BEST OF

Best Boat Loans in 2021: Finance Your Boat

Boat loans can be unsecured or secured by the boat. Compare financing options from online lenders, banks and credit unions.

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Setting sail on your own boat is a priceless experience. But unless you’ve saved a lot of cash, you’ll need a boat loan to make your dreams a reality.

You can get a boat loan from a banks, credit union or online lender. The application process is typically fast, and approval is largely based on your credit score and ability to repay.

Before you jump in, consider that most financial experts don't recommend personal loans for discretionary purposes, especially if you already carry credit card or other debt. If you take a personal loan, have a plan to pay it off.

Here’s how to finance a boat with a personal loan — including unsecured and secured loan options — where to find boat loans and factors to consider before applying.

Secured boat loans

Bank of the West

Bank of the West offers boat loans in all 50 states, but not in Washington, D.C. You can’t add a co-signer to the loan, but you can apply with a co-borrower who would be on the title. The bank requires at least a 10% down payment.

Loan amount: $10,000 to $5 million.

Rates: From 4.29% to 9.99%. Rates vary by loan amount and repayment term.

Terms: 4 to 20 years.

Qualifications: Here’s what you’ll need to apply for a Bank of the West boat loan:

  • Asset information, like the amount you have in savings and investment accounts.

  • Two years of verifiable income history.

  • Information about your other existing debts.

  • Social Security number or tax identification number.

The bank says it prefers borrowers with credit scores of 700 or higher.

U.S. Bank

U.S. Bank’s boat loans are available in the 25 states where the bank has branches. You may have to visit a branch to close a boat loan, but the bank says it can make same-day application decisions when you apply online. It's one of few lenders that charges a fee for paying your loan off early — 1% of the original loan amount if the loan is paid off in the first year, up to $100.

Loan amounts: $10,000 to $150,000.

Rates: Starting at 5.24%.

Terms: 1 to 20 years.

Qualifications: Borrowers must live in one of the states where the bank has branches to get a boat loan. Approval is based on the boat you’re financing, as well as the amount requested, your credit score and history, and other factors.

USAA

USAA works primarily with military members and their families. The lender offers a 0.25% APR discount for setting up automatic payments, and no down payment is required.

Loan amounts: $5,000 to $35,000.

Rates: Starting at 5.75%.

Terms: 1 to 15 years.

Qualifications: You must meet USAA’s eligibility requirements to get a boat loan. Whether you qualify and the rate you get depends on the boat you’re financing, your creditworthiness and other factors.

How boat loans work

A boat loan is an installment loan with fixed monthly payments typically over two to 15 years. Interest rates and loan terms vary based on the lender, the size of the loan, your credit score and income and whether the loan is secured by the boat or unsecured.

Secured boat loans

Secured boat loans use the purchased boat as collateral. They may have higher loan limits, longer repayment terms and lower rates than unsecured loans. The risk is that you can lose your boat if you default. With a secured boat loan, you may also need to make a down payment, which means you’ll need cash upfront but you’ll borrow less.

Secured loans work best for borrowers who don’t qualify for an unsecured loan, want a higher loan amount and are comfortable with the risk associated with secured loans.

Unsecured boat loans

An unsecured boat loan doesn’t use the boat or anything else as collateral. Without that backing, rates on unsecured loans may be higher and terms shorter. Generally, annual percentage rates range from 6% to 36%, and terms range from two to seven years.

You may not lose the boat if you default on an unsecured loan, but you’ll still face consequences, including a damaged credit score and wage garnishment if the lender takes you to court.

Where to get a boat loan

Online loans

Online lenders typically offer unsecured boat loans only. These lenders may be able to approve and fund loans more quickly than other lenders. Online lenders also offer pre-qualification, which shows you what loan amount and rate you could get without affecting your credit.

Some tailor their loan products to borrowers with good or excellent credit (690 or higher FICO), while others accept lower credit scores and focus more on factors like your monthly cash flow, education and where you work.

Bank loans

You’re more likely to find secured loans from banks. Banks may sometimes offer perks to existing customers, like discounts and favorable loan terms. If your bank offers boat loans, it may be a good place to start.

Credit union loans

Credit unions can offer low-rate secured boat loans to their members. These not-for-profit lenders may look past a low credit score or rocky credit history on a loan application and consider a borrower’s whole financial picture, including your relationship with the credit union. Credit unions should be the first stop for members looking to finance a big purchase.

Navy Federal and First Tech both offer boat loans with 15-year repayment terms with rates starting below 10%.

loans from marine lending specialists

Marine lending specialists are financial service companies that act as brokers to find you a boat loan. They secure funding through outside sources, such as from banks.

Boat loans from marine lenders have similar rates and repayment terms to personal loans. One advantage might be the ability to work with a specialist who understands the boating business, according to the National Marine Lenders Association.

These loans must be secured by the boat and require down payments from 10% to 20% of the purchase price. A bank may require a down payment or make it optional.

Boat loans: Questions to ask before you apply

How does the loan fit into my budget? Monthly payments on a boat loan should fit comfortably within a budget that covers all of your needs, wants, debt payments and savings. Use our boat loan calculator to see estimated monthly payments, interest costs and total payments.

Payments toward the boat loan — combined with other debt payments — shouldn’t exceed more than 20% of your income.

What is the true cost of boat ownership? Buying a boat isn’t your only new expense. Additional costs include fuel, licenses, insurance, storage, maintenance and repairs. Boats also depreciate over time, just like a car.

Does my boat have resale value? It’s smart to buy a boat that is both affordable and popular, as this can attract potential buyers if you decide to sell it and pay off your loan at any point in the future.

Alternatives to taking a boat loan

If you can’t afford to buy a boat today, or you’re not quite ready to make the commitment, here are some alternatives.

Save up for the purchase. Consider holding off and starting a savings plan toward buying a boat. You may be able to negotiate a cheaper price by paying with cash, and you’ll avoid paying interest on a loan.

Join a boat club. For a one-time fee and ongoing monthly or annual dues, boat clubs provide access to a fleet of boats for their members and guests.

Consider peer-to-peer rentals. Similar to renting a house on Airbnb, you can temporarily rent a boat through a peer-to-peer rental marketplace, such as Boatsetter or GetMyBoat.

Last updated on March 31, 2021

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Best Boat Loans in 2021: Finance Your Boat

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