Weigh all your options: How to choose the best boat loan lender

Personal Loans

Image of young couple talking to loan officer. Male client and financial advisor are shaking hands.

5 min read Published July 02, 2024

Written by

Hanneh Bareham

Edited by

Pippin Wilbers

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Key takeaways

The best boat loan lender will depend on your unique financial situation and personal preferences.
You’ll need to consider usage requirements, restrictions, member benefits, terms and fees when evaluating lenders.
Get prequalified with at least three lenders that could be a good fit and compare loan quotes.
A personal loan could be a viable alternative if you cannot secure a boat loan with attractive terms.

Finding the best boat loan lender involves more than just searching for the lowest rates and fees. In addition to digging into your financial situation, lenders want to know about the type of boat you’re buying — especially if you’re applying for a secured boat loan.

To choose the right boat loan for you, you need to know how boat loans work and the requirements for approval. You should also crunch numbers to find a payment that fits your budget, and select a lender with APRs and repayment terms that match your needs.

7 factors to consider before choosing the best boat loan lender

Before applying for a boat loan, consider these seven factors.

1 . Secured or unsecured

A secured loan uses your boat as collateral in the same way that a car loan is secured by an auto. Rates and terms may be lower because the lender knows they can repossess the boat if you don’t repay the loan. However, the boat has to meet the lender’s requirements. And you may need to make a down payment.

Unsecured loans are a good option if you’re buying an older used boat or don’t qualify for dealer financing for the boat you want. The best boat loan lender may be a personal loan company since they can offer fast and easy financing.

Personal loan lenders offer loans as high as $100,000 with terms as long as seven years, giving you plenty of payment options. If the personal loan is unsecured, you don’t risk losing the boat if you default. One caveat: If you have bad credit, your APR could be as high as 36 percent.

Pros of secured boat loans

Lower APRs than most unsecured loans.
Longer terms available.
May allow you to finance accessories.
Higher loan amount options for luxury boats.

Cons of secured boat loans

Requires approval of your boat.
Older boats may not be eligible.
May need a down payment.
Could lose your boat if you default.

Pros of unsecured personal boat loans

Easier to qualify for bad credit.
Boat details aren’t required for approval.
Can sometimes be funded the same day you apply.
Lender can’t seize your boat if you can’t repay the loan.

Cons of unsecured personal boat loans

Rates may be very high for higher or bad credit.
Terms are typically shorter than secured options.
Fees are often more expensive.
Loan amounts may not be high enough for luxury boats.

2. Usage requirements

Some lenders may set rules about how boat loan funds are used. Companies focusing solely on secured boat and marine craft financing may be flexible about the type of new boat you finance.

Some lenders won’t approve certain boat models made after a specific year. Others may not allow you to finance boating-related costs, like marina fees, insurance or maintenance costs.

In that case, you may be better off applying for an unsecured personal loan. Approval isn’t tied to the age, condition or type of boat you’re buying.

3. Used boat restrictions

Some institutions or lenders may hesitate to finance a used boat. Or they may require a larger down payment or offer a higher annual percentage rate (APR) because of the risk that older models may need more routine maintenance and upkeep than newer models.

Lenders offering used boat financing may request a full inspection to ensure the vessel is in good condition. They will give you an offer based on the results. If you want to skip all the used-boat inspection hassles, consider a personal loan to finance it instead.

4. Your local bank

The best boat finance company may be your local bank or credit union. You may be eligible for member benefits, like interest rate discounts, if you sign up for autopay or have another account with them.

Sticking with your bank could reduce some application process stresses, especially if you have borrowed from the institution before.

5. Rates and terms

The rates and terms offered by boat lenders can vary significantly.

Some lenders cater to excellent credit borrowers and offer high loan amounts with terms over seven years. Others may offer a wider variety of options for fair or bad credit.

Check whether the lender offers an interest rate discount for enrolling in autopay (most offer discounts of between 0.25 percent and 0.50 percent).

The APRs on unsecured personal loans for boats may range from 7.5 percent to almost 36 percent, while secured boat loans may stay in the 9 to 12 percent range. New boat rates are usually lower than older boat APRs.

You may also find longer terms (up to 20 years) at secured boat lenders, while many unsecured personal loan companies offer a maximum seven-year term.

6. Fees

Some lenders may charge application or origination fees on top of interest. That can significantly increase the loan’s overall cost. Some may also charge a prepayment penalty if you pay off your loan ahead of schedule, although that is very rare.

Before applying for a loan, research these fees. If possible, go for a lender that charges little to fees to lessen the financial burden.

7. Reputation

Always take time to check out the consumer and industry ratings of any lender you’re considering. Unresolved Better Business Bureau complaints may be a red flag that the lender isn’t trustworthy, while Trustpilot ratings give you an idea of what consumers think of their experience.

Look for patterns in the reviews. For example, if you notice that many people have issues with customer service or were pressured to accept terms that changed after approval, you may want to cross that lender off your list of options.

Tips for finding the best boat loan lender

Shop around: Finding the best place to get a boat loan often requires comparing offers from at least three boat lenders. Make sure you compare apples-to-apples loan types. If you want a secured loan, compare secured boat lender options or compare the offers of only unsecured personal loan lenders. Once you find a few suitable lenders, see if you prequalify before applying. Prequalification allows you to see your approval odds and predicted rates before applying, without impacting your credit score.
Spruce up your credit score: The lowest boat loan rates go to borrowers with the highest credit scores. If your boat-buying plans are a few months away, consider paying down your credit card balances to boost your credit utilization ratio.
Check your debt-to-income ratio: Lenders measure your debt-to-income (DTI) ratio to determine how much of your monthly paycheck is used to pay debt like credit cards, car loans or mortgages. A high DTI ratio may result in a higher rate, lower loan amount or both.
Learn the lender requirements before applying: Your financial profile should meet the lenders’ boat qualification requirements. The requirements for a luxury boat loan may be stricter than for someone financing a used weekend warrior watercraft. Before applying, check the lender’s website for details about the minimum and maximum loan amounts, credit score minimums, repayment terms and any boat specifications (for secured loans).
Check the lender’s funding time: You should also know how quickly the lender funds loans, especially if you’re competing to buy a used boat and need the funds quickly.