How Long Can You Finance a Boat?
Boat financing is not terribly different from financing a car, a home, or other major purchases, but people often wonder just how long you can finance a boat for. There are different variables (like the size of your down payment and the interest rate), that will affect just how much your monthly payment boils down to, in addition to the length of the term.
So, these other factors also need to be considered when you sit down with a pencil and paper to determine how long you should get the loan for.
Boat Loan Terms
Historically, lenders made boat loans for shorter periods of time than they might for other major purchases. This is because truth be told, 50 or more years ago boats simply weren’t built as well as they are today. After 10 years or more many boats were in need of an overhaul, so lenders wanted to make sure their collateral wasn’t devaluing faster than they were getting paid. But as boats and the engines that propel them have become better and begun lasting far longer, they’ve begun to retain more and more resale value. Net result? Lenders have become willing to finance them over much longer periods of time.
So yes, you may have heard that boat loans are short in duration. It’s true that once upon a time getting a boat loan for 10 years was a stretch and loan periods longer than that were rare—but those times are long past.
Today, many lenders will finance a boat for 20 years. Obviously, that can bring down your monthly payments quite a bit; you can use our Boat Loan Calculator to figure out exactly how the monthly payments would differ between a 10-year term and a 20-year boat loan.
Factors that Effect Boat Financing Terms
You need to be aware, however, that how long you finance a boat can also impact those other variables we mentioned earlier. If you double the term of a loan, for example, a lender is likely to want a slightly higher interest rate, or perhaps a down payment that’s a higher percentage of the boat’s value. There are also some other factors a lender may take into consideration when determining just how long a loan term they’ll be willing to consider. These commonly include:
- The size of the loan
- The type of boat
- The age of the boat, if it’s used
Boat Loan Size
Loan size has an important impact on how long a lender will be willing to stretch the loan. As a general rule of thumb, the larger the loan is the longer it can be financed. Many lenders will have minimum loan amounts for different specific term periods.
Type of Boat
Most modern powerboats can be lumped together, but there are some outliers that financers will treat differently.
- Boats with wood hulls, for example, or high performance boats, may be treated differently.
- Some lenders differentiate between sailboats and powerboats in general, and some consider multi-hull boats or pontoon boats differently.
- One big issue that arises from time to time is with liveaboards. Because of the laws regarding residences, home ownership, and home ownership escrow accounts, loans for liveaboards are treated very differently than common boat loans and some lenders won’t make them at all.
Used Boat Age
The age of a boat has a big impact on the term length that’s acceptable to a lender. In almost all cases 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 to even consider when making a loan, and some others deal purely with new boats.
When buying used you also have to expect that other loan requirements may also change; some lenders have higher minimum loan amounts or different finance rates for boats built prior to a specific model year.
Ready to Secure Boat Financing?
The bottom line? If you’re buying a new boat—which we’d certainly encourage as opposed to buying used, since new boat-buyers report a much higher level of satisfaction—and your credit score and debt-to-income ratio are up to snuff, you should have no problem financing a boat that meets a lender’s minimum loan amounts for up to 20 years.
Use our Boat Buyer’s Guide to help work through all the other factors that should be taken into account when making a purchase of this nature, and you’ll have years of fun on the water to look forward to.
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