When it comes to financing a boat, there isn’t a one-size-fits-all loan or a “best” boat loan lender out there. That said, there are a few factors you can weigh in to narrow down your options.

You’ll need to get into the nitty-gritty details of your financial situation, as well as the type of vessel you’re trying to finance, in addition to evaluating the lender’s terms and conditions, to find the right boat loan for you.

5 factors to consider before choosing a boat loan lender

Weighing in these factors will help you find the lender that best caters to your financial situation and needs.

Usage requirements

Some lenders or institutions may have restrictions on what the loan funds can be used on. Marina-specific companies that solely focus on boat and other marine craft financing likely won’t have a restriction on what boat you finance. However, online lenders and banks may have regulations in place.

Before applying for a boat loan, read the terms and conditions thoroughly to ensure you can use the loan for a boat and related expenses.

Used boat restrictions

Some institutions or lenders may be hesitant to approve you if you’re using the funds to finance an older, used model. This doesn’t apply to all used boats. It primarily impacts individuals with significantly older models that may need more routine maintenance and upkeep than newer models. In some cases, the lenders that do offer used boat financing may ask for a full inspection to ensure the vessel is in good condition and give you an offer based on the results.

Member benefits

Before turning straight to an online or marina-specific lender, look into your bank or credit union’s options. While the rates may not be as competitive as online lenders, it’s common for banks to offer member benefits, like interest rate discounts if you sign up for autopay or for having another account with them.

Plus, sticking with your bank could alleviate some of the stress associated with the application process, especially if you have borrowed from the institution in the past.

Rates and terms

Knowing what a competitive interest rate looks like is a crucial part of choosing the best lender for you. Before signing on with the first lender you see, look at the terms to make sure the repayment options meet your needs and compare its interest rate range to similar lenders.

You could qualify for more favorable terms or a lower rate with a different lender or institution, so make sure you’re aware of what a competitive rate will look like for your credit situation before starting the application process.

Fees

Some lenders may charge application or origination fees on top of interest, which can significantly increase the overall cost of the loan. Additionally, some may also charge a prepayment penalty if you pay off your loan ahead of schedule.

Before applying for a loan, make sure to research these fees and, if possible, go for a lender that charges little-to-no fees to lessen the financial burden.

How to compare lenders

Comparing lenders can seem like a daunting task; there are a plethora of lenders that all offer similar products and interest rates. However, finding the right lender for you doesn’t have to be a time-consuming and difficult process.

There are websites that do all the back-end work for you and list the ‘best’ lenders as per their methodologies and ranking systems. They’ll often list the lender and loan details, so you don’t have to dig through every lender’s terms and conditions document.

Once you come across a few lenders that you think would best suit your needs, see if you prequalify (if they offer the option) before applying. Prequalification allows you to see your approval odds and predicted rates before applying, with no impact to your credit score.

How to choose the best boat lender for you

After prequalifying, compare your predicted terms and make sure you meet all of the requirements before you decide to apply for the lender that offers you the most competitive rate.

Ensure you look into the benefits and perks that each lender offers. If you end up prequalifying for a few lenders that offer similar rates and terms, the lender that offers the perk best suited to your needs may be what makes a boat lender the best for you.

For example, if you don’t get paid monthly or if you aren’t a salaried or hourly employee, then a flexible repayment plan would be a good perk to have. If you plan on enrolling in an autopay option to make repayment easier, check to see if the lender offers an interest rate discount for enrolling in autopay.

Financing a boat with a personal loan

While there are some companies that offer marinecraft-specific lending, most of the boat loans are actually personal loans that can be used for boating expenses.

That being said, if you’re not having the best luck finding a boat loan that works for you, look into personal loan lenders that allow you to use the funds for a boat or marine-related expense. The only catch is that some lenders may have restrictions based on the type of boat you’re financing or how you plan on using the boat.

Before relying on a personal loan to finance your boat, make sure the lender allows the funds to be used accordingly and that you meet all of the usage requirements.