about 1.5% of the boat's insured value. Rates are higher in hurricane-prone areas.

Have a question? Contact Us here and we will be happy to get back to you!