Key takeaways

  • New and used boats are available from banks, credit unions, online lenders and directly from boat sellers.
  • Lenders take into account the boat’s age in addition to your personal finances and credit score.
  • Choosing between a new and used boat will depend on how frequently you plan on using it.

Deciding to buy an older used boat versus a new one often comes down to the price tag, available boat loan options and how often you plan to use it. Financing an expensive boat at a marine dealership for year-round use is very different from getting a loan to buy a used boat from a private owner for weekend fishing trips.

Lenders typically offer longer terms and lower rates for new boats, while you may need to pay a higher rate for a boat that’s had some wear and tear. Like any type of loan, your credit and finances have a major impact on the boat loan terms you qualify for.

Financing a used vs. a new boat

Whether you’re buying new or used, boat loans generally come in two types: secured and unsecured.

Secured loans are more common with new boats because you can borrow higher loan amounts over longer terms. Unsecured loans don’t use your boat for collateral, which means you qualify based on your credit and finances. They may be an easy way — and sometimes the only way — to finance an older used boat.

Secured boat loans

A secured loan uses your boat as collateral, which means the lender can repossess it if you default. That extra security allows the secured boat lenders to offer terms as long as 20 years and lower rates than unsecured loans.

Secured boat lenders tend to scrutinize the make, model, year and features more closely.  A marine surveyor inspection may be required to prove the boat is safe.

Like new cars, new boats lose value quickly, which makes used boats less attractive for lenders. It may be more difficult to finance an older boat, unless you choose an unsecured loan. Alternatively, lenders may require large down payments or charge higher rates and fees to cover their risk.

Unsecured boat loans

The most common unsecured boat financing option is a personal loan. Funds can be used for any purpose, which means lenders don’t consider the type of boat you’re buying for approval. While it’s not impossible to finance an older used boat, you could be charged a higher interest rate than you would be with a more recent model or newer boat.

Personal loan lenders don’t typically offer terms longer than seven years, which could make for a much higher payment than secured boat loans. Unsecured personal loan rates may also be much higher, especially if you have fair or bad credit.

Financing a new boat

If you’re a boat enthusiast like an all-season fisher or all summer water warrior, a new boat may be a good choice to handle the constant use. Marine lenders may offer special deals for new models, or add in the cost of extras like storage, maintenance and fuel to the loan amount.

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  • Interest rates could be lower for creditworthy borrowers.
  • Longer terms help spread the cost of the boat to keep payments lower.
  • New boat marine dealerships may offer financing incentives or upgrades for using their onsite lenders.
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  • Secured loans may take longer to fund with more documentation.
  • A down payment may be required.
  • You may not qualify with a low credit score.

Financing a used boat

Lenders may be stricter if you’re financing an older, used model since they present more of a financial risk. Repair and maintenance costs can add up, and that makes a secured lender less likely to consider outdated crafts. You may not be able to get a secured loan if the boat is outdated or shows a lot of wear and tear on it.

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  • You can get funds quickly if you choose an unsecured loan to buy your boat.
  • A lower boat price usually means you borrow less and have a lower monthly payment.
  • No down payment if you choose an unsecured loan.
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  • Some lenders may not offer loans for older boats.
  • If an unsecured loan is needed, the shorter available may make the payment unaffordable.
  • The rates and fees are typically higher.

What to know before financing a boat

Look over the lender’s eligibility requirements before you apply to confirm you qualify and check your credit score ahead of time. Most boat loan lenders require a good to excellent credit score for approval.

Use a boat loan calculator to estimate payments to make sure they fit your budget. Add in a buffer for origination fees or any additional features you know you’ll want with your boat.

The process to get a boat loan is fairly similar regardless of whether you buy used or new. You’ll fill out an application, document your income and address and the lender will pull your credit. Secured loan lenders will review your boat’s age, make and model to determine what terms to offer you.

Before making a final decision, consider how much money and time you’ll spend storing, maintaining, transporting and fueling the boat. The ongoing costs may add up, especially if you use the boat on a regular basis.

Is it easier to finance a new boat?

It may be easier to finance a new boat if you have excellent credit and solid finances. A used boat may be better to finance with a personal loan, so you don’t have to jump through hoops regarding the age or condition of the boat.

How to choose between a new and used boat loan

Like most financial decisions, whether you should buy a new or used boat depends on how you plan on using the boat. General recreation and infrequent trips may mean it’s better to choose a used boat. Many are still reliable, and you will save money by avoiding the new boat sticker price. Compare the cost of renting rather than buying if you only plan to use the boat occasionally.

Next steps

Boat loans are available at a number of financial institutions, from banks and credit unions to online lenders and marine financing companies that are onsite at dealerships. When looking for boat loans, compare offers from at least three lenders to ensure you’re getting the best terms and rates available.

Research interest rates and terms in addition to loan amounts, fees and perks. If possible, get prequalified with each lender you find to get an idea of what you may be eligible for without hurting your credit.