Best boat loans of May 2024

Buying a boat can be expensive. Depending on the type of boat you get and your budget, you could spend anywhere from 10,000 into the millions. According to the National Boat Owners Association, a new sailboat can range from $100,000 to $500,000, while a used sailboat can start as low as $10,000.

We’ve determined the best personal loans to buy a boat based on maximum loan amounts, lowest annual percentage rates (APRs), loan repayment terms, credit score requirements, and more.

Compare personal loan rates for boat loans of May 2024

Best boat loans

All of the following lenders offer loans that can be used to finance a boat, but you may need to apply directly on their websites.

LightStream: Best home improvement loans and low rates

Upgrade: Best for fair credit

SoFi: Best overall

BHG Money: Best for large personal loans

Methodology

We evaluated the best personal loan lenders for boat loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date. Read our full lender rating methodology for more information.

How do boat loans work?

Boat loans work similarly to car loans or any other type of installment loan, except that some loans require the boat as collateral, while others do not. For instance, most personal loans don’t require collateral, while boat financing through a dealer typically does. Specialized boat loan lenders and dealers generally also require that you make a down payment of 10% to 20% of the boat’s purchase price.

Regardless of which type of boat loan you get, most have a fixed interest rate and fixed monthly payment for the duration of the loan’s term. Repayment terms vary, but can range up to 7 years for a personal loan and 10 to 20 years for a specialized boat loan.

When comparing loans, you’ll want to consider the annual percentage rate (APR) over just the interest rate alone. The APR includes the interest rate and upfront fees the lender charges. Boat loan APRs tend to start around 7%, but can range much higher, up to 36%, if you need a loan with bad credit.

Banks, credit unions, personal loan lenders, and boat dealers all offer boat loans. You can also get them from a boat loan lender that specializes in boat financing. 

Check out: Where to get a personal loan

Financing a used boat

Financing a used boat could save you money since used boats are generally cheaper than new. But used boat financing has more stringent requirements.

Most boat loan lenders will examine the age, value, and condition of your used boat before they will finance it. Lenders will then use a loan-to-value (LTV) ratio to determine how much to finance you — an LTV below 85% is often required. And some may not fund boats over a certain age.

But if you use a personal loan to buy a used boat, an appraisal won’t be required, and there may be no restrictions on the boat’s age, condition, or LTV amount.

Types of boat loans

If you want to finance a boat, you have options. You’ll need to decide what type of financing works best for you. All tend to have fixed interest rates and monthly payments.

Secured loans

Many boat loans are secured, meaning you must offer collateral, such as your boat, to secure the loan. If you default on payments, the lender has the right to repossess the collateral. Secured boat loans often require a down payment of 10% to 20% of the boat’s price, and repayment periods often last between 10 and 20 years. You’ll typically encounter this type of financing at a boat dealer.

Learn more: What are collateral loans?

Home equity financing

A home equity loan is a type of secured loan that’s backed by the equity in your home. Once the loan closes, you’ll typically receive a lump sum that’s paid back at a fixed interest rate over five to 30 years.

Ahome equity line of credit (HELOC) offers a revolving credit line allowing you to draw funds as needed, up to a set limit. This type of financing may be best if you’re purchasing a boat that will require ongoing investment, such as a retrofit, repairs, or deferred maintenance. While home equity financing provides flexibility, it poses risks as failure to repay could result in the loss of your home.

You’ll need to have sufficient equity in your home to qualify — usually at least 20%. Also, home equity loans can take a month or more to close, and upfront costs can range from 2% to 5% of the loan amount. Plus, if you default on the loan, you risk losing your home.

Unsecured loans

Unsecured loans, like most personal loans, don’t require collateral, and so tend to have higher interest rates and higher credit score minimums compared to secured loans. The average rate on a two-year personal loan is 12.49% APR, according to the Federal Reserve. You’ll qualify for the lowest rates if you have excellent credit, a low debt-to-income ratio (DTI), and a reliable source of income.

However, if you have a poor credit score (between 300-579), you may not qualify, or the interest rate and fees might not be worth it. Some lenders specialize in personal loans for fair credit and personal loans for bad credit, but you could be looking at APRs up to 35.99% with lenders like Best Egg.

The advantage is that if you do qualify, getting an unsecured loan can be quick and relatively easy. Loans can be funded the same day you apply, in some cases, and no down payment is required. You’ll have flexibility in your choice of repayment terms — up to seven years is common. Plus, if you go with lenders like BHG, LightStream, or Navy Federal, you may be able to repay the loan over 10 years or longer.

Personal loans are a common type of unsecured loan — if you go this route and are approved, you’ll receive the money as a lump sum that you can then use to buy your boat.

How to compare boat loans

Once you know the type of boat loan that’s best for you, comparing your options is going to help you get the best deal for your financial needs. Here are some factors to consider when comparing boat loans.

• APR: The annual percentage rate reflects the loan’s total cost. It accounts for the interest rate as well as upfront loan fees, such as an origination fee. Getting a low APR depends on factors like your credit score, income, current debt, as well as the type of boat loan you choose. Typically a lower credit score means a higher APR.
• Repayment terms: Boat loans can have repayment terms up to 20 years, depending on the lender and type of loan. If you are looking for a lower monthly payment, a longer term loan may be a better fit, but keep in mind that you’ll pay more in interest in the long run.
• Used boat restrictions: Not all lenders finance used boats. A pre-owned boat can be seen as a risk to some lenders and may require a full inspection of the vessel before getting approved for a loan.
• Eligibility requirements: Most lenders will have a set of criteria you need to meet in order to get approved for a loan. These requirements often include a minimum credit score, sufficient income, a positive payment history, and a reasonable DTI. Meeting the requirements for a lender can potentially help you get approved.
• Loan amount: Consider lenders that offer the loan amount you need. For instance, if you’re looking to finance a $25,000 used boat, you might consider a personal loan along with dealer financing. But if you’re looking to finance a $500,000 boat, you’ll likely be limited to dealer and boat-specific financing.

Pros and cons of boat loans

A boat loan can get you out on the water, but it’s important to consider the pros and cons, and the bigger picture, before pulling the trigger.

Pros:

• Flexibility: One of the biggest perks of using a boat loan is that you can buy a boat when you can’t pay for it out of pocket.
• Long repayment terms available: Long repayment terms have lower monthly payments than shorter ones do, and can help you afford payments over an extended period of time.
• Predictable payments: Boat loans often have fixed rates for the length of the repayment term, so you can budget for predictable monthly payments.
• Timely payments can improve your credit: Like most loans, as long as your lender reports to the three credit bureaus, a boat loan will be reflected on your credit report, as will your payments. If you consistently make payments on time, it can improve your credit score.
• Finance other boat expenses: Some boat lenders allow you to finance other aspects of owning and operating a boat, such as delivery and refitting.

Cons:

• Expensive if you don’t have good credit: With fair credit (a FICO score from 580 to 669) or poor credit (a FICO score below 580), a boat loan can be costly. If you can qualify, expect to pay a higher rate relative to someone with good credit. For example, rates on personal loans can range up to 36% — at a rate that high, it’s crucial to consider whether owning a boat is worth it.
• May require a down payment: Some boat loan lenders require a down payment of 10% to 20% of the boat’s price. (You won’t need to provide a down payment for an unsecured personal loan.)
• Could lose your collateral: If you get a secured boat loan, you could lose the boat if you fail to make payments on time. If you use home equity to buy a boat and default, you could potentially lose your home.
• Fees: Many loans are subject to fees, such as origination and processing fees. Plus, buying a boat comes with registration fees and taxes. Shop around to compare loan terms and make sure you know the total amount you’ll need to finance.
• Stringent requirements for used boats: If you get a used boat, you will likely be subject to stricter requirements than financing a new boat, including an appraisal. Plus, some lenders won’t finance boats older than 20 years.

Related: Average personal loan interest rates

How to qualify for a boat loan

To qualify for a boat loan, it’s best to have: a good credit score (a FICO from 670-739), a DTI below 45%, and sufficient income to afford the payment. You may or may not need a down payment, depending on the type of lender.

Lenders may also require information about the boat, such as the year, model, and appraisal value. When you apply, lenders will usually request recent pay stubs or a tax return, along with proof of address, insurance, and banking details.

How to apply for a personal loan for a boat

If you’re ready to apply for a personal loan to buy a boat, the process is simple and only requires a few steps.

1. Research lenders: Start by researching lenders that match your criteria, like loan amount, loan term, or minimum credit score requirements. To see multiple lenders in one place, visit an online loan marketplace to explore your borrowing options.
2. Prequalify: Once you find lenders that may be a good match, prequalify with lenders that offer it. Prequalification does not impact your credit score and provides an estimate of the rate and terms you may be eligible for. Note that a hard credit pull — which can temporarily lower your score by a few points — will follow if you submit a formal application. Prequalification is not an offer of credit, and final rates may be higher. Also reach out to lenders offering secured boat loans for an estimate of APRs and loan terms.
3. Compare lenders: Next, compare loan quotes to find the best boat loan for your situation. Consider loan APRs, repayment terms, and monthly payments, along with lender fees. Use a loan calculator to see how much you’ll pay in interest to buy a boat.
4. Pick a loan and apply: Once you’ve settled on a lender, fill out an official application and submit your supporting documents, such as proof of income and information about the boat you want to finance, if required.
5. Get your funds and your boat: If you’re approved for a loan, the lender will send you a loan agreement to review and sign. Once you sign, expect to receive the funds as soon as the same or next business day. Some lenders may take up to a week.

Check out: Best fast personal loans

Alternatives to boat loans

When exploring alternatives to traditional boat loans, there are several options that offer flexibility and different financial structures.

• Personal loans: These unsecured loans are available from banks, credit unions, and online lenders. They typically have fixed interest rates and terms ranging from two to seven years, but may offer terms up to 12 years or longer for boat-specific loans. Personal loans don't require collateral, making them suitable for financing smaller boat purchases or when you prefer not to use the boat as collateral.
• Home equity loans: If you own a home and have built up sufficient equity, you can consider a home equity loan. This type of loan uses your home as collateral, allowing you to borrow a lump sum often at a fixed interest rate. Home equity loans often have lower interest rates compared to personal loans or credit cards, but your home is used as collateral, so if you miss payments your home may be on the line.
• Home equity lines of credit (HELOC): Similar to home equity loans, HELOCs also use your home as collateral. However, instead of receiving a lump sum, you're given access to a line of credit that you can draw from as needed. You only pay interest on the amount you borrow, making HELOCs flexible for financing a boat in need of ongoing repairs or refitting.
• Boat clubs: Boat clubs offer an alternative to boat ownership, providing access to a fleet of boats for a membership fee or regular subscription. Members can enjoy boating without the responsibilities of ownership, such as maintenance, storage, and insurance. While this option doesn't involve loans, it provides a cost-effective way to enjoy boating, especially for occasional or seasonal use.

Boat loans FAQ

What is the minimum credit score required for a boat loan?

Each lender has different credit score requirements, but a credit score of at least 680 is ideal to qualify for most boat loans. However, some lenders offer boat loans to borrowers with fair credit. For example, Trident Funding requires a FICO score of at least 600 to be considered. The higher your credit score, the more likely you are to qualify for better loan terms and a lower interest rate.

Can I get a boat loan with bad credit?

Yes, some lenders may offer loans for bad credit, but you will have fewer options. Bad credit boat loans may also come with higher fees and loan costs overall. To improve your options, lower your DTI by paying down existing debt (this could also lower your credit utilization). If you can wait for a boat, take steps to improve your credit by making on time payments as well.

Are boat loan interest rates fixed or variable?

Boat loans are usually offered at a fixed interest rate. This means you'd have the same payment amount during the life of the loan, regardless of how interest rates change.

Can I use a boat loan to purchase a used boat?

Yes, depending on the type of boat loan, you can use one to purchase a new or used boat. However, some lenders that specialize in boat loans will scrutinize the age, value, and condition of a used boat before financing it. If you want to finance a used boat that doesn’t qualify, consider a personal loan.

Can I refinance a boat loan?

Yes, you may be able to refinance your boat loan to lock in a better interest rate, remove a co-borrower, or lower your monthly payment. You’ll want to maintain a good credit score by making payments on time. Shop around and compare loan rates before settling on a new lender.

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• What is a personal line of credit?
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