How to get a loan for a used boat?
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How to get a loan for a used boat?

May 9, 2023
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Whether you want to sail for a relaxing day or fish on the high seas, a secondhand boat can make your dreams come true. But perhaps you have been forced to put aside your dream of owning a boat because you cannot afford to buy one.

Fortunately, financing options, such as used boat loans, are available to make boats more affordable for enthusiasts. However, before taking out a loan, it is a good idea to familiarize yourself with the process to avoid surprises when applying or later.

How can financing for a used boat be different?

Although it is possible to obtain financing for a used boat, it becomes more difficult for older models. Depending on the year, make, and model of the boat, the lender may be reluctant to give you a loan for fear that the boat will become obsolete and you will stop paying. They may then ask you for a higher interest rate or a high down payment to minimize the risk to the lender.

What to consider before getting a loan for a used boat

Before applying for a used boat loan, it is good to understand how these factors may affect your finances and the terms you will be granted.

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 fits your budget. It is also important to include other ownership costs that you will incur when you sell and during the life of the boat. These include registration fees and taxes, boat insurance, marina fees, and storage costs (if any). Don't forget to factor in the cost of fuel and maintenance, as well as the cost of the boat license.

Boat value

What is the cost of the boat and how much is the loan needed to purchase it? It is essential to confirm this amount in order to know which lenders are not available at the time of purchase. If you plan to include outfitting costs (if any) and other up-front costs in the loan, you should include them when calculating the amount to be borrowed.

Credit rating.

The lowest interest rates on used boat loans are usually reserved for people with a good or excellent credit rating. A poor credit rating does not automatically mean a rejection, but higher borrowing costs can be expected. In addition, the lending institution may require a large down payment to secure the loan.

For example, if you get a $20,000 boat loan for five years with an 8 percent interest rate, you will pay $406 per month and $4,331.67 in interest over the life of the loan. If, on the other hand, you have a lower credit rating and your interest rate is 21%, your monthly payment will rise to $541.07. In addition, you will pay $12,464.03 in interest, an increase of $8,132.36.

It is therefore worth checking your credit rating and making sure it is up to date before you apply. Otherwise, you could end up paying a fortune in interest.

Where to get a loan for a used boat?

Dealers, online lenders, traditional banks and credit unions offer used boat loans. Here's what you need to know about each option.

  • Online lending institutions: the entire loan process can be completed without the need to travel to a physical branch, making it a convenient option for obtaining a used boat loan. Many online lenders offer attractive loan terms because they have lower operating costs, which allows them to pass savings on to customers.
  • Credit union: to get a used boat loan from a credit union, you need to be a member. However, it may be worthwhile to join a credit union, which often offers competitive financing terms. You can get a loan even if your credit is not perfect if you already have a relationship with a credit union.
  • Traditional banks: a traditional bank can be a viable option for a used boat loan if you have bad credit. Unlike credit unions, you do not need to be a member to apply and may not need to open an account to get a loan.
  • Dealer financing: dealers may offer in-house financing. However, be sure to read the fine print, as these loans often carry higher interest rates to help the dealer increase profit margins.

How do you get a used boat loan?

Once you have determined the loan amount, done the calculations and checked your creditworthiness, here is how to apply for a used boat loan:

  • Step 1: Choose the type of loan . Choose between a secured loan, where your boat must be used as collateral, and an unsecured loan, where no collateral is required.
  • Step 2: Search for lenders . Pay attention to the interest rate, proposed repayment terms, and any fees associated with taking out a loan.
  • Step 3: Get pre-qualified. Many lenders allow you to submit your information to get pre-qualified online and view the loan offers and terms. This will help you narrow down the list of lenders that might be right for you.
  • Step 4: Collect documents. Typically, you will need to submit a copy of your driver's license, ID and proof of income (pay stubs, W2s or bank statements) when you apply. To avoid the hassle of finding these documents, prepare them in advance.
  • Step 5: Submit a formal application. Go to the lending institution that offers you the most favorable terms and submit the required documents.
  • Step 6: Sign the loan documents. Once the application is approved, you will need to review the loan documents, ask questions of the lending institution and sign on the dotted line.


If you cannot afford to pay cash, it may be worth considering a used boat loan. However, your credit rating must be good to allow you to get the best financing terms. You also need to check the numbers to make sure you have room in your spending plan for monthly payments. Use the boat loan calculator to figure out how much you can expect to pay each month.

Start by researching lenders and getting pre-qualified to find the best loan offers for your credit profile. Then you can apply with confidence, knowing that you will get the best terms on a used boat loan.

Irene Scott
Written by
Irene Scott
I’ve worked for more than 5 years as a Credit Analyst and more than 4 years as an Internal Auditor for one of the leading global financial institutions. I have been exposed to the credit review process, various banking products, financial security topics, corporate governance, operational risk, and the internal control framework of a complex, multinational organization.