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Bankrate analyzes the best boat loan lenders and what borrowers should look for before signing a loan agreement. Boat dealerships, banks, credit unions and online lenders offer boat loans. Before you choose which lender you go with, consider:
Annual percentage rate: The interest rate percentage on the loan. Your rate will depend on individual factors like your credit score, income and debt-to-income ratio.
Loan term: How long the loan lasts and, as a result, how long a borrower has to pay back a loan.
Loan amount: The amount of money the loan is for.
Bankrate has also identified each boat lender highlighted as "best for" particular situations based on our research. Comparing these and other factors will help you find the right lender for you and determine if a boat loan is the right choice for your finances.
1
Identify the costs
Your first step is to identify the costs so you can make long-term adjustments to your finances. Look at what kind of boat is feasible in your financial situation and your ability to pay off a loan for that amount.
2
Check your credit score
Lenders will look at your credit score to help determine things like if you are eligible for a loan and what the annual interest rate percentages (APR) will be. You should know your score in advance to know which lenders you can apply to and what kind of offers you are more likely to get.
3
Choose your loan type (secured or unsecured)
A secured loan is if you want to use an asset you have (in this case, often the boat itself) to guarantee the loan. If you don't want to use the boat as collateral, it is an unsecured loan. What loan type you use will influence your rates and which lenders to apply with.
4
Research lenders and compare rates
To find the best lender for your needs, you should look at information from multiple lenders to see which has the advantages you need and ideal interest rates. If possible, prequalify for the most information about your loan costs.
5
Choose a lender and apply
After you have narrowed down your choices, it is time to apply. Most of the time, you can do this online or in person through your financial institution.
6
Prepare necessary documents
You will need information to prove who you are, your financial situation and your ability to repay the loan. This will usually include items such as pay stubs, proof of residence, W2s and driver’s license information.
7
Accept the loan and start making payments
After you get your loan, it is time to start making payments. Make sure to look over the loan information carefully to see the repayment terms so you don't miss a payment.
Shop around and compare lenders based on:
1
Approval requirements
Every lender has its own threshold for approving potential borrowers, considering things like your income, credit score and debt-to-income ratio. If you have below-average credit, look for lenders that utilize other approval criteria; some will take into account things like your area of study or job history.
2
Interest rates
The lowest advertised rate is never guaranteed, so compare your actual quotes. When comparing interest rates, also make sure to incorporate any fees or penalties; origination fees or application fees can significantly add to the overall cost of your loan.
3
Loan amounts
If you need a loan for something small, like a minor car repair, you'll look at different lenders than you would if you need to pay for tens of thousands of dollars in medical bills.
4
Repayment options
A good personal loan lender usually offers multiple repayment terms so you can choose the one that makes the most sense for your situation. If you're borrowing a lot of money, you may want to look for a lender with long repayment terms to decrease your monthly payment. If you have a smaller loan, a shorter repayment term will cut back on the amount of interest you pay overall.
5
Unique features
Keep an eye out for lenders with any unique perks (or restrictions). Be sure to check that any lender you're considering will allow you to use your loan for the purpose you're intending. Some, like Payoff, restrict their personal loans to specific uses, like debt consolidation.
6
Customer service
It's also wise to investigate a company's customer service options, particularly if you prefer in-person service to online. If you need more information, you can always look up reviews about the company or check out its Better Business Bureau profile.
Consider your own financial health and credit history. Lenders that offer the lowest APRs and higher loan amounts tend to require good credit.
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The term, amount, and APR of any loan we offer to you will depend on your credit sc¬ore, income, debt payment obligations, loan amount, credit history and other factors. Your loan agreement will contain specific terms and conditions. About half of our customers get their money the next day. After successful verification, your money can be deposited in your bank account within 1-3 business days. The timing of available funds upon loan approval may vary depending upon your bank’s policies. Loan amounts range from $2,000– $50,000. Residents of Massachusetts have a minimum loan amount of $6,500 ; Ohio, $5,000; and Georgia, $3,000. TO REPORT A PROBLEM OR COMPLAINT WITH THIS LENDER, YOU MAY WRITE OR CALL Joseph Walsh – Operations Manager, Email: ccrt-resolution@bestegg.com, Address: P.O. Box 42912, Philadelphia, PA 19101, Phone: 1-855-82-6353. This lender is licensed and regulated by the New Mexico Regulation and Licensing Department, Financial Institutions Division, P.O. Box 25101, 2550 Cerrillos Road, Santa Fe, New Mexico 87504. To report any unresolved problems or complaints, contact the division by telephone at (505) 476-4885 or visit the website https://www.rld.nm.gov/financial-institutions/. For a second Best Egg loan, your total existing Best Egg loan balances cannot exceed $100,000. Annual Percentage Rates (APRs) range from 8.99%–35.99%. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0.99%–8.99% of your loan amount, which will be deducted from any loan proceeds you receive. The origination fee on a loan term 4-years or longer will be at least 4.99%. Your loan term will impact your APR, which may be higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest APR. For example: a 5‐year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3‐year $5,000 loan with 7.99% APR has 36 scheduled monthly payments of $155.12. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. Best Egg products are not available if you live in Iowa, Vermont, West Virginia, the District of Columbia, or U.S. Territories.
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Overview: Happy Money (formerly Payoff) offers low APRs of 10.50 percent to 29.99 percent, making it an ideal lender for borrowers trying to consolidate credit card debt at a lower interest rate. This lender also offers free monthly FICO updates and reports payments to major credit bureaus in order to help borrowers build credit.
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The Bankrate guide to choosing the best boat loan
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What is a boat loan?
A boat loan is similar to an auto loan. In this case, a boat loan gives you the money to purchase a boat. This can be anywhere from a small boat to a more luxury craft, depending on your financial situation and desires.
Some lenders offer loans specifically for boats, but most will offer personal loans that can be used to finance boats and related costs. Looking for an online boat loan from a personal loan lender can give you more options to find the least expensive option for you.
Most lenders will ask the borrower to fill out a loan application, which can be fairly thorough. Lenders will also likely ask for information like tax returns and proof of assets. It's likely that you'll need to provide a detailed account of your personal finances during the application process. Lenders want to make sure you're in a healthy place financially and can afford to take out a larger loan, so it's best to have the necessary documentation on hand before you start the process.
The application process is typically fast and approval is largely based on your credit score and income.Though banks typically require 10 percent to 20 percent down for the purchase of a boat, you may be able to finance 100 percent of the cost.
Overview:LightStream offers personal loans from $5,000 to $100,000 with APRs starting at 9.99 percent. Borrowers can choose from loan terms of 24 to 84 months.
Why LightStream is the best overall boat loan:LightStream’s personal loans offer a wide range of loan amounts and repayment options, in addition to a low interest rate cap of 25.99% APR. All of these factors make LightStream a great option for a big purchase such as a boat.
Pros
Longer terms.
High maximum amount.
No down payment.
Cons
Requires excellent credit.
Limited eligibility criteria.
No due date flexibility.
Who its for: Borrowers with strong credit history.
Lender perks:
No fees.
Low interest rates.
Autopay discounts.
Fees: None.
Time to receive funds: Same day if approved before 2:30 EST, Mon-Fri.
Overview: Upgrade offers personal loans from $1,000 to $50,000 with APRs starting at 8.49 percent. Borrowers can choose from loan terms of 24 to 84 months.
Why Upgrade is best for buying a sailboat: The average price of a mid-range pre-owned sailboat starts around $8,000. Upgrade’s loan range of $1,000 to $50,000 is wide enough to ensure that borrowers will qualify for at least the average starting cost of a sailboat.
Overview: Best Egg offers personal loans from $2,000 to $50,000 with APRs starting at 8.99 percent. Borrowers can choose from loan terms of 36 to 48 months.
Why Best Egg is best for financial resources: Best Egg offers a fairly wide range of loans and does not charge a prepayment penalty for early payments, but its high maximum APR of 35.99 percent and origination fee up to 5.99 percent can eat into the overall value of the loan.
Pros
Offers secured and unsecured loans.
Prequalification available.
Flexible eligibility criteria.
Cons
Not available in every state.
High fees.
Potentially high APR.
Who its for: Those with less-than-stellar credit.
Lender perks:
Simple interest loans.
Next day funding.
Low minimum APR.
Fees:
0.99 to 8.99 percent origination fee.
$15 late fee.
$15 returned payment fee.
Time to receive funds: One to three business days.
Overview: PenFed offers personal loans from $600 to $50,000 with APRs starting at 7.74 percent. Borrowers can choose from loan terms of up to 60 months.
Why PenFed is best for buying a used boat: PenFed’s wide range of loan amounts and low starting amount of $600 makes this lender a good choice for borrowers looking to buy a used boat. The price point for a used boat varies depending on the type of boat and a variety of other factors, so its wide loan amount range is well-suited for a borrower in this market.
Pros
Wide loan amount ranges.
Brick-and-mortar locations.
No origination fees.
Cons
Eligibility requirements unclear.
PenFed savings account required.
No discounts.
Who its for: Existing PenFed members who need a small loan.
Lender perks:
Member benefits.
No origination fee.
Low maximum APR.
Fees:
$29 late fee.
$30 returned payment fee.
Time to receive funds:
Same day at brick and mortar.
One to two business days online.
Five to seven days via check.
Requirements: Must maintain PenFed savings account.
Overview: SoFi offers personal loans from $5,000 to $100,000 with APRs starting at 7.99 percent. Borrowers can choose from loan terms of 24 to 84 months.
Why SoFi is best for buying a luxury boat: SoFi’s wide range of loan amounts and high maximum loan amount of $100,000 makes this lender well-suited for borrowers looking to finance a luxury boat.
Pros
Prequalification available.
Rate discounts.
No additional fees.
Cons
Financial criteria not listed.
No payment date flexibility.
No physical branches.
Who it's for: Borrowers looking for a long repayment term.
Lender perks:
Autopay discount.
Fast funding.
Unique member benefits.
Fees: None.
Time to receive funds: In a few days; larger loans may take longer.
Overview:Happy Money offers personal loans for credit card debt consolidation from $5,000 to $40,000 with APRs starting at 10.50 percent. Borrowers can choose from loan terms from 24 to 60 months.
Why Happy Money is best for borrowers with limited credit history: With a low minimum credit score of 640, borrowers who haven't had time to build up a solid credit score have increased approval odds, making it ideal for those looking to pay off previous boating-related credit card debt.
Overview:Prosper is a peer-to-peer lending network offering personal loans from $2,000 to $50,000 with APRs starting at 6.99 percent. Borrowers can choose from loan terms from 36 to 60 months.
Why Prosper is best for buying a deck boat: Deck boats can cost anywhere from $20,000 to $50,000, making Prosper’s loan range of $2,000 to $50,000 ideal to help pay for this expense.
Pros
Joint applications allowed.
No prepayment penalties.
Payment date flexibility.
Cons
Origination fee.
High maximum interest rate.
No rate discounts.
Who it's for: People who want to be matched with a lender.
Overview: Avant offers personal loans from $2,000 to $35,000 with ARPs starting at 9.95 percent. Borrowers can choose from loan terms from 12 to 60 months.
Why Avant is best for fair credit borrowers: Avant is best for borrowers looking for a smaller loan. If you’re in the market for a jon boat or any other moderately priced boat, Avant could be a good place to start.
Pros
Long possible loan terms.
Low minimum credit score of 580.
Household members' income eligible.
Cons
High minimum APR.
No co-signers or co-borrowers.
Administrative fee.
Who its for: People looking for a smaller loan.
Lender perks:
Payment assistance options.
Prequalification offered.
10-day grace period.
Fees:
4.75 percent administration fee.
Late fee.
Dishonored payment fee.
Time to receive funds:
Next business day.
Certain banks or institutions may take longer.
Requirements:
Have an Avant account.
Submit income pay stubs.
Pass identity verification.
Provide employment information.
Have bank account on file.
How boat loans work
Banks and other lenders have tailored their products to fit nearly every budget and lifestyle. However, there are two main categories that boat loans usually fall into: secured and unsecured.
Both of these options have pros and cons, but the loans and rates available to you will depend on the lending institution and your financial history. It’s important to understand the difference between the two types of loans before signing up for any financing.
Secured boat loans
A secured loan is geared toward lower-credit borrowers and is backed by collateral (property, a vehicle or a value item that's used to recoup the loan value if the loan payments aren't made). In the case of a secured boat loan, the boat itself could serve as collateral.
Due to the collateral provided by the borrower, secured loans usually feature lower interest rates than unsecured loans and are accessible to borrowers with a low score or thin credit history. Secured loans are also accessible to borrowers who may not have the best credit history, as lenders aren't as stringent with secured loan requirements.
Unsecured boat loans
An unsecured loan doesn’t require collateral, and generally comes with higher interest rates and more restrictions than secured loans.
Unsecured personal loans are a common boat financing option, as they generally come with better rates and have benefits, like repayment flexibility.
Financing your boat with a personal loan
Personal loans typically have competitive interest rates and flexible repayment terms and if you have a good credit score and sufficient income, a personal loan may be a great fit for you. Plus, depending on the lender, you may be able to make extra payments that go 100 percent toward the principal, which can help you pay down the balance faster.
A personal loan is unsecured, meaning your boat or another asset won’t be used as collateral. An unsecured loan is entirely based on your creditworthiness and verifiable income, so borrowers with better-than-average credit have the best unsecured approval odds.
Once your loan request is approved and funded, you receive the entire amount in your bank account, minus fees such as origination fees.
How to compare boat loan lenders
Comparing lenders is the most important step in the process of finding the best loan for your credit situation. Here are three steps to take before applying to ensure you're not putting your finances at risk in the long-term:
Prequalify for as many lenders as possible to see your predicted eligibility odds and potential rates without impacting your credit.
Compare the predicted offers to find the lender that offers the most competitive rates and terms.
Research the discounts and member benefits of the remaining lenders to find the one that best meets all of your financial needs.
Different boat loan uses
While eligibility may differ from lender to lender, boat loans are often restricted to boats themselves or boat-related purchases. Boat loans can generally be used to finance any new or pre-owned models, from smaller jon boats to full-sized yachts depending on what you qualify for.
Depending on the criteria, some lenders may allow you to use the funds for any related purchases, like maintenance, repairs, storage and insurance. Before signing on the dotted line, check with the lender's requirements to make sure you don't end up in more high interest debt down the road.
What to consider before getting a boat loan
Although there are a few choices for budget boats, most of them cost well into the thousands. Anyone in the market for a luxury boat can expect the price tag to be far higher than what most families have on hand for recreational expenses.
Once you have your sights set on the boat of your dreams and are ready to look at financing the purchase, consider all factors that could affect your final decision.
The price tag is just one of the expenses attached to owning a boat. Maintenance and insurance can quickly turn into big-ticket items. If you plan on keeping the boat at a marina, expect to pay monthly rent for a storage area and administrative fees.
Anyone preparing to take out a loan should also take an honest look at their personal finances and future earnings. Once the contract is signed, the money must be paid back. Look closely at the fine print and ensure your finances can handle the payments, both now and in the long-term.
Pros and cons of getting a boat loan
Pros
Lower down payments: Depending on the institution, the down payment you're required to make could be less than what you'd have to pay with other financing methods. Some lenders don't even require a down payment, which could end up costing you more in interest down the road, but could increase your approval odds.
Long repayment terms: Since the loans are larger, the average repayment term for a boat loan falls between 15 and 20 years.
Cons
Potentially high fees: Origination and administrative fees have the potential to cut into a large portion of your loan amount, so make sure you're aware of any and all fees before signing on the dotted line.
Debt-to-income impact: Boats are a large investment, no matter the cost. Taking out a larger loan could boost your debt-to-income ratio significantly, which makes it harder to get approved for other forms of lending, like a mortgage or a car loan.
Where to get a boat loan
Boat loans are available for both new and used boats; generally the biggest difference between the two is in how much you'll need to borrow and where you get the loan from. If you buy a new boat, you may be able to get financing from the dealer or through a marine specialist. Used boats, such as those you buy from an individual, may not have dealer financing as an option, which would cost you more up front but less in the long-term.
Like most vehicles, the newest, biggest or most high-tech models end up costing the most. As a rule of thumb, assess the likelihood of a future upgrade to determine whether a loan for a new boat is worth it. If you have your eye on an upcoming model or an upgraded version of your current boat, consider looking at pre-owned boats so as not to put yourself in large amounts of debt unnecessarily.
New vs. used boat loans
Aside from the make and model, the biggest difference between new and used boats how much you will need to borrow. Generally, new boats are going to cost more, so you will need to borrow more money or put down a larger amount up-front. The exception to that is if you are deliberately choosing a used boat that costs more than the price of a new boat because of the size or features.
The other difference may be in where you can get a loan. If you buy a new boat, you may be able to get financing from the dealer. Used boats, such as those you buy from an individual, may not have dealer financing as an option. However, online lenders will still be available to help fill in any funding gaps.
Alternatives to boat loans
If a boat loan isn't in the picture, there are other ways to finance such a purchase. Just keep in mind that while all of these options are technically available, it doesn't mean that they're the best fit for everyone. Before choosing an option, assess your finances to make sure it doesn't break the budget.
Unsecured personal loans, while potentially more expensive and harder to get approved for, can be good financing tools when looking to buy a boat. These loans are found through banks, credit unions and online lenders and since they don't require collateral, there's less risk involved. However, some lenders may limit what you can use the funds for, so read through the fine print before making a final decision.
Home equity loans can also be used to finance a boating-related purchase, although it's not recommended. A home equity loan allows you to tap into the equity you've built up in your home to finance a purchase, with your home acting as collateral. If you miss the monthly payments, you run the risk of losing your home to the lender to settle your debt.
Plus, the interest on a home equity loan is tax deductible only when using the funds to make improvements toward your home, so the interest you pay is on the hook for taxation if used to purchase a boat.
How to calculate how much boat you can afford
To decide how much you can afford a boat, consider factors like the following:
The APR: Look through the lender's credit requirements, APR ranges or prequalify to see your approval odds and what your monthly payments potential interest rate could cost you.
Your monthly income and expenses: Calculate your debt-to-income ratio to see how much more debt you can reasonably take on while maintaining your budget.
Other current debts: If you have other high-interest debts, like private student loans or credit cards that have been weighing down your wallet, consider paying those down before taking on another loan.
Repairs and maintenance: Before applying, calculate the maintenance, insurance and storage costs to determine whether a boat will fit comfortably in your budget. Also factor in the potential for emergency repairs and how much it could cost with your desired make and model.
FAQs about boat loans
If you need a loan to finance a boat purchase, you should start by checking your credit score and shopping around to compare lender rates. Be wary of high interest rates and added fees, especially if you do not have a high credit score and low debt-to-income ratio.
You can get a boat loan with almost any credit score depending on what lender you choose. Online lenders sometimes offer loans to those with no credit history or bad credit. However, you will get better interest rates if you have a higher credit score.
While used boats are much less expensive than new boats, prices vary significantly based on boat type, model years and history of use. To make sure you’re getting a good deal, you should compare the boat’s value with the given price using a guide like Kelley Blue Book.
You can lease a boat, but this can be cost-prohibitive depending on what type of boat you rent and for how long. In some cases, a long-term lease on a boat could end up costing you more than buying a boat. If you’re thinking about leasing a boat, consider an alternative like chartering or boat sharing.
Generally, it is best to save up money for a boat before taking on the purchase. However, taking out a loan to cover the expense makes sense if you do not have the cash up front, but are confident you’ll be able to pay it off quickly. Personal secured and unsecured loans tend to be the best option since there are basically no restrictions on how you use the funds. If you’re a homeowner, you could also consider a home equity loan or line of credit. These loans tend to have lower rates, but you will be at risk of losing your home if you do not make payments.
The term of the loan depends on the type of loan you choose, the lender you choose and the amount you borrow. Personal loans tend to have maximum terms of 7 years or less, while home equity products can have terms up to 30 years.
If you have strong credit, you have a good chance of qualifying for a lender’s lowest rates. If you choose to go with a personal loan, rates tend to start around 3 percent. The average personal loan rate is currently around 10.5 percent, so anything less than that would be considered a good interest rate for a personal loan.
Financing a boat could be the right choice if you have good credit, qualify for reasonable terms, and are confident you will be able to make the payments on time. However, if you have fair to bad credit, it may be smarter to work on your credit before making the purchase or pay cash if you are able to.
You can finance a yacht, but only if you can qualify for a large enough loan to cover it. The average cost of a yacht is $640,000, and prices range to more than $15,000,000.
The bottom line
If getting out on the open water has been a lifelong goal,many boat loan financing options are available. Depending on your credit and income, you can find secured or unsecured boat loans that fit your needs and budget.
Before jumping 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 or a boat loan, have a plan to pay it off. Use our boat loan calculator to see how much your monthly payment might be.
Methodology
To select the top boat lenders, Bankrate considers several factors that indicate loan cost, lender trustworthiness and eligibility. Factors include details such as credit requirements, APR ranges, fees, loan amounts and flexibility to account for a wide range of credit profiles and budgets. Bankrate also considers boat-specific offerings and emphasizes factors such as loan amounts that make a difference when purchasing a boat.
Each lender has a Bankrate rating, which consists of three categories. These categories include:
Affordability: The interest rates, penalties and fees are measured in this section of the score. Lower rates and fees and fewer potential penalties result in a higher score.
Availability: What the minimum loan amounts are, eligibility requirements and loan turnaround are considered in this category.
Customer experience: This category covers customer service hours, if online applications are available, online account access and mobile apps.
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