Getting accepted for a boat loan can be very exciting as your dreams of conquering the water are finally coming true. However, understanding the length of the loan is essential, especially when it comes to highly depreciating items such as boats.
Most lenders allow boat loan terms of 15 years; however, some allow up to 20 years. If you plan on getting a boat that may not last that long such as a wood boat or speed boat; you may be limited to short-term loans only.
Another important thing to note is that most boats lose about 40% value within the first 5-10 years of use.
So make sure you understand what you are getting into before agreeing to any long-term boat loans. Making sure you have a low-interest rate (preferably below 5-7% APR) is very important because the longer the loan, the more money you will have to pay for interest.
Boat loan lenders with high term lengths
So, if you’ve decided to get a loan with a high term length, here are some of the most popular ones available that allow loan terms of 15 years or more:
|Lender||Maximum Loan Term||Minimum Credit Score|
|Bank of the West||20 years||700|
|Southeast Financial||15 years||None|
|Mountain America Credit Union||15 years||None|
All of these lenders have been ranked as one of the best boat lenders on the market by Investopedia.com. If you find a different lender, make sure to always check them for credibility. Many lenders may push you into bad loans especially if you have low credit or are unable to put a lot of money down.
Related article: How Much Boat Can You Afford? (Simple Calculator)
If you have already found a loan that may interest you, use the calculator below to determine what your monthly payment will be. You can also put your monthly budget in and find an estimated boat price.
Factors that may deter you from getting a long-term boat loan
Although many lenders do allow 15-20 year boat loans, they can still deny you. This is mostly for if you plan on getting a boat that they don’t believe will last 15 or 20 years. That may include:
- Speed boats
- Boats with wood hulls
- Liveaboard boat loans
- Used boats
Many lenders won’t give you loans if your boat is 10 years old or older when you purchase it. Along with that, if the boat you want to purchase falls into the category of any of the ones above, you will probably have trouble getting a long-term boat loan. Even short-term loans will most likely have a higher interest rate with those types of boats.
Some other factors include:
- A low credit score
- A high debt to Income (DTI) ratio
- No or low downpayment
Most people pay less than 10% of their monthly income on their boat payments, so if that is not the case for you or you have any of the issues above, you may run into trouble when getting a long-term boat loan. Many lenders will either deny you or give you a very high-interest rate.
I would consider anything above 15% APR to be high for a boat loan, and preferably, you want it to be under 10%. Before signing anything, I would always recommend contacting a financial adviser. You should also shop around many different lenders to see which one will give you the lowest APR.
Related article: What Credit Score Is Needed To Buy A Boat?
How to get a boat loan?
After determining your price point and finding a boat, it’s time to purchase it. If you go with financing, there are three options you can choose including:
- Financing it through a boat dealer – Boat dealers will make the process very simple and quick. Instead of having to go to a bank or marine lender, you can sit down with a salesman and get it done and get your boat on the water as quickly as possible. However, because of this, they may not give you the best deal. So always at least compare the dealer’s offer to other offers to avoid agreeing to a bad loan.
- Getting a loan through a bank or creditor – If you plan on taking equity out of your home, going with a bank is the best bet. However, it may be a more complex and timely process.
- Getting a loan from a marine lender – There are many boat lenders out there that can give loans. Most of them allow you to apply online. Some are marine loan specialists, and some are banks with marine departments. However, no matter what it is, compare a few of them to ensure you get the best loan available.
Getting a loan from a marine lender is probably the best option for those trying to get a long-term boat loan as they are the ones that generally allow 15-20 year term loans.
Many lenders won’t give a loan for a boat 10 years old or older; however, if they do, the longest loan term they will give you is 5 or possibly 10 years. Generally, older boats will also come with a higher APR.
It’s usually a little easier to finance a new boat because new boats will last longer, so lenders are comfortable giving you loans. However, many used boats (especially if they’re less than 10 years old) can be financed very easily through a dealership, bank, or marine lender.
It’s harder to get a boat loan than an auto loan, but if you have decent credit (above 650 or preferably above 700) And a good debt to income ratio, you should be able to find a good deal.