Financing A Boat: How To Finance Your Boat

7 Min Read
Updated Feb. 15, 2024
Written By
Sarah Sharkey
Mother, father and young daughter enjoying time on a blue and yellow motor boat on a lake.

Time spent on a lake, ocean, river or bay might be your idea of a perfect day. If you want to spend more days enjoying the water, buying a boat might be at the top of your wish list. But it’s no secret that your ticket to freedom on the water isn’t cheap. The good news is that financing a boat could be an option. Whether you choose a boat-specific loan or use a personal loan to cover this purchase, your boat may be within reach.

Types Of Boat Financing

If you want to use a loan for your boat purchase, there are different types of financing options to consider. They boil down to a secured loan or an unsecured loan, which have different collateral requirements.

Secured Loans

A secured loan involves putting down collateral to finalize the loan. If you’re purchasing a boat with this type of loan, the lender will likely accept the boat itself as collateral. The catch is that the lender has the right to seize the asset if you don’t keep up with your loan payments.

In general, secured loans come with lower interest rates. After all, the collateral you pledge to the loan lowers the financial risk for the lender. If you default on the loan, the lender can use the boat’s value to recoup any losses.

Unsecured Loans

An unsecured loan doesn’t require collateral, which means you won’t put any physical assets on the line. However, there will still be financial consequences if you default on the loan. While the lack of collateral may lower your risk, it also increases the lender’s risk. With that, most unsecured loans come with higher interest rates than secured loans.

See What You Qualify For

How Financing A Boat Works

If you’ve filled out a loan application in the past, applying for boat financing will feel similar. Below are some of the details to consider:

  • Average terms: If you apply for a secured boat loan, you’ll often find loan terms of up to 20 years, depending on the lender. If you opt for an unsecured loan, you’ll find shorter terms that top out around 5 – 7 years.
  • Down payments: Boat loan lenders often expect a down payment in the range of 10% to 20%. However, you may be able to find unsecured loan options that don’t require a down payment.
  • Interest rates: Interest rates vary dramatically based on the lender and your credit score. As of writing, you can expect a good rate to sit around 7% to 10% APR.
  • Credit score: Most lenders prefer to work with borrowers who have a reasonably good credit score. Typically, a minimum credit score of around 670 is recommended.

For example, let’s say that you want to spend more time on the water as a family. After careful searching, you’ve found a boat that will suit your needs for $35,000. If you qualify for a 20-year loan term with a 7% interest rate, you’ll find a monthly payment of $232.59 after making a down payment of $5,000.

Where To Go For Boat Financing

When it comes to taking out a loan, the right lender can make all the difference to your budget. Here are a few places to start your search.

Credit Unions

Some credit unions are willing to offer boat loans to existing customers. In most cases, credit unions are able to offer a lower interest rate and less stringent credit requirements than many banks.

The downside is that you might have to pay a membership fee to get access to these loan opportunities.


Banks often offer personal loans, which you can use to fund your boat purchase. If you have a working relationship with a bank, then it may worth reaching out to ask about financing options. In some cases, you might be able to lock in a great rate.

Boat Dealers

Many boat dealers offer financing opportunities to customers. Essentially, you’ll handle everything from picking the boat to setting up a loan through the boat dealership. While you might find easy access to financing, you might face higher interest rates than you would through a traditional lender.

Online Lenders

Online lenders provide an opportunity to complete your entire borrowing experience online. Many online lenders offer unsecured personal loans, which can come with faster funding than traditional financial institutions.

What To Consider When Financing A Boat

When picturing beautiful days on the water, it’s easy to skip past important financial checkpoints.

Before you dive into a boat loan, take a close look at your credit history and credit score. In general, borrowers with good credit scores will find the most attractive financing options. If your credit score is on the low end, consider holding off on your purchase until you’ve built it up.

Another thing to consider is the size of the loan you can afford. Determine what size loan payment your budget can comfortably absorb. You don’t want to stretch yourself too thin. If you squeeze your budget too hard, you might be forced to work longer hours to afford the boat while simultaneously spending less time on the water.

Nail down the loan amount that best suits your financial situation. In some cases, you might decide to opt for a smaller boat to keep your budget afloat.

Pros And Cons Of Financing A Boat

Every financing opportunity has advantages and disadvantages. Here’s what to consider about financing a boat:


  • You’re a boat owner now, not later: You don’t have to wait to start spending time on the water.
  • It can build your credit: Diversifying your credit mix and making on-time payments to your boat loan can help you build credit.



  • More expensive to finance than buying with cash: When you finance this purchase, interest payments will increase your total costs.
  • Risk of losing the boat if you can’t make payments: If you take out a secured loan, you might lose the boat if you fall behind on the payments.

How To Finance A Boat

If you choose to move forward with boat financing, here’s how to get to the finish line:

  • Make a realistic boat budget: The monthly payment is only one part of your boat costs. You’ll also need to consider maintenance, insurance, water-based assistance, fuel and storage.
  • Pick the right boat for your wallet: Every boater could use a bit more space on deck. But the reality is that you’ll get to spend more time on the water if you can comfortably afford the boat. Find a boat that strikes the right balance between usability and your budget.
  • Choose the right loan type: You’ll need to choose between an unsecured loan and a secured loan.
  • Shop around: When you choose the loan type, you can start shopping around for the right lender. Look for low interest rates and terms that fit your budget.
  • Apply: As you fill out your application, be prepared to provide information about your financial situation.

Alternatives To Boat Financing

Financing a boat isn’t the only way to enjoy water recreation. Here are some other options to consider.

  • Rent a boat: If you only plan to use the boat occasionally, consider renting one on an as-needed basis. Run the numbers to see if your level of use makes sense to buy a boat.
  • Pay cash: While paying cash for a boat might mean delaying your purchase, you won’t have to worry about loan payments.
  • A home equity loan: If you have equity in your home, it’s possible to tap into that to cover your boat purchase. You might find a lower interest rate, but you’ll put your home at risk if you cannot keep up with the payments.

Financing A Boat FAQs

You have questions about financing a boat. We have answers.

What are typical terms for boat financing?

You can expect boat financing terms to range from 4 to 20 years. But the exact loan terms available will vary based on the lender.

Is it hard to finance a boat?

If you have a good credit score, stable income and an available down payment, it might not be too difficult to finance a boat. However, the ease of your financing journey will vary based on your unique situation.

What credit score is needed to finance a boat?

Every lender has their own credit requirements for a boat purchase. But in general, you can expect to need a credit score of at least 670 to move forward.

Can you get a boat loan on an old boat?

It’s possible to finance an older boat. One option is to take out an unsecured personal loan to fund this boat purchase.

When it comes to finances and spending, it’s always good to check in with a financial advisor.

The Bottom Line

A boat loan can accelerate your path to boat ownership. However, it’s important to ensure you can comfortably afford to add this payment to your budget. 


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