How Long Can You Finance a Boat?

Financing a boat is a great option if you can’t or don’t want to pay the full price upfront. A common question is how long the loan term can be? How long can you finance a boat?

You can normally finance a boat for 15 to 20 years. For example, if you are getting a $25,000 loan for the boat, you can get it financed for at least 15 years.

For loan amounts higher than this, the term of the loan will typically be longer. You will also likely have to pay a down payment that ranges from 15 to 20% of the boat’s initial price.

Loans can also be short-term or long-term. Short term loans are typically those that are not more than 60 months or five years. Long term loans are for about 20 years. On average, loan terms range from 8 to 12 years. Loan terms for financing a boat is typically long term.

Read on to learn more about how long you can finance a boat and the different boat loan types.

how long can you finance a boat

How Long Can You Finance a Boat?

The term or length of time you can finance a boat usually ranges from 15 to 20 years. For instance, if you have applied for a $25,000 boat loan, you will be able to finance it for at least 15 years.

If you take out a loan with a higher amount, you may be able to get a longer-term. Do keep in mind that loans usually require a downpayment in the range of 15 to 20% of the boat’s initial price.

Funding your boat is no different than financing a car or a house. These kinds of loans typically stretch for more than 20 years. Several factors affect the calculation of the term, e.g., the boat’s price, the amount of your downpayment, and the rate of interest.

If you opt for a shorter term, your monthly amortizations will be bigger, and vice versa. It really depends on how much you can pay in one month. You should also factor in your monthly cost of living before deciding on your boat loan’s financing term.

The fact is: boat loans are quite normal and can be likened to financing a home for the long term. In fact, some boat owners consider their boats as their second home. Some even consider their boats as their only home.

So, depending on your financial capacity, you can take out a boat loan and finance it either on a short term basis or a long term basis. Short term loans are usually not over 60 months, while long term loans can stretch up to 20 or even 30 years.

Different Boat Loan Terms

Financial institutions offer two terms for boat financing. They are the short term loan and the long term loan. Short term loans are generally settled not more than 60 months or five years. Long term loans are settled in more than 20 to 30 years.

In the past, boat loans are allowed only on short terms or shorter periods of time than other types of loans. The reason is that the boats that were built in the past weren’t as strongly built as they are now.

Many boats in the past start deteriorating after 10 years. They need to be overhauled in a major way. These boats were very susceptible to the degradation brought about by outdoor conditions such as corrosion from seawater, inclement weather, and other natural destructive elements.

Thus, a person taking out a boat loan needs to settle it in the short term.

With the advances in building techniques and stronger materials, modern boats are now stronger and longer-lasting. But they have also become more expensive. While they are pricier, modern boats are also able to retain attractive resale values.

Due to these developments, financial institutions are now willing to take longer risks in financing these modern boats. At present, many banks, money lenders, and financial institutions are willing to provide long term boat loans that can stretch up to 20 years.

This is favorable to those who aren’t able to pay outright cash to buy a boat but can manage their finances to pay their monthly amortizations. Longer terms offer lower monthly amortizations allowing more people to buy their dream boat through financing.

Different Types of Boat Loans

Another financial aspect of boat loans that you need to understand is the type of boat loans you can avail of. There are four general types of boat loans: Fixed-rate, Adjustable rate, secured, and unsecured.

1. Fixed Rate

A fixed-rate loan means the loan’s interest rate will remain fixed throughout the term of the loan. So, if you and the financial institution agreed on a fixed rate of 6%, this rate of interest will be followed up to the time that you have settled your loan amount.

This is the most popular type of loan that most borrowers take because it offers certain predictability to their budget.

2. Adjustable Rate

An adjustable-rate loan has its interest rate adjusted according to the interest rate indexes. This means the interest rate could be low at times and higher at other times.

If you are confident that your finances can weather this kind of arrangement, it is possible to get a boat loan that is more financially beneficial to you in the long run.

3. Secured

A secured loan uses your boat as collateral. In general, this type of loan offers lower rates. But if you default on your payments, the lender can take your boat. This loan type is ideal if you need a bigger loan amount or not qualified to take out an unsecured loan.

4. Unsecured

An unsecured loan does not need collateral. It is generally offered in the short term with higher interest rates ranging from 4 to 7%.

Factors That Affect the Terms of Boat Financing

how long can you finance a boat for

There are several factors that a money lender will take into account in establishing the term of your boat loan. These terms are:

1. Loan Amount

The amount of loan you are applying for will determine how long the moneylender will finance it. In general, the bigger the loan, the longer its term will be. Most financial institutions prescribe minimum and maximum loan amounts that have their respective term periods.

2. Boat Type

While most modern boats are generally seen as the same, some boats are treated differently by financial institutions for loan approval. Thus, boats are classified by lending institutions as follows:

  • Sailboats
  • Powerboats
  • Pontoon boats
  • Multi-hull boats
  • Boats with wooden hulls
  • High-performance boats
  • Liveaboard boats

Liveaboard boats are treated differently by financial institutions because they are used as residences wherein homeownership laws are applied.

3. Age of Boat

Moneylenders will also look at the age of the boat, especially if it is a used one. Most of them will limit the age of the boat that they are willing to finance. In most cases, the newer the boat is, the longer will be the term of the loan.

Loan requirements may also change when it comes to financing used boats. Some lenders may increase their standard minimum loan amounts or increase their interest rates for used boats built in a certain year.

How long can you finance a boat for? The common term length ranges from 15 to 20 years. If you get a $25,000 boat loan, you can get the boat financed for at least 15 years.

Next, let’s get to know why boats have longer terms.

Why Boat Loans Have Longer Terms

As you search for boat loans, you will find that most of them are offered finance terms that are longer than those offered for cars. Here are some of the reasons why:

Boats Maintain Their Value Longer

Boats have a slower rate of depreciation compared to cars and other solid assets. When it comes to their resale and trade-in value, their prices remain steady over time. Boat owners have the confidence that they will be able to sell their boats at desirable prices even after they have used it for years.

Interest Rates Tend to Remain the Same

It is not unusual for an 8-year term boat loan to have an interest rate similar to a 10 or 12-year loan. This is attractive to boat buyers because they can opt for the longer term since it carries the same interest rate as a shorter term.

With this arrangement, boat buyers can look forward to a low monthly amortization. It will be easier for those who don’t have a big budget to arrive at a wiser buying decision.

How Long Can You Finance a New Boat Vs a Used Boat?

How long can you finance a new boat? Many financial institutions today are willing to give out boat loans for new boats for 20 years. This means lower monthly amortizations for those who are interested in buying new boats.

They are offering this kind of loan to attract more potential buyers to make their buying decisions. It also means that potential boat buyers need not tie up their cash or pull money out of their other investments to enjoy the amenities of a new boat.

Usually, money lenders are willing to reserve 180 to 240 months for loans of $25,000 or more. But it is also worth noting that the longer your loan term is, the longer you will be able to gain equity in your new boat.

How long can you finance a used boat? It is also possible to finance a used boat for 20 years, depending on its condition, its purchase price, and your credit rating. But the lending institution may deduct the age of the boat from the length of the term.

When you apply for a loan, the bank will ask for your permission to examine your credit score. It may also seek a pre-approval of your loan. They call this process a hard credit check. The moneylender may do this because the object of your loan is a used boat.

Some banks offer loans for used boats. But you will need strong credit to be considered by any money lender. You don’t have to be a bank’s customer, but you must have the proper credit credibility to be considered a worthy risk.

Where Can You Apply for a Boat Loan?

Here are some of the financial institutions that are offering boat loans:

1. Banks and Lending Institutions

how long can you finance a new boat

About 20% of boat loans are extended by banks and other lending institutions, like online lenders and credit unions. Some of these money lenders are Lightstream, an online lender, which is actually a division of SunTrust Bank, and Essex Credit, a division of “Bank of the West”.

2. Boat Dealers

Boat dealers themselves finance approximately 80% of loans for new boats. These dealers have good relationships with the banks, and they refer their customer boat loans to these banks for processing.

3. Marine Brokers

According to the National Marine Lenders Association, loans for used boats are usually arranged by marine brokers. These brokers facilitate the connection between you, the buyer, and the seller of the used boat.

They will help you find a boat that will suit your need and your budget. Generally, the broker should represent you and not the seller.

If you are thinking of buying a used boat, it is wise to shop around. To help you arrive at a wise decision, you need to consult with legitimate industry resources such as the NADA Guides. They will provide you with relevant research values and the prevailing prices of boats in your area.

Conclusion: How Long Can You Finance a Boat For?

The usual term or length of time you can finance a boat ranges from 15 to 20 years. In practical terms, it means when you apply for a $25,000 boat loan, you can get it financed for at least 15 years.

If the loan amount is higher than this, the loan term will be longer. Financial institutions also require a down payment that ranges from 15 to 20%.

How long can you finance a used boat? It is possible to finance a used boat for 20 years, depending on its condition, its price, and your credit rating. But the lending institution may deduct the age of the boat from the length of the term.