A boat loan is a type of installment loan used exclusively for financing a boat or similar marine craft. Boat loans operate similarly to auto loans and the application will likely mimic loan application processes.

However, boat loans are larger than most installment loans and therefore tend to be harder to get approved for. Before applying, it’s imperative that you know the ins-and-outs of the application process to increase your chances of approval.

1. Check your credit score

Boat loans often require a higher credit score than auto loans and most personal loans. It’s unlikely that you’ll get approved if you have a score under the very good-to-excellent range.

Your FICO credit score is the most popular scoring model and is often used by lenders in the application process. If you have a FICO score under 740, your chances of approval are likely to decrease. Every lender has different requirements, however, so check the specific criteria before settling on a lender.

How to check your credit score

There are multiple ways to check your score for free. For example, you have access to your credit report once a year for free on AnnualCreditReport.com. If you have a credit card, it’s likely that you’ll have access to your score and report for free as an added cardholder perk.

You can also purchase your score from the three credit bureaus – Equifax, Experian and TransUnion – for a minimal cost. At the end of the day, however you choose to check your score isn’t going to impact your credit score and it’s important to keep up with it. Monitoring your credit will give you insight as to why your score is going up or down, which can help you improve your credit and increase your chances of getting approved for a boat loan.

2. Calculate how much you need to borrow

Before diving into any application, calculate down to the dollar amount how much you need to borrow including related expenses, like maintenance, insurance and marina fees.

Having a specific number will prevent you from over borrowing. If you over-borrow, you’ll likely end up spending more than you originally borrowed due to the interest that accrues on the principal amount. It’s also important to know how much you need as every lender has different requirements and maximum amounts you can borrow.

You can do this by taking a close look at your budget, assets and financial health and also through using a loan calculator. A loan calculator helps you determine a potential repayment timeline and monthly payment based on the predicted loan details.

3. Prequalify and compare lenders

Prequalifying is an option that’s offered by most online lenders and banks; it allows you to check your eligibility odds and predicted rates with no impact to your score. That being said, if the institution offers prequalification, there are very few situations where you shouldn’t take advantage of this benefit before applying.

Prequalify with at least 2 lenders and then compare the offers to more easily find the lender that’s best for you and your credit situation. If you end up with similar rate offers, dig into each lender’s benefits or perks to deduce which option will benefit you.

When looking at the lender websites, be on the lookout for perks like interest rate discounts for enrolling in autopay, exclusive financial resources and guides or tailored customer service experiences for its members.

4. Gather the required documentation

When applying for a loan, starting the application and then realizing that you don’t have the required documentation on-hand can be one of the most frustrating borrower experiences.

Most lenders boast same-day funding and quick application processes; however, it won’t be an easy process if you don’t know exactly what you need beforehand. As a rule of thumb, have your income documentation on hand, a form of ID and your Social Security Number on deck.

Much like with credit scores, every lender will have different requirements so read the criteria carefully before starting the application. Having documentation close by and prepared can also help avoid an incomplete application denial.

5. Apply

You can apply on the institution’s website or in person if there are brick-and-mortar locations near you. Once you complete the application, you may be notified of your status that same day or it could take a few business days, depending on the lender.

Once you’re approved, the lender will reach out to you with disbursement information and when you can expect the funds to hit your bank account. Some companies pride themselves on their exceptional customer service and may provide you with a personal representative to guide you through the process.

Frequently asked questions

  • Most lenders will be looking for a credit score at 700 or higher. If you have a lower score, you may still qualify for a boat loan but won’t qualify for the most competitive rates and terms. Plus, you may be required to provide a larger down payment if your score doesn’t fall into the higher ranges.
  • Each lender has different qualifications; however, most lenders approve borrowers with a good to excellent credit score, a low debt-to-income ratio and a steady income.
  • Since boat loans tend to be larger than other loans, they often come with an average repayment term between 15 and 20 years. Regardless, your exact repayment timeline will ultimately depend on how much you borrow and how large of a down payment you provide.
  • While it depends on the specific circumstances, most lenders won’t approve a mortgage for a boat, houseboat or related marine craft. However, borrowers have the option of borrowing a boat loan or a personal loan to help finance the cost or can take out a home equity line of credit (HELOC) to purchase the boat.
  • Some lenders allow you to pay off a boat loan early and others charge prepayment fees, which charge you for making payments early. Before making any extra payments, read through your terms and conditions carefully to make sure you won’t get hit with extra fees for paying down your loan early.