Comparing all your options: How to choose the best boat loan lender

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

To find the best boat loan for you, you’ll need to dig into the details of your financial situation, including your credit score, repayment history and debt-to-income (DTI) ratio. You also need to consider the type of vessel you need to finance and the loan terms and conditions that work with your finances.

5 factors to consider before choosing a boat loan lender

Before applying for a boat loan, consider these five factors to help you find the lender that best caters to your financial situation and borrowing needs.

1. 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.

For example, some lenders may set a threshold that won’t approve certain boat models made after a specific year. Others may not allow you to use the funds for boating-related costs, like marina fees, insurance or maintenance costs. To ensure you can use the loan for exactly what you need, read the lender’s terms and conditions thoroughly before applying.

2. 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. While every lender’s restrictions will differ, this doesn’t apply to all used boats. Lenders are more hesitant to approve individuals with significantly older models that may need more routine maintenance and upkeep than newer models.

In some cases, the lenders that offer used boat financing may ask for a full inspection to ensure the vessel is in good condition and will give you an offer based on the results.

3. 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.

4. Rates and terms

Knowing what a competitive interest rate looks like is crucial to choosing the best lender for you. Before signing on with the first lender you see, look at the terms to ensure 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, ensure you know what a competitive rate will look like for your credit situation before starting the application process.

5. 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 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.

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

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 ensure you meet all the requirements before applying for the lender that offers you the most competitive rate.

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 aren’t a salaried or hourly employee, then a flexible repayment plan would be a good perk. 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 (most offer discounts that range from 0.25 percent to 0.50 percent).

Evaluating boat lenders and comparing terms makes it easy to narrow down your options and find the best deal on financing. It’s equally important to consider the added incentives offered by lenders to make an informed decision.

Financing a boat with a personal loan

While there are some companies that offer marine craft-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, ensure the lender allows the funds to be used accordingly and that you meet all of the usage requirements.