Whether you enjoy setting sail for a day of relaxation or going deep sea fishing, a used boat can make those dreams a reality. However, the outright cost of a boat isn’t a small expense and has caused many marine enthusiasts to put these dreams on hold.

Fortunately, financing options, like used boat loans, are available to make boats more financially accessible. Whether it’s through a bank, credit union, online lender or marine marketplace, it’s important to know the ins-and-outs of the loan details to make sure you’re getting the most competitive rate.

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. That being said, you may be charged a higher interest rate or be required to make a hefty down payment to minimize the risk posed to the lender.

Monthly payments for a used boat loan in 2023 

  • Loan Amount: $35,000
  • Interest Rate: 11.99%
  • Loan Term: 5 years
Month Payment Principal Interest paid Total interest Balance
February $778.38 $428.67 $349.71 $349.71 $34,571.33
March $778.38 $432.95 $345.43 $695.13 $34,138.38
April $778.38 $437.28 $341.10 $1,036.23 $33,701.10
May $778.38 $441.65 $336.73 $1,372.96 $33,259.45
June $778.38 $446.06 $332.32 $1,705.28 $32,813.39
>July >$778.38 $450.52 $327.86 $2,033.14 $32,362.87
August $778.38 $455.02 $323.36 $2,356.50 $31,907.85
September $778.38 $459.57 $318.81 $2,675.31 $31,448.28
>October $778.38 $464.16 $314.22 $2,989.53 $30,984.12
November $778.38 $468.80 $309.58 $3,299.12 $30,515.33
December $778.38 $473.48 $304.90 $3,604.01 $30,041.85

What to consider before getting a loan for a used boat

Before shopping for a used boat loan, there are a few key factors that will impact your rate, monthly payment and the terms you’re offered.

Payment amount

Before applying, it’s imperative that you know exactly how much you can afford per month. The best way to do this is to use a boat loan calculator to determine a purchase price and monthly payment 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 costs can include but are not limited to, registration fees and taxes, insurance, 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

Confirming the total boat cost and exactly how much you need to borrow 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 interest rates and fees to be higher. Plus, the lender may require a larger down payment to secure a loan for a borrower with less-than-stellar credit.

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.

That being said, checking your credit score and ensuring you meet the lender’s minimum requirements before applying is worthwhile to avoid spending 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 upfront in cash. However, your credit score should meet the lender’s minimum requirements to ensure you get the most competitive rates and fees. Before signing on the dotted line, run the numbers or use a calculator to know exactly how much you need to borrow.

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.