Boat Loan Rates: Who Offers The Best Deals?

If you're looking to buy a boat, you'll likely need a boat loan to make your dreams a reality. A boat loan is an installment loan with fixed monthly payments typically over two to 20 years. You can get a boat loan from a bank, credit union, online lender, or marine lending specialist.

Boat loans can be secured or unsecured. A secured boat loan uses the purchased boat as collateral, while an unsecured boat loan is backed by your signature. Secured boat loans may have higher loan amounts, longer repayment terms, and lower rates than unsecured loans, but you risk losing your boat if you default. Unsecured boat loans, on the other hand, have no collateral, so you won't risk losing your boat, but interest rates may be higher and terms shorter.

When considering a boat loan, it's important to shop around for the best rates and terms. Your credit score, the amount you borrow, the age and size of the boat, and how quickly you need the cash will determine which lender is the best fit for you. It's also essential to consider the pros and cons of secured and unsecured boat loans before making a decision.

Secured vs. unsecured loans

When it comes to boat loans, there are two main types: secured and unsecured. Here's a detailed comparison of the two to help you understand the key differences and make an informed decision about which option might be better for you.

Secured Loans

Secured loans require collateral, which means you need to provide something valuable that the lender can seize if you fail to repay the loan. Collateral can include various assets, such as vehicles, bank accounts, stocks, mutual funds, insurance policies, or high-end collectibles. The collateral reduces the lender's risk and can lead to lower interest rates and more flexible loan terms. Secured loans are typically easier to qualify for, especially for individuals with low credit scores or limited credit history. However, failing to repay the loan can result in the loss of your collateral, and your credit score will also be negatively impacted. Secured loans usually take longer to approve and fund compared to unsecured loans due to the additional time needed to evaluate the collateral.

Unsecured Loans

Unsecured loans, on the other hand, do not require collateral. The approval of these loans is based on the borrower's creditworthiness, income, and existing debt. Unsecured loans are more common and tend to have higher interest rates because they are not backed by collateral. Borrowers with good to excellent credit scores usually have a better chance of qualifying for unsecured loans. These loans are often used for debt consolidation, home improvement projects, or other large expenses. Unsecured loans may have stricter credit score and debt-to-income requirements, and the loan amounts may be lower compared to secured loans. However, they offer the advantage of not risking the loss of specific assets in case of default. Unsecured loans typically have a faster approval and funding process, sometimes providing same-day funding.

Boat Loan Options

Now that we've discussed the differences between secured and unsecured loans, let's explore some boat loan options available in the market. Here are some lenders that offer competitive rates and terms for boat loans:

• Boatzon: Offers funding limits of up to $25,000,000, making it suitable for purchasing luxury vessels. It caters to borrowers with fair credit scores and offers long repayment terms.
• Boatloan.com: Specialises in extra-long repayment periods, with loan terms of up to 252 months. It is a good option for those seeking to spread out their loan payments over a more extended period.
• Southeast Financial: This lender stands out for borrowers with bad credit. They offer same-day credit approvals and long repayment terms. However, they have specific requirements, such as a minimum income of $25,000 and residency restrictions.
• LightStream: Best suited for those seeking no fees and fast funding. LightStream does not require collateral and usually provides funding on the same day as approval. However, they require a hard credit pull to see rates, and their loan amounts may be smaller compared to other lenders.
• Upgrade: A good option for financing boat accessories, with a low minimum loan amount. They offer secured loan options and cater to borrowers with fair credit.
• Upstart: Specialises in low or no credit boat loans, with a minimum credit score requirement of 300. They consider factors beyond credit health, such as education and career history.
• Achieve: Recommended for consolidating debt to boost your credit score before applying for a boat loan. They offer rate discounts for using a significant portion of the loan proceeds to pay off existing debt.
• Prosper: A peer-to-peer lending platform that is suitable for borrowers with fair credit. They allow joint applications, increasing the chances of approval for larger boat purchases.
• SoFi: Offers loans of up to $100,000 and is a good alternative for those who don't meet the high credit score requirements of other lenders. SoFi does not charge origination, late, or prepayment fees.
• LendingPoint: Provides longer loan terms, ranging from 24 to 72 months, giving borrowers more flexibility in their repayment plans. However, they may have higher maximum APRs and origination fees.
• Trident: Connects borrowers with lenders based on their specific needs, offering loan amounts from $25,000 to $2 million and terms up to 20 years.
• Universal Credit: An online lending platform offering personal loans between $1,000 and $50,000. They cater to borrowers with damaged credit but charge higher APRs and origination fees.

Pros and cons of each

SoFi: Best for Large Loans

SoFi is a good option for those who need to borrow a large sum of money as it offers loan amounts ranging from $5,000 to $100,000. It also offers same-day funding and doesn't charge origination, late payment, or prepayment fees. However, it has a high credit score requirement of 650 and a high minimum annual income requirement of $45,000. It also doesn't allow co-signers.

Pros:

• High loan amounts
• Same-day funding
• No origination, late payment, or prepayment fees

Cons:

• High credit score requirement
• High minimum annual income requirement
• Doesn't allow co-signers

LightStream: Best for Low Interest Rates

LightStream offers low-interest rates and long loan terms, with loans ranging from $5,000 to $100,000. It also doesn't charge origination, late payment, or prepayment fees and offers a 0.50% rate discount for borrowers who enroll in autopay. However, it has a high minimum credit score requirement of 660 and doesn't offer prequalification.

Pros:

• Low-interest rates
• Long loan terms
• No origination, late payment, or prepayment fees
• Autopay discount

Cons:

• High minimum credit score requirement
• No prequalification option

LendingPoint: Best for Fast Funding and Below-Average Credit

LendingPoint offers fast funding and is a good option for those with below-average credit scores, with a minimum credit score requirement of 600. It offers loan terms of 24 to 72 months, providing borrowers with flexible repayment plans. However, it has high maximum APRs and origination fees of up to 10%.

Pros:

• Fast funding
• Flexible repayment plans
• Low credit score requirement

Cons:

• High maximum APRs
• High origination fees

Southeast Financial: Best for Large Loan Amounts

Southeast Financial offers large loan amounts, with loans ranging from $15,000 to $4 million. It also offers financing for new and used boats and has lower credit score requirements than most lenders, approving borrowers with scores as low as 575. However, it has a lengthy approval and disbursement process, taking several business days, and is not available in Alaska or Hawaii.

Pros:

• Large loan amounts
• Financing for new and used boats
• Low credit score requirements

Cons:

• Lengthy approval and disbursement process
• Not available in all states

Trident: Best for Boats up to 20 Years Old

Trident offers financing for boats up to 20 years old and provides loan amounts ranging from $25,000 to $2 million. It also has a wide range of term options, from seven to 20 years. However, it has a high minimum credit score requirement of 680 and doesn't finance live-aboard vessels.

Pros:

• Financing for boats up to 20 years old
• Wide range of term options
• Large loan amounts

Cons:

• High minimum credit score requirement
• Doesn't finance live-aboard vessels

Upgrade: Best for Bad Credit

Upgrade is a good option for borrowers with poor credit histories, with a minimum credit score requirement of 300. It also allows co-signers and offers flexible eligibility requirements. However, it has high APRs and charges origination fees of 0% to 12% of the loan amount.

Pros:

• Good for borrowers with poor credit histories
• Allows co-signers
• Flexible eligibility requirements

Cons:

• High APRs
• High origination fees

Where to get a boat loan

There are several options for where to get a boat loan. Here is a list of some of the best boat loan lenders:

Southeast Financial

Southeast Financial is a good option for those seeking large loans, with loan amounts ranging from $15,000 to $4,000,000. They also have lower credit score minimums than most lenders, approving borrowers with scores as low as 575. Loan terms can be as high as 20 years, helping to spread out the cost and reduce monthly payments. However, Southeast Financial's approval and disbursement process can take several business days, and they do not offer financing in Alaska or Hawaii.

Upgrade

Upgrade is a good option for those with bad credit, as they approve borrowers with scores below 660. They also allow joint applications, which can improve your chances of getting a loan and a lower rate. Funds are available as soon as the next business day if approved. However, Upgrade's loan maximum of $50,000 may be too low for some boat shoppers, and they charge high origination fees of up to 9.99%.

Trident Funding

Trident Funding is a leading boat loan origination company that works with over 50 banks and financial institutions across the US. They offer loan amounts of up to $2 million and loan terms of up to 20 years. They also have a low credit score minimum of 600. However, some of their partner lenders charge prepayment penalties, meaning there may be a fee for paying off your loan early.

Patelco Credit Union

Patelco Credit Union offers lower rates than most lenders, with loan amounts of up to $100,000. They also have loan terms of up to 15 years and offer interest rate discounts through their LevelUp program for those who make payments on time. However, they have higher rates on loans with terms of 60 months or longer, and credit union membership is required to get a loan.

SoFi

SoFi is a good option for those seeking quick funding, with disbursements available as soon as you are approved. They offer loan amounts of up to $100,000 and loan terms of up to seven years. However, you may need a co-borrower if your credit score is not high, as their borrowers had a weighted average credit score of 749 in 2023.

Regions

Regions Bank can provide a credit decision within one business day, and if approved, you can receive your loan funds immediately. They offer both unsecured personal loans and secured installment loans with lower rates. However, the boat must be under 30 feet, and you must sign for your loan in person at a branch, which is only available in certain states.

How to get a boat loan

Check your credit score and employment stability

Much like with any loan, the best credit scores will get you the lowest rates, largest loan amounts and longer terms. You’ll also need to document a steady income to qualify.

Decide on the type of boat you want

If you're buying a new boat, you'll typically need a secured loan, a down payment, and a high credit score. If you're buying a used boat, it may be easier to budget for an unsecured loan since the loan isn't based on the boat's features.

Shop around

Look at multiple lenders before completing full applications. Make sure you meet the basic credit score requirements and that the lender offers a loan for the amount you need. From there, create a list of the top three to four lenders.

Prequalify

Find lenders that allow you to prequalify first. Prequalification is a process that allows you to check your predicted interest rates and approval odds without any negative impact on your credit score.

Compare offers and apply

After prequalifying, compare the offers and choose the lender that works best for you. You’ll then give your lender additional information about yourself and your loan, and once you’re formally approved, they’ll send you the money.

Pay the seller

After you get the funds, send the payment over to the boat’s seller. Remember to sign up for autopay so that you don’t have to remember to make loan payments manually.

Alternatives to boat loans

There are several alternatives to boat loans, which can help spread out the costs of purchasing a vessel and make the initial investment more affordable. However, boat loans can come with high interest and fees, so it is worth considering other options. Here are some alternatives:

Paying in Cash

Paying in cash is the cheapest option as you avoid interest charges and loan fees. However, ensure you have enough remaining cash for an emergency fund and to meet other financial goals.

Renting a Boat

Renting a boat may be more cost-effective if you are only an occasional boater. You will also save on storage, insurance and maintenance costs.

Dealer Financing

Boat dealers may offer onsite financing options, which can be convenient. However, it is important to compare the terms with other lenders to ensure you get the best deal.

Unsecured Personal Loans

Unsecured personal loans can be a good option if you have excellent credit and can afford the payments. They are also a good choice if you are buying a used boat or cannot qualify for traditional financing. These loans do not require collateral, but they usually have higher interest rates and shorter repayment terms than secured loans.

Home Equity Loans and Lines of Credit

You can secure a loan against your house to finance a boat purchase. Home equity loan rates are usually fixed and can be spread out over 30 years. However, this option puts your home at risk if you miss payments.

Home equity lines of credit (HELOCs) are secured against your home and can be used to cover various boat-related costs. You can use, pay off and reuse the line of credit during the draw period, and payments are based only on the amount used.

Frequently asked questions