A brand new 20-foot boat could cost $40,000 to $60,000. Boat loans are a type of personal loan that you can use to finance the purchase of a marine vessel. You can use a personal loan calculator to understand the monthly payments and total cost of a boat loan.

What Is a Boat Loan and How Does It Work?

A boat loan is an installment loan that is used to finance the purchase of a watercraft. Similar to an auto loan or a mortgage, you will pay a boat loan back in monthly installments with interest.

You can apply for a boat loan with a bank, credit union, online lender or marine dealership. Some lenders offer loans specifically for boats. You can also explore general personal loans, which can be used to finance nearly any purchase.

Calculating the Cost and Payments of Your Boat Loan

The total cost and monthly payments of your boat loan will depend on several factors.

• Loan rate: Boat loan rates will vary depending on the lender and your creditworthiness. An interest rate on a 20-year boat loan is typically in the range of 8.24% if you have excellent credit.
• Loan term: Boat loan length will vary. Terms are typically 10 to 15 years.
• Type of boat: Are you planning to buy a new or used boat? How big is the boat? A brand-new superyacht, for example, will require a much bigger loan than a used sailboat.
• Your credit score: Lenders will look at your credit score to determine how much risk you represent as a borrower. The higher your credit score, the more likely you will be to qualify for a boat loan with good terms. If you have poor credit, lenders may offer you a secured loan.
• Down payment: You may be required to make a down payment to secure a boat loan. You can expect down payment requirements to range from 10% to 30% of the purchase price. A higher down payment usually means lower monthly payments.

You can use a personal loan calculator to figure out your monthly payments and total loan cost

Example of How Much a Boat Loan Would Be

Imagine you want a boat loan to buy a $50,000 boat. If this loan has a five-year term and an 8.24% interest rate:

• Your monthly payment would be $1,019.87
• You would pay $11,174.35 in interest over the lifetime of the loan.
• The total cost of the loan would be $61,174.35
  

Other Considerations

Before you buy a boat, keep in mind the cost of your loan and the other considerations that come with being a boat owner.

The Total Cost of Owning a Boat

While your loan is a significant expense, it does not represent the total cost of owning a boat. Boat owners are also responsible for:

• Registration fees: You may need to pay a registration fee to your state's Department of Motor Vehicles or its Fish and Wildlife agency.
• Insurance: You will likely need boat insurance. The cost of insurance will vary. In low-cost states, the average annual premium is $263. In high-cost states, it is $527.
• Taxes: The federal government does not collect taxes on boats, but you may need to pay state and local taxes when you buy a boat.
• Gas: You will need to pay fuel costs to operate your boat.
• Maintenance: Boats require regular maintenance. Typically, maintenance costs about 2% of the total purchase price each year. You may also need to pay for repairs during its lifespan.
• Storage: Unless you already own a dock or storage facility, you will need to pay a marina or a facility to store your boat.

Depreciation

For many people, owning a boat is a dream come true. But it is a big purchase, and you will want to keep in mind the value of your boat.

Boats depreciate over time. Depreciation will depend on factors like brand and how well you maintain your boat. On average, a boat will depreciate 10% to 15% within a year of purchase and 20% to 30% within five years of purchase.

The Bottom Line

You can use a personal loan calculator as a new or used boat loan calculator. This tool will help you determine how much your monthly payments will be and the lifetime cost of the loan. Comparing boat loans can help you to find the best rates and terms.