In a secured boat loan, the boat will be used as collateral for the loan. However, lenders may charge higher interest for boat loans with very long terms or require a sizable down payment.īorrowers should do some comparisons between lenders and confirm with the lender to see how long they can finance your boat loan and what kind of interest rate they offer.īoat loans can be both secured and unsecured. You can finance a boat loan for as long as 20 years. Borrowers have the option to put down even more if they can afford to reduce their monthly payments, the loan term, or both.īorrowers who want to purchase a boat should save a good portion before applying for a boat loan. The typical down payment can be anywhere from 10% to 20%. Most lenders require down payments for boat loans. A high credit score can save us tens of thousands of dollars if we ever need to apply for other types of loans, such as a home mortgage. Therefore, it is important for us to be responsible with our credit card bills and build a high credit score. Borrowers with a low credit score will end up paying thousands more on their loans. Lenders check the borrower's credit score to determine what kind of interest rate they will be getting. What they want to know is if the borrower is able to pay them back. Most lenders require borrowers to submit documents about their employment and income to determine if they qualify. The bank might be the best option as they generally offer competitive rates for boat loans.īorrowers should shop around between different lenders and find one with the lowest interest rate and fees. Dealership financing usually charges a higher interest rate so that they can make a profit. Online lenders are the most convenient option, but they may not get all your questions answered. There are pros and cons of applying for a boat loan with these institutions. On other hand, if the borrower is strong financially and knows that he won't be missing any payments, then go for the secured boat loans.īorrowers can apply for a boat loan with their local bank, credit union, dealership, and online lenders. However, to justify the extra risk, lenders charge a higher interest rate for unsecured boat loans.įor borrowers with a high credit score, unsecured boat loans might be worth a shot. If the borrower doesn't want to lose his boat, he may consider an unsecured boat loan, in which case the lender has no right to take his boat if the borrower defaults. If the borrower stops making payments, the bank or lender would take the boat. However, nobody can predict how the interest rate would go in the future, therefore, it is much safer to lock in a fixed rate.Ī boat loan can be secured or unsecured. The interest rate is lower for secured boat loans, but collateral is required which would be the boat itself. The variable rate is good only when the interest rate is declining. With a variable interest, borrowers usually pay a lower introductory interest rate initially, and then the rate fluctuates based on the interest rate index. If you have ever financed a car, you know exactly how it works.Ī boat loan can be fixed interest or variable interest, but most people choose a fixed interest as it is safer and gives the borrowers peace of mind.Ī fixed interest rate means the borrower pays the same amount each month. With a longer term, the borrower would pay less each month but would end up paying more in interest, whereas a boat loan with a shorter term means a higher monthly payment but the borrower saves in interest.Ī boat loan works just like a car loan except that the terms are usually longer because boats are more expensive than cars. The typical down payment required by lenders ranges from 10% to 30%. Higher loan sizes usually require a longer term, but may also come with higher interest and higher down payment. It depends on the lender and the borrower's ability to pay back. The length of the boat loan can be anywhere from 5 to 20 years.

Borrowers with a high credit score will get a lower interest rate.

The interest rate is determined by one's credit score, the size of the loan, and the terms. Once the borrower is approved for the boat loan, he is required to pay fixed monthly payments until the loan is paid in full. He receives a lump sum payment from the lender to buy a boat he otherwise may not afford, and pay the lender back in installment which is very similar to an auto loan. A boat loan is a loan that a borrower gets to finance the purchase of a boat.

Payment on boat loan