Raija Haughn is an associate writer for Bankrate.com specializing in personal and home equity loans. She is passionate about helping people make financial decisions that will benefit them long term.
Edited by
Aylea WilkinsLoans Editor, Former Insurance Editor
Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information.
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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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Check Your Personal Loan Rates
Answer a few questions in two minutes or less to see which personal loans you pre-qualify for. It's free and will not impact your credit score.
Bankrate’s scores for personal loan lenders evaluate 11 data points related to loan costs and terms, as well as customer experience.
The annual percentage rate (APR) includes your interest rate, plus any loan fees. It reflects the total cost of borrowing.
The range of loan amounts that a lender will service. The maximum value is the largest amount a lender will give although this amount may not be available to borrowers who don’t have good or excellent credit. Amount ranges may vary for non-loan products. Term refers to the amount of time you have to repay the loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
Lowest rate is for excellent credit only. Rates 6.99% - 22.49% APR w/autopay.*
Loans from $5,000 - $100,000
Same-day funding available (conditions apply)
We guarantee your best-funded loan experience ever
*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are .50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 6.99% APR with a term of 3 years would result in 36 monthly payments of $308.73. 2022 Truist Financial Corporation. Truist, LightStream, and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.
Personal loans up to $50,000 with low fixed rates that will never change
Affordable monthly payments that fit your budget and no prepayment penalties
Fast Funding —You should receive your funds within a day of clearing verifications†
No obligation and no impact to your credit score when you check your rate
Use your loan through Upgrade to pay on high interest credit cards, make a large purchase, finish that home improvement project, or almost any life event!
Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 7.96%-35.97%. All personal loans have a 1.85% to 8.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's bank partners. Information on Upgrade's bank partners can be found at https://www.upgrade.com/bank-partners/.
Get a personal loan up to $50,000 with a fixed APR from 7.99% to 35.99%
Get money in as little as one business day, upon approval and verification
Join more than 450,000 customers at a trusted company with an A+ BBB rating
Use it for almost anything: consolidate debt or other unexpected expenses
GENERAL AFFILIATE DISCLOSURE UPDATE AS OF 11.2022
*Trustpilot TrustScore as of June 2020. Best Egg personal loans, including the Best Egg Secured Loan, are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender or Blue Ridge Bank, a Nationally Chartered Bank, Member FDIC, Equal Housing Lender. “Best Egg” is a trademark of Marlette Holdings, Inc., a Delaware corporation. All uses of “Best Egg” refer to “the Best Egg personal loan”, “the Best Egg Secured Loan”, and/or “Best Egg on behalf of Cross River Bank or Blue Ridge Bank, as originator of the Best Egg personal loan,” as applicable.
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 ; New Mexico and Ohio, $5,000; and Georgia, $3,000. 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.
No prepayment penalties, application fees, late fees, or hidden fees. Because no one wants to do that
You can consolidate all your credit card payments down to one monthly, affordable, fixed-rate payment between 5.99% and 24.99% APR
"This does not constitute an actual commitment to lend or an offer to extend credit. Upon submitting a loan application, you may be asked to provide additional documents to enable us to verify your income, assets, and financial condition. Your interest rate and terms for which you are approved will be shown to you as part of the online application process. Most applicants will receive a variety of loan offerings to choose from, with varying loan amounts and interest rates. Borrower subject to a loan origination fee, which is deducted from the loan proceeds. Refer to full borrower agreement for all terms, conditions and requirements."
Personal loans are available through Achieve Personal Loans (NMLS ID #227977), originated by Cross River Bank, a New Jersey State Chartered Commercial Bank or Pathward N.A., Equal Housing Lenders and may not be available in all states. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, credit usage and history. Loans are not available to residents of all states. Minimum loan amounts vary due to state specific legal restrictions. Loan amounts generally range from $5,000 to $50,000 (including the origination fee) and are offered based on underwriting conditions and loan purpose. APRs range from 7.99 to 29.99% and include applicable origination fees. Repayment periods range from 24 to 60 months. For example: A four-year $20,000 loan with an APR of 18.34% would have an estimated monthly payment of $561.60 and total cost of $26,956.80. To qualify for a 7.99% APR loan, a borrower will need excellent credit, a loan amount of $12,000.00 or less, and a term of 24 months. Loan origination fees vary from 1.99%to 6.99%, most loans have a fee of 4.99%. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to pay off qualifying existing debt directly; or showing proof of sufficient retirement savings, could help you also qualify for a lower rate. Average interest savings for personal loans range from 0% - 6% based on closed loans that qualified for one or more of our rate discounts in July 2022. †Times noted are estimates and can vary for a loan request from Achieve Personal Loans (NMLS #227977). Same day approvals assume that a fully completed application with all required supporting documentation is provided early enough on a day that our offices are open. Achieve Personal Loans consultants are available Monday–Friday 6AM to 8PM MST and Saturday–Sunday 7AM to 4PM MST.
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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. However, personal loans can also be used to purchase boats. 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. Don’t be surprised if the lender asks to see a detailed account of your personal finances — they want to make sure they’re giving a loan to someone who can pay it back.
The application process is typically fast, and approval is largely based on your credit score and ability to repay. 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 7.99 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 22.49% APR. All of these factors make LightStream a great option for a big purchase such as a boat.
Pros
No added fees
No down payment required
Mobile app available
Cons
Must have excellent credit to apply
No prequalifying online
Eligibility requirements not available on website
Who the lender is best for: LightStream is best for borrowers with good credit. LightStream does not specify a minimum credit score on its website, but it does make clear that borrowers with excellent credit are more likely to qualify for the lowest rates.
Impact on financial wellness: For borrowers who can qualify, LightStream offers flexible terms, low rates and no additional fees. Financing a boat through a LightStream personal loan could ultimately save you from added costs typically associated with loans.
Time to receive funds: Borrowers can expect to receive funds the same day they apply as long as it is a business day and the verification process is complete by 2:30 PM EST.
Fees: LightStream personal loans do not come with any added fees.
Additional requirements: You must have excellent credit to apply for the lowest APR.
Overview: Upgrade offers personal loans from $1,000 to $50,000 with APRs starting at 7.96 percent. Borrowers can choose from loan terms of 24 to 84 months.
Why Upgrade is best for buying a sailboat: The price of a sailboat starts at around $12,000. Upgrade’s loan range of $1,000 to $50,000 is wide enough to ensure that borrowers will qualify for at least the starting cost of a sailboat.
Pros
Rate discount if you have an Upgrade checking account
No prepayment penalty
Mobile app available
Cons
Origination fee
High APR cap of 35.97
Cosigners not allowed
Who the lender is best for: Upgrade is best for borrowers with good credit who may have a better chance of qualifying for Upgrade’s lowest APR.
Impact on financial wellness: A personal loan from Upgrade could have a positive impact on your finances, but borrowers should watch out for late fees, an origination fee up to 8 percent and Upgrade’s high APR cap of 35.97.
Time to receive funds: Borrowers can expect to receive funds within one business day of applying.
Fees: Upgrade personal loans come with an origination fee of 2.9 percent up to 8 percent, as well as a $10 late fee if you do not make your monthly payments on time.
Additional requirements: Upgrade does not specify exact requirements on its website, but the lender will review your credit and overall financial health when assessing your application.
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 financial health app that allows borrowers to track their credit health, calculate payments and learn more about personal finance. Best Egg also has a financial resources tab on their website where borrowers can enhance their financial knowledge before making big decisions.
Pros
Offers secured and unsecured loans
Accessible to fair credit borrowers
No prepayment penalty
Cons
Origination fee
Only two repayment options
Not available in all states
Who the lender is best for: Best Egg is a great option for borrowers with fair credit scores who may struggle to find reasonable interest rates elsewhere.
Impact on financial wellness: Best Egg offers a fairly wide range of loans and does not charge a prepayment penalty for early payments, but its maximum APR of 35.99 percent is a bit high and it charges an origination fee up to 5.99 percent.
Time to receive funds: Borrowers can expect to receive funds within one business day of applying.
Fees: Best Egg personal loans come with an origination fee of 0.99 percent to 7.99 percent, as well as a $15 fee for returned payments.
Additional requirements: you must have a minimum credit score of 600 and a debt to income ratio of 30 percent or less to qualify.
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 this wide range is well-suited for a borrower in this market.
Pros
Wide range of loan amounts
No fees
Mobile app available
Cons
No same-day funding
No discount for auto-pay
Must be a credit union member
Who the lender is best for: PenFed is best for borrowers who want to borrow a small amount. Few lenders let you borrow as little as $600, making PenFed a great option for those that only need a small loan.
Impact on financial wellness: PenFed has a low maximum APR of 17.99 percent, meaning that borrowers can worry less about potentially paying a high interest rate.
Time to receive funds: Borrowers can expect to receive funds within 1 to 2 business days after approval.
Fees: PenFed personal loans come with a potential late fee of $29 and a returned payment fee of $30.
Additional requirements: You must be a PenFed Credit Union member in order to apply.
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 buy more expensive luxury boats.
Pros
Wide range of loan amounts
No fees
Flexible repayment terms
Cons
High minimum loan amount
No same-day funding
Good credit required
Who the lender is best for: SoFi is best for borrowers looking for a long repayment term. SoFi offers terms from 2 to 7 years, allowing borrowers to stretch out the life of their loan in favor of lower monthly payments.
Impact on financial wellness: For borrowers with good credit, SoFi is a very cost-effective option. With no fees, repayment term flexibility and a wide range of loan amounts available, SoFi gives borrowers more space to customize their loan experience.
Time to receive funds: Borrowers can expect to receive funds within a few days of approval.
Fees: Personal loans from SoFi do not come with any added fees.
Additional requirements: Borrowers must be at least 18 years old, a U.S. citizen and a resident of one of the states where SoFi is authorized to lend. You must also provide proof of income.
Overview: Happy Money offers personal loans from $5,000 to $40,000 with APRs starting at 8.99 percent. Borrowers can choose from loan terms from 24 to 60 months.
Why Payoff is best for borrowers with limited credit history: Payoff has a low minimum credit score of 640, which gives borrowers who have not had time to build up a solid credit score a chance of being approved for a loan.
Pros
Accessible to low credit borrowers
Money management tools included on website
No late fees or prepayment penalties
Cons
No same-day funding
Origination fee
Limited borrowing range
Who the lender is best for: Personal loans from Payoff are designed to help borrowers get out of debt. If you are in the market for a boat but are unsure about juggling another loan payment, consolidating your debt could be a great place to start.
Impact on financial wellness: Payoff charges few additional fees and has a low maximum APR of 24.99 percent. This ensures that borrowers are able to access the cash they need without worrying about added costs.
Time to receive funds: Borrowers can expect to receive funds within 3 days of approval
Fees: Personal loans from Payoff come with an origination fee up to 5 percent.
Additional requirements: Borrowers must have a FICO credit score of at least 640 and no delinquencies on current debts to qualify.
Overview:Prosper is a peer-to-peer lending network offering personal loans from $2,000 to $40,000 with APRs starting at 7.95 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 $40,000 ideal to help pay for this expense.
Pros
No prepayment penalties
Cosigners allowed
Option to change payment date
Cons
High maximum interest rate
Origination fee
No same-day funding
Who the lender is best for: Prosper is best for borrowers with good credit who will qualify for the lender’s minimum APR.
Impact on financial wellness: While borrowers with good credit can qualify for relatively low APRs with Prosper, bad to fair credit borrowers should be wary of the lender’s relatively high maximum APR of 35.99 percent.
Time to receive funds: Borrowers can expect to receive funds as soon as the next business day after approval.
Fees: Personal loans from Prosper come with an origination fee from 2.41 percent to 5 percent, a late fee of $15 or 5 percent of the payment (whichever is greater), and an insufficient funds fee of $15.
Additional requirements: Borrowers must have a FICO score of at least 640, some proof of income, a debt to income ratio of 50 percent or less, at least three open trades on your credit report, fewer than five credit bureau inquiries within the last six months, and have not filed for bankruptcy in the last 12 months.
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’s minimum required credit score is 580, making this a great option for fair credit borrowers who may struggle to find a loan elsewhere.
Pros
Low minimum credit score
No prepayment penalties
Mobile app available
Cons
High minimum APR
Origination fee
Cosigners not allowed
Who the lender is best for: 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.
Impact on financial wellness: Despite being accessible to fair and bad credit borrowers, Avant’s APRs are relatively high and borrowers should make sure they know exactly how much they will pay before signing on.
Time to receive funds: Borrowers can expect to receive funds as soon as the next business day after approval.
Fees: Personal loans from Prosper come with an origination fee up to 4.75 percent, as well as a late fee of $25 and a dishonored payment fee of $15.
Additional requirements: Borrowers must have a credit score of 580 or higher to qualify.
Overview:Figure offers personal loans from $5,000 to $50,000 with APRs starting at 5.75 percent. Borrowers can choose from loan terms from 36 to 60 months.
Why Figure is the best for retired borrowers: Figure does not require verification of employment for retired borrowers, making the lending process easier for borrowers who are no longer in the workforce.
Pros
No prepayment penalties
No late fees
Mobile app available
Cons
Origination fee
Not available in some states
Cosigners not allowed
Who the lender is best for: Figure is best for borrowers with good to excellent credit. This lender requires a minimum credit score of 680 FICO to qualify.
Impact on financial wellness: a loan from Figure could have a positive financial impact on good credit borrowers who qualify for the lender’s lowest APRs. However, borrowers should be aware of the relatively high maximum APR of 31.44, as well as the potential origination fee up to 3 percent.
Time to receive funds: Borrowers can expect to receive funds within 1 to 2 business days of approval.
Fees: Personal loans from Figure may come with an origination fee up to 3 percent.
Additional requirements: Borrowers must have a minimum credit score of 680 FICO, a debt to income ratio of 50 percent or less, a valid U.S. ID and proof of employment unless you are retired.
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 loans usually fall into: secured and unsecured.
Both of these options for financing a boat with a loan have pros and cons, and some borrowers may only qualify for secured loans. 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 means that the money being lent is backed by collateral — something of value that can be used to recoup the cost of the loan if the borrower fails to make the payments. Homes, vehicles and other valuable items are commonly used as collateral. The boat itself could also be considered collateral for a secured boat loan.
Secured loans offer borrowers two main advantages. They usually feature lower interest rates than unsecured loans because the lender is taking on a lower risk due to the collateral. Secured loans are also accessible to borrowers who may not have the best credit history. Even those with faulty credit might be able to qualify for secured loans after doing a little homework on available lenders in the area.
Unsecured boat loans
An unsecured loan doesn’t require collateral, but that doesn’t mean it comes without strings attached. Unsecured loans usually have higher interest rates and more restrictions than secured loans. The application process is also more difficult for unsecured loans.
Many people decide to go the route of personal loans when looking into boat financing options. Personal loans are unsecured loans that can offer better rates than traditional funding sources. Personal loans may also offer more flexibility in things like loan amounts and repayment periods.
Financing your boat with a personal loan
Personal loans typically have competitive interest rates and flexible repayment terms. If you have a good credit score and sufficient income, a personal loan may be a great fit for you.
You can also make extra payments that go 100 percent toward the principal — or pay the entire loan off early in some cases.
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.
Once your loan request is approved and funded, you receive the entire amount in your bank account, minus fees such as origination fees. You then can negotiate with the boat dealer or private party like a cash buyer.
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.
Where to get a boat loan
You can get loans for boat purchases from banks, credit unions, online lenders and other lending institutions. Asking your personal bank for financing options is a good place to start. Having a positive existing relationship with a bank can go a long way toward getting you approved with a good rate.
Many boat dealers now offer financing options of their own. However, this isn’t always the case, and any financing that is available from a boat dealer should be checked against rates offered by other lenders.
Researching online marketplace lenders can be another cost-effective method for financing a boat. When other loan companies can’t provide the right option, an online lender could be the ticket to cruising the lake in a new family boat.
New vs. used boat loans
Boat loans are available for both new and used boats. The biggest difference is in how much you will need to borrow. Generally, new boats are going to cost more, so you will need to borrow more money. The exception to that is if you are deliberately choosing a used boat that would be an upgrade of the price of a new boat because of the boat's 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.
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 into what your interest rate is likely to be so that you can get an estimate of how much your monthly payments will be.
Your monthly income and expenses: You should know how much of your income is currently used up. How much will you be able to put into living expenses and savings if you have a loan?
Other current debts: If you have other debts that you could try to pay off sooner, you may want to factor those in.
Repairs and maintenance: How much will it cost you to keep a boat? Determine where will you store it, how much will boat insurance cost, what any needed repairs will cost and so on.
Once you figure out how much you can afford to pay for a boat, look into the cost of boats around you to make your decision.
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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