How long can you finance a boat

How Long Can You Finance a Boat?

Written by Boatsetter Team
April 9, 2021

Are you thinking about buying a boat any time soon? There is nothing like getting out on the open water and feeling the cool breeze and ocean spray against your skin. At Boatsetter, you can try before you buy. You have the option of renting as many different types of boats as you like so that you can get an idea of the type of boat you are most interested in purchasing.

Once you’ve narrowed your options down a little, you’ll probably need to arrange some type of financing for your new watercraft. Although they will give you and your family many years of enjoyment, new boats can often be quite expensive, especially if you are looking for something with all of the latest bells and whistles. The idea of boat financing is essentially the same as financing a car, rv, a home, or any other kind of major purchase. 

You are more likely to obtain a boat loan if you go to marine lending institutions rather than regular banks or a credit union. This is because many of the marine lending institutions’ agents know much more about boats and understand the purchasing and survey process better than agents at regular banks.

If you’re wondering about the range of interest rates you can expect to see on a boat loan in your area of the country, keep in mind that many factors affect a loan’s interest rate. For example, how much you plan to borrow, your credit score, and your down payment size can all affect your monthly payments.

Boat Loan Terms

Buying a used boat

Indeed, most lenders have traditionally made boat loans for shorter periods than they might for other major purchases. During most of history, boats just were not built as well as they are today, so many boats needed major repairs or were even beyond repair after about ten years. This meant that most lenders wanted to make sure their collateral was not devaluing faster than getting paid. 

As many types of boats and their engines have improved over the years and started lasting far longer, they have begun to retain much more of their resale value. The result is that lots of lenders have now become willing to finance boat purchases over much longer periods. 

Today, you will find plenty of lenders who will be willing to finance a boat for up to 20 years. You’ll quickly see how that can bring down the monthly loan payments a lot. Just search online for a Boat Loan Calculator to determine exactly how the monthly payments would differ between a 10-year term and a 20-year term.

Financing Options

The amount of time that you finance a boat can also have a large impact on other variables. For example, if you double the loan term, a lender will probably charge a slightly higher interest rate, or perhaps a larger down payment will be required. A few other factors a lender may consider when determining the length of your loan term are:

  • The size of the loan
  • The type of boat 
  • The age of the boat, if it’s used. 

Size of the Loan

Boat Loan Rates

Just like when you purchase a house or a car, loan size is very important for how long a lender will be willing to stretch the loan. Generally, the larger the loan is, the longer it can be financed. Just keep in mind that many lenders will have minimum loan amounts for different specific term periods. 

Having a longer loan term also means that your boat’s overall cost will be far higher than it would if you had bought the boat with a shorter loan term. But for some people, a smaller monthly payment is worth more than saving money over the long term. It just depends on your outlook and attitude toward your purchase.

Type of Boat

When you are considering what boat to get, keep in mind that most modern powerboats can be treated as a single category, but there are some types of boats that lenders might treat differently.

  • Boats with wooden hulls. 
  • High-performance boats. 
  • Sailboats and powerboats in general.
  • Multi-hull boats or pontoons.

Age of the Boat

The age of a boat often has a big impact on the boat loan term length. Generally, the newer a boat is, the longer a boat loan you can get. Many lenders put a cap on how old a boat can be, and other lenders deal solely with new boats. When buying a used boat, you might also have to expect that other loan requirements can change. For example, some lenders might set higher minimum loan amounts or different financing rates for boats built before a specific model year. 

There are some definitive guidelines that marine finance companies use when deciding whether to fund older boats. Many of the lenders may fund the purchase of an older, high-quality boat but not an older mid-range or lower quality boat. For example, you might not be able to borrow money for an older $35,000 boat, but you might be able to for an older $70,000 boat of a similar size and model. The lenders assume that the higher value boat is of higher quality, and it will stand the test of time.

The loan rate will depend on if you have a good or bad credit rating and the amount of down payment. Sometimes buying an older boat takes a little more effort, and you might have to provide tax records and income statements. Also, for boats older than 20 years, a premium is often added to the cost of borrowing, so boats that are 21 to 30 years old are more expensive to finance.

Living on the Boat

living on houseboat

One big question that also comes up is when people want to live on their boat. Living on a boat full-time is an alternative lifestyle that takes plenty of preparation and organization. Because of the various laws regarding residences, homeownership, and homeownership escrow accounts, loans for liveaboards are treated very differently than common boat loans, and some lenders will not make them at all. Getting boat financing can be challenging in these situations. 

The best way to manage your expenses is by making a firm budget and sticking to it. Depending on your boat’s size and value, you might find that boat insurance is just as expensive as house insurance. You will be pleased to hear that Boatsetter offers a comprehensive peer to peer boat insurance package, provided through Geico. Become familiar with boat insurance by taking out a Boatsetter rental with significant liability coverage: $300,000 per person and $300,000 total liability per accident. 

Your property taxes will usually be less, and so will electricity because you won’t be living in as big of a place. You’ll probably save some money on waste management, gas, and water as well. Where you might see your costs rising quite dramatically is for general maintenance. 

Marine parts and labor are usually quite a lot more expensive than their typical household counterparts. If you take on the tasks yourself, you can reduce the costs a little. But remember that if you are self-employed, every hour you spend working on your boat is an hour you are not making money. 

Finally, keep in mind that even if you already have a boat in a slip in a marina, you can necessarily just move aboard. 

Most marinas require an application for you to move aboard permanently. In some areas, liveaboards aren’t permitted or there are long waiting lists. Liveaboard slip fees are usually higher, and your insurance rates may increase if your boat becomes your primary residence. When you commit to living aboard, you’ll need to make checklists of necessities. Be sure to prepare the boat for life aboard well before you make the move.

Using Boatsetter to Help You Decide

In addition to helping you try out the type of boat you may want to purchase, Boatsetter can help you get an idea of how much your dream boat is going to cost you. One of the best ways to experience a luxurious boat is to rent it out with a few friends. If you split the costs, you’ll get a reasonably cheap day out on the water, and you’ll get a better idea of whether or not you want to shell out the big bucks and buy a boat of your own.

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