Boat loan terms can be as short as five years, but, typically, they are between 10 to 20 years. The exact length of a boat loan depends on a number of factors including the loan amount, the age of the boat, and the type of boat. Learn more about how to determine the right boat loan term for you. 

Factors that Affect Boat Financing Terms

As with other types of loans, a number of factors can affect the financing terms on boat loans.

• Age of the boat: Generally, the newer the boat, the better the financing terms because lenders can more easily recoup their money if the borrower defaults and the lender needs to sell the boat. Loans for older boats tend to have higher interest rates and may have shorter terms. Lenders typically will not finance a boat older than 20 years. 
• Loan amount: The amount of money you need to borrow could help dictate how long you can finance it. Generally speaking, the more money you borrow, the longer you can finance it. 
• Type of boat: While loans for most modern powerboats are treated similarly, loans for some types of boats may have more unique terms. These include sailboats, boats with wooden hulls, high performance or racing boats, and boats you can live on, such as houseboats and yachts. 

How Boat Loans Work 

Boat loans include many of the same terms you’ll find with other loans. 

• APR range: For boat loans, interest rates typically start at between 6% and 7%, but depend on the lender, how much the down payment is, and the borrower’s credit score and history. 
• Amount range: Boat loans can vary greatly, depending on the type and age of the boat. Lenders could finance anywhere from $5,000 to $5 million. 
• Requirements: These vary by lender, but include a minimum credit score, income requirements, and loan-to-value ratio (how much the loan amount is compared to the boat’s market price). 
• Boat requirements: The lender may limit how much it will loan, if any, based on the boat’s age. 
• Fees: These include application and origination fees, processing fees, and closing costs. In addition, lenders may charge you late fees for overdue payments and prepayment penalties if you want to pay off the loan early. 
  

Other Considerations 

The interest rate and type of loan could also affect the loan terms. 

For a boat loan with a fixed interest rate, the monthly loan payments will remain the same for the entire term of the loan. For a boat loan with a variable interest rate, the rate could change frequently, meaning the monthly payment could increase or decrease throughout the loan term. 

With a secured loan, the lender uses the boat as collateral, meaning if you miss payments and default on the loan, the lender has the right to repossess the boat and sell it to pay off the loan. 

Where to Find a Boat Loan 

Boat loans are available through numerous lenders ranging from your local financial institution to qualified marine brokers. So, like other types of personal loans, boat loans can be found online and through brick-and-mortar providers.

Banks and Credit Unions 

Many banks and credit unions offer boat loans, so when shopping for a boat loan, talk with a banking professional at your current bank or credit union. You may receive more favorable loan terms such as lower interest rates if you are a current customer. 

Online Lenders

Because they don’t have the same operating costs as brick-and-mortar financial institutions, online lenders often offer lower interest rates on loans, including boat loans. When shopping for a boat loan, check with a variety of online lenders to see how they compare on loan terms. 

Dealer Financing 

Just as car dealers offer financing when you purchase a vehicle, boat dealers can also offer financing. However, dealer financing could have higher interest rates or include additional fees compared to other lenders like your bank or credit union.

Boat Lender Options

Boat Loan Lenders With Varying Loan Limits
Lender	Starting Interest Rate	Minimum Credit Score Required	Loan Amount	Loan Terms
Lightstream	7.49% w/autopay	None, but good credit recommended	$100,000 maximum	24 to 144 months
BMO	9.14%	700	$5 million maximum	5 to 20 years
Southeast Financial	7.49%	550	$10,000 to $4 million	Up to 20 years
Mountain America Credit Union	8.99%	None	Unknown	Up to 15 years

Alternatives to Boat Loans 

Other ways to finance a boat purchase aside from a boat loan include a home equity loan or a personal loan.

Home Equity Loans or Home Equity Lines of Credit

If you own a home and have established equity, you may be able to use that equity as collateral for a secured loan. A home equity loan is an installment loan in which you receive money in a lump sum that you repay over time.

A home equity line of credit (HELOC) also uses your home as collateral, but instead of a lump sum of money, you receive a credit line that works similarly to a credit card. You can use as much of the credit line as you need and only pay interest on those borrowed funds. When you repay what you borrowed, you can borrow it again.

Personal Loans 

If you have good credit, you may qualify for an unsecured personal loan to purchase a boat. Personal loans are approved based on your credit score and financial information like your income. But they are not backed by collateral. Interest rates on personal loans tend to be higher than on secured boat loans, but you can use personal loans for a range of purposes.

With a personal loan, you receive a lump sum of money to use toward your expenses. Then, you repay that loan over a set amount of time. Terms of personal loans generally range for two to five years. Many lenders offer a maximum of $30,000 to $50,000, but some lenders may provide as much as $100,000.

The Bottom Line

Boat loans typically range between 10 and 20 years, depending on how much the loan amount is, the age of the boat, and the type of boat. Boat loans are available from a number of lenders, including banks, credit. unions, online lenders, the boat dealer, and marine brokers. The right length of boat loan will depend on your budget and funding needs.