Best boat loans

The right boat loan for you will depend on the type of boat you want, how much you can afford to offer as a down payment, how you plan to use the boat and your financial situation.

The best boat loans are available to a wide variety of borrowers and have flexible down payment requirements, few fees and low interest rates. Your interest rate and terms may depend on your credit score, income and employment details. The watercraft's age, condition and price may also affect the terms of your boat loan.

Compare top boat loan lenders

When searching for a boat loan, be sure to consider the lender's reputation, financial stability and consumer reviews. Look for a lender with excellent customer service and a history of great satisfaction ratings.

Methodology

The ConsumerAffairs research team chose our top six picks for boat loans by comparing 27 companies based on their online reputations, their starting rates and the availability of their lending services. All information is accurate at the time of publishing.

• Online reputation: We compared ratings and reviews on our site and across the internet. We also checked in with the Better Business Bureau for current government actions related to marketplace misconduct within the last year.
• Rates and fees: We gave preference to lenders with lower starting APRs.
• Availability: We confirmed that all of our picks for boat loan lenders are currently available to borrowers throughout the United States. However, not all lenders are available in all states. We also eliminated lead generators.

Bank of the West provides competitive rates, widespread availability and flexible loan amounts. Borrowers with good credit can borrow from $10,000 up to $5 million to purchase their boats, and the company also offers loans for live-aboard boats, though these have a $25,000 minimum.

Boats financed through Bank of the West must be 2002 models or newer, and loans for models older than 2011 have 0.25% higher rates.

While there are no prepayment penalties, loan processing fees may apply. Borrowers should expect funding to take seven to 14 business days after they receive formal approval.

LightStream issues boat loans from $5,000 up to $100,000 for qualified borrowers. The company offers same-day approval and potential same-day funding, and satisfied customers who left reviews on ConsumerAffairs have praised LightStream’s quick service.

There are no fees, and borrowers don't have to use the boat as collateral for the loan. LightStream also doesn’t require down payments on vehicle loans.

The company doesn’t disclose any qualifications for the boats borrowers can buy with their funds. So, if you’re having difficulty finding a loan to purchase a watercraft that's older or otherwise doesn’t fit other lenders’ requirements, LightStream could be a good option.

Mountain America Credit Union provides boat financing for new and used watercrafts through authorized dealers. The company offers loans with repayment terms up to 15 years and fixed interest rates as low as 5.49%. Borrowers can get money for boats up to 15 years old.

However, you do have to become a Mountain America Credit Union member to apply for a loan, and the not-for-profit has relatively strict membership eligibility requirements, like living in specific parts of Utah or having a relative that’s an existing member. Mountain America Credit Union has branches in six states around the western U.S.

OneMain Financial provides boat loans for $1,500 to $20,000 with maximum annual percentage rates of 35.99%. Rates are fixed, and you can have a co-signer on your loan, which could help you qualify for the lowest available interest rate.

OneMain also charges origination fees that vary by state from 1% to 10% or $25 to $500, depending on how the loan is set up. Loan funding may be available the same day as approval.

Trident Funding is a marine lending marketplace that connects boat buyers with lenders. It has worked with more than 40 lending institutions to help borrowers secure loans. Offerings include fixed- and variable-rate loans.

Trident Funding finances boats up to 25 years old, but it doesn’t offer loans for live-aboard vessels. It also typically requires a down payment of 10% to 20%.

SeaDream provides boat buyers with access to a network of lenders offering a wide variety of boat loan programs. It can also set you up with a boat warranty or boat insurance.

Borrowers with credit challenges have access to the company's Bad Credit Boat Loan Department, which specializes in locating lenders with midtier or subprime marine financing programs.

How to apply for a boat loan

It’s often easier to find a loan before you begin shopping for a boat — this lets you move quickly once you find a boat you’d like to purchase and reduces the chance of it selling while you arrange for your loan.

Getting preapproved or pre-qualified for a boat loan lets you know how much you have to spend and can make shopping for one easier.

Many lenders offer to preapprove or pre-qualify you for a boat loan so you know how much money you may be able to spend. If you like the terms, you can start shopping and get officially approved after you find a boat you’d like to purchase.

As part of the formal application, the lender may require additional information and will likely conduct a hard check of your credit. A hard credit inquiry may temporarily reduce your credit score by a few points.

Lenders may require you to submit your personal information, including your full legal name, address, Social Security number, birthdate and contact details. They may also require your employer's contact information, your last two to three pay stubs and your last set of tax returns to help prove that you have a stable income.

If you’re using a loan specifically for purchasing a boat, you may need to make a down payment. Be sure to consider how much you can afford upfront when comparing loans and shopping for a boat.

Are boat loans secured or unsecured loans?

You can get a secured or unsecured loan to buy a boat. Unsecured personal loans often let you use the money for nearly any reason, including purchasing a boat. Since the loan is unsecured, it presents a slightly higher risk for the lender.

Because secured loans use collateral that can be repossessed by the lender, they’re considered to be less risky and may come with more favorable APRs or terms.

Understand the costs of owning a boat

The total cost of owning and operating your boat may reach far beyond your monthly boat loan payment. Depending on where you live and how you plan to use the boat, you may also need to pay for slip fees, towing, fuel, land storage, maintenance and winterization.

Keep in mind that taking care of your boat is crucial. You'll likely spend a significant amount of money on regular maintenance and repairs to keep your boat in top condition.

Depending on where and how you use your boat, you may need to register it or obtain specific permits. You'll also pay taxes on your purchase, which vary depending on your state's laws.

When you finance a boat, lenders almost always require you to carry boat insurance on it to protect their interest in the property. Boat insurance can be expensive, and your rates will depend on the retail cost of the boat, your claim history and how you plan to use the boat.

Boat loan alternatives

You don't have to purchase and own a boat to get the pleasure of regularly using one. Instead of taking out a boat loan, consider joining a boat club or participating in a peer-to-peer rental program that allows you to pay a fee to occasionally use someone else's boat.

If you’re purchasing a boat, however, other options include financing through the dealer instead of a third-party lender, paying cash upfront or using a home equity loan.

Get boat financing through a boat dealer

If you want to own a boat but don't want to get a traditional boat loan, explore the option of financing a new or used boat through the dealership.

Many boat dealers have finance managers who work to secure financing for buyers. They'll collect personal information about your finances, pull your credit report and approach the dealer's lending partners about getting financing on your behalf.

Boat dealers may be able to save you time shopping for a loan, and specific boat brands or models may come with built-in financing deals that other lenders can't easily match. Dealers may also be able to help you gain access to extended warranty programs to help pay for future repairs.

Look for perks like a delayed first payment, lower rates for a limited time or no interest for a specified time.

Pay cash for your boat

With an excellent credit score, stable income and a significant down payment, you may be able to secure a boat loan with favorable terms and super-low interest rates.

However, if you have enough money to purchase the boat outright, it makes sense to pay cash for your boat and avoid interest costs.

Doing so also lets you choose the types and amounts of boat insurance that fit your budget instead of whatever insurance you need to meet the demands of a lender.

Use a home equity loan

If you own your home and have enough equity, you can take out a home equity loan and use the cash to buy a boat outright. Although the loan won't be secured by your boat, it will be secured by your house.

With a secured boat loan that uses the purchased watercraft as collateral, the lender repossesses your boat to recover some of its money if you fail to make payments. If you use your home as collateral to get the money and fail to make payments on time, the lender can foreclose on your home.

Can you refinance a boat loan?

If you aren't happy with your current boat loan or you couldn’t qualify for the best rates and terms at the time you took out the loan, you may be able to refinance it.

When refinancing a boat loan, watch for fees that can cancel out the money you save from reducing your interest rate.

Before looking into boat loan refinancing, check with your current lender to ensure you won't be charged prepayment penalties. A loan that includes prepayment penalties may not be worth refinancing — the additional costs could offset any savings you'd get with a new loan, even with lower interest rates and fewer fees.

You may be able to save a great deal of money by refinancing a boat loan if you can qualify for lower interest rates than you currently pay. If your credit is worse now than it was when you purchased the boat or if you plan to sell the boat in the near future, it may not be worth the hassle to refinance.

When shopping for a boat refinance loan, watch out for loan origination fees or other costs that could cancel out the lower APR. Look for a loan that helps you reach your goal of making smaller monthly payments or paying off your boat sooner.

Bottom line: What is the best way to finance a boat?

Owning a boat is a goal for many people, but purchasing one can be an expensive undertaking. For those who want to enjoy the boating life but don't have the cash to purchase a watercraft outright, getting a boat loan with favorable terms and affordable payments is crucial.

The best way to finance a boat is with a loan that offers you the best possible interest rate, payment terms that fit your needs and low fees. Since each person's financial situation is different, it's crucial to shop around among reputable lenders for your boat loan.

You can work with lenders to get preapproved so you can see your potential interest rate range. Most lenders only require a soft credit pull for preapproval, so this lets you compare multiple offers without affecting your credit score.