Boat Loans and How Boat Financing Works

Setting sail on a boat is priceless in our opinion. But the reality is - unless you’ve saved some extra cash, you may need a boat loan to make it all happen. 

What Are Boat Loans?

Most boat loans are set up just like car loans, with a loan principal that you pay interest on over a fixed term. You can apply for financing through banks and credit unions - as well as some boat dealers and marine-specific financing companies. 

What to Consider

There are various financing options whether you plan to purchase a new or used boat. Before you begin making these big decisions, here are some things to consider: 

Your Credit Score 

Your credit score is a key factor that lenders use to determine your interest rate and loan amount. Credit score requirements will vary across lenders, however, borrowers with higher credit scores are usually offered lower interest rates. Lenders will also look at your credit history, debt-to-income ratio, and other aspects of your financial health. 

The Overall Cost of Owning a Boat

Make sure all potential expenses fit your budget. The total cost will extend beyond your down payment and monthly payments. Common boat-related expenses include seasonal maintenance (i.e., winterizing and preparing for spring launch), storage fees, fuel, registration and taxes, and boat insurance. 

Marine Surveys

A marine survey provides a detailed inspection of the boat. It is used to determine the vessel’s condition and seaworthiness. The surveyor will likely evaluate these systems when conducting the survey: 

  • The nature of the construction
  • Basic vessel design 
  • Cockpit designs
  • Propulsion machinery 
  • Auxiliary machinery and generators
  • Equipment - such as bilge pumps, navigation lights and horn, steering system, and engine controls
  • Fuel system
  • Electrical systems
  • Plumbing systems
  • Safety equipment

Marine surveys are especially important when purchasing a used boat. Most lenders will take value into account when determining how much you can borrow. 

» MORE: NAMS and SAMS Marine Surveyors

Applying for a Boat Loan 

Applying for a boat loan is very similar to applying for an auto loan or any other personal loan. First, you will need to find a lender. It’s best to contact multiple and compare their rates and fees  . 

The application comes next. You will need to provide some basic information like the purchase price of the boat, along with the boat type and age. Lenders will also want to know about your personal finances including employment information, assets, outstanding debt, credit score, and more. 

Finally, you have to wait for approval. Timing will depend on the lender, but it may only take a few business days. 

Boat Maintenance, Storage, and Insurance Costs 

Before you commit to any kind of loan, consider all additional expenses beyond the purchase price. For a boat, you should think about maintenance, equipment, insurance, and fuel costs. 

Maintenance Costs

  • Cleanings
  • Oil changes
  • Tire and brake service (if trailering)
  • Hull maintenance
  • Storage
  • Winterizing
  • Haul-out
  • Spring prep and launch  

» MORE: Complete Guide to Boat Maintenance

Equipment and Accessories (some are optional)

  • Safety gear (i.e., life jackets, horns, flares, etc.)
  • VHF Radio
  • Marine GPS navigation system
  • Anti-theft device
  • Watersports towing equipment 
  • Fishing equipment
  • Etc. 


Boat insurance is not required in many states, though your lender will likely require it. Even if you are not required to obtain insurance, you never want to leave a significant purchase uninsured. 

Coverage may protect you from a hefty repair bill, liability, medical expenses and more. And these costs are often far greater than what the cost to insure the vessel in the first place.  

At the end of the day, your boat is a valuable investment; one that can lead to expensive out-of-pocket expenses if catastrophe hits. That’s why it’s important to protect this asset with quality boat insurance coverage.

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