Skip to Main Content

How to get a used boat loan

Couple sitting on the front of a boat
anyaberkut/Getty Images
Bankrate Logo

Why you can trust Bankrate

While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .

Whether you enjoy setting sail for a day of relaxation or going deep sea fishing, a used boat can make those dreams a reality. But maybe you’ve been forced to put your dreams of owning a boat on hold because you don’t have the funds to purchase one outright.

Fortunately, financing options, like used boat loans, are available to make boats more accessible to marine enthusiasts. But before you take out a loan, familiarize yourself with the process to avoid surprises when it’s time to apply or later down the line.

How financing can be different for a used boat

Although securing financing for a used boat is possible, it becomes more difficult with older models. Depending on the vessel’s year, make, and model, the lender may be reluctant to approve you for a loan out of fear that it’ll become obsolete and you’ll stop making payments. So, you may be charged a higher interest rate or required to make a hefty down payment to help minimize the risk posed to the lender.

What to consider before getting a loan for a used boat

Before shopping for a used boat loan, understand how these factors may impact your finances and the terms you receive.

Payment amount

Can you afford the monthly payment on a used boat loan? You can use a boat loan calculator to determine a purchase price that works for your budget. It’s equally important to include other boat ownership costs you’ll incur at the point of sale and for as long as you own the boat. These include registration fees and taxes, insurance for your vessel, marina fees and storage costs (if applicable). Also, don’t forget to factor in the cost of fuel and maintenance, along with fees for your boating license.

Value of boat

How much does the boat cost, and what loan amount will you need to make the purchase? Confirming this amount is vital, so you’ll know which lenders aren’t an option when shopping around. If you plan to roll origination fees (if applicable) and other upfront costs into the loan, you’ll want to include those when calculating how much you need to borrow.

Credit score

The lowest interest rates on used boat loans are generally reserved for borrowers with good or excellent credit scores. A lower credit score doesn’t automatically equal a denial, but you can expect borrowing costs to be higher. Furthermore, the lender may require a hefty down payment to secure a loan.

To illustrate, if you get a 5-year $20,000 boat loan with an 8 percent interest rate, you’ll pay $406 per month and $4,331.67 in interest over the life of the loan. But if your credit score is lower and your rate is 21 percent, the monthly payment will increase to $541.07. Plus, you’ll pay $12,464.03 in interest, an increase of $8,132.36.

So, checking your credit score and ensuring it’s up to par before applying is worthwhile. Otherwise, you could spend a fortune on interest.

Where to get a used boat loan

Used boat loans are available through dealerships, online lenders, traditional banks and credit unions. Here’s what you should know about each option.

  • Online lenders: The entire loan process can generally be handled without visiting a physical branch, making it a convenient option to get a used boat loan. Many online lenders offer attractive loan terms since their operational costs are lower, enabling them to pass on cost savings to customers.
  • Credit unions: You must be a member to secure a used boat loan with a credit union. However, joining a credit union could be well worth it as many often feature competitive financing terms. You could also get approved with less than perfect credit if you have an existing relationship with a credit union.
  • Traditional banks: A traditional bank could be a viable option for a used boat loan if you have exceptional credit. Unlike credit unions, there are no membership requirements to apply, and you may not need to open an account to take out a loan.
  • Dealership financing: Dealers may offer in-house financing. Be sure to read the fine print, though, as these loans often come with steeper interest rates to help the dealer boost their profit margins.

How to get a used boat loan

Once you’ve decided on a loan amount, ran the numbers and checked your credit score, here’s how to move forward with applying for a used boat loan:

  • Step 1: Select your loan type. Choose from a secured loan that requires your boat to be used as collateral or an unsecured loan product with no collateral requirements.
  • Step 2: Research lenders. Be mindful of the interest rate, repayment terms they offer and any fees assessed to take out a loan.
  • Step 3: Get pre-qualified. Many lenders let you submit your details to get pre-qualified online and view projected loan offers and terms. Doing so allows you to create a short list of lenders that could be a good fit.
  • Step 4: Gather your documents. You’ll generally need a copy of your driver’s license, proof of residence and proof of income (i.e., pay stubs, W2s or bank statements) when applying. Avoid scrambling to find them by preparing the documents you need beforehand.
  • Step 5: Submit a formal application. Apply with the lender offering the most favorable terms and submit the requested documents.
  • Step 6: Sign the loan documents. Once you’re approved for financing, review the loan documents, ask the lender any questions you may have and sign on the dotted line.

Bottom line

A used boat loan is worth considering if you can’t afford to pay cash. However, your credit score should be up to par to ensure you get the best deal on financing. You also want to run the numbers to ensure you have room in your spending plan for monthly payments. Use the boat loan calculator to understand how much you can expect to pay each month.

Most importantly, research lenders and get pre-qualified to identify the best loan offers based on your credit profile. That way, you can apply confidently and have peace of mind knowing you’re getting the best deal on a used boat loan.

Written by
Allison Martin
Allison Martin's work began over 10 years ago as a digital content strategist, and she’s since been published in several leading financial outlets, including The Wall Street Journal, MSN Money, MoneyTalksNews, Investopedia, Experian and Credit.com.
Edited by
Loans Editor, Former Insurance Editor