Owning a boat is a dream for many, but that dream often comes with a significant price tag. Because of this, many watercraft purchases are financed with the help of a boat loan.
There are many different loans and lenders to choose from, depending on whether you plan to buy a new or used boat (or even finance an existing one), how much your boat costs, and how you plan to use it. As with all loan products, you can also expect boat loan terms to vary based on personal factors like your credit score. However, unlike products like an auto loan, boat loans are a bit harder to come by and may take significantly longer to fund.
To help you find the best boat loans out there, we have compared and reviewed more than 10 different watercraft lenders. We looked at factors such as loan availability, interest rates, down payment requirements, and repayment terms. We also compared things like loan fees and penalties, credit score minimums, and industry financial strength ratings. Here are our top picks.
The 5 Best Boat Loans of 2020
Best Overall: Bank of the West
Our top overall pick for the best boat loans is Bank of the West, also known as Essex Credit. This lender offers boat loans of up to $5 million for a variety of different watercrafts, whether borrowers are part- or full-time users.
Loans up to $5 million
Repayment terms between four and 20 years
Available in all 50 states
Full-time and liveaboard accepted
Fees can be rolled into loan
Rates as low as 3.99% APR
Good credit preferred
85% loan-to-value limit
Charges loan processing fees
Funding isn’t immediate
No cosigners allowed
Bank of the West is arguably one of the most popular watercraft lenders around. Founded in 1874, Bank of the West, also known as Essex Credit, operates and provides loans to creditworthy borrowers in all 50 states. Boat loans through Bank of the West can range from $10,000 all the way up to $5 million, with repayment terms from four to 20 years depending on the loan amount.
While the wide range of loan amounts and repayment terms is great, this lender wins our best overall spot because of the types of boats (and owners) it accepts. Bank of the West offers to finance for boat model year 1999 or newer. Allowed boats include standard and custom power, sailboats, multi-hull boats, pontoon boats, electrical boats, high-performance boats, houseboats, and wood hull boats. One of Essex’s few exceptions is boats that are capable of speeds of 99 mph or higher.
Bank of the West/Essex offers financing to both recreational boat owners and full-timers/liveaboards; many other lenders limit boat loans to recreational users only. New, used, and refinance borrowers can get rates as low as 3.99% APR, while for liveaboard borrowers, rates are as low as 3.59% APR.
A credit score of 700 or higher is preferred through this lender, especially if you want to qualify for the lowest published rates. In most cases, you’ll need to keep your loan-to-value (LTV) ratio at 85% or lower, and a down payment of 10% to 30% based on loan amount is required. There are no prepayment penalties, though you will pay a loan processing fee through this lender. You’re also able to roll any additional expenses—think taxes, title, licensing, registration, etc.—into the loan as long as you don’t exceed the LTV limits.
Getting approved and funded is not an immediate process through Bank of the West, which is probably one of the biggest downsides. If purchasing, you can expect funding to take between 10 to 15 business days after loan approval; refinance customers should plan for 18 to 24 business days from loan approval to funding.
Best for Bad Credit: Southeast Financial
With no minimum credit score requirement, Southeast Financial offers financing to borrowers with subprime credit and even past bankruptcies, earning our pick as best for bad credit boat loans.
No minimum credit score requirement
Discharged bankruptcies okay
Decisions in as little as three hours
Rates starting at 4.74% APR
Recreational use only
Not available in Alaska or Hawaii
$20,000 minimum loan
High debt ratios may be a limiting factor
With a history dating back to 1936, Southeast Financial has been providing loans and other financial products to customers across the country for over 80 years. When it comes to boat loans, though, Southeast Financial excels at connecting borrowers with poor credit to lenders willing to finance their purchase.
Through Southeast Financial, subprime borrowers can access boat loans ranging from $20,000 all the way up to $4 million, with no published credit score minimum. Borrowers with low credit scores or high debt ratios may not qualify for the best possible rates, but loans are available even to those with past bankruptcies.
New and used boat loans are not available in Alaska or Hawaii, and borrowers are only allowed to finance their purchase if the boat is intended for recreational use—no full-timers or liveaboards allowed. Repayment terms may vary according to the loan amount but are available all the way up to 15 years.
Credit approval is provided within 24 hours, with many applicants getting an answer in as little as three hours. Funding can take an additional three to five days after that, and current rates start at only 4.74% APR.
Best for High-Value Boats: SunTrust
Winning our pick for the best high-value boat loans is SunTrust, which offers financing up to $4 million for as long as 240 months, with interest rates starting at only 4.74% APR.
Loans available up to $4 million
Low fixed-rate APR
No points, fees, or service charges
Repayment terms up to 240 months
Boats must be 25’ or longer
Loans start at $100,000
Not offered in all states
Recreational use only
Though SunTrust isn’t the only lender on this list willing to finance a $4 million boat purchase, it is the only high-value lender that doesn’t charge any processing fees to do so. SunTrust also doesn’t have a published credit score minimum requirement, making it easy to see why this competitive-rate lender snagged our top spot for new, used, or refinanced luxury boat purchases.
SunTrust has been around since 1891 and is now part of the Truist bank group. This group, which also includes BB&T, boasts an A- financial strength rating from S&P Global as well as an A+ rating from the Better Business Bureau. Though SunTrust currently offers products and/or services in all 50 states, boat loans are not available in either Hawaii or Vermont.
Marine loans through SunTrust start at $100,000 and go as high as $4 million, with loan repayment terms of up to 240 months. Boats must be 25’ in length or longer, no more than 20 years old (15 years for multi-hulls and 10 years for houseboats), and can only be intended for recreational use. Also, high-performance boats (traveling 60 mph or higher) are not accepted.
A down payment of 15% to 25% is required, depending on the total loan amount. There are no application fees, points, or prepayment penalties involved, and applying takes less than 15 minutes. Current interest rates range from 4.74% APR to 5.74% APR, depending on creditworthiness.
Best for Quick Funding: LightStream
Our top pick for fast boat loans is LightStream. This bank, which is part of the SunTrust (Truist) family, offers quick approval and same-day funding for many applicants.
Funds deposited as soon as same-day
Rate Beat program
No fees or collateral required
Available for buying or refinancing a boat
Offered in all 50 states
Limited repayment terms
Loans cap out at $100,000
Maximum rates can be high
As part of the Truist bank family, LightStream—along with SunTrust and BB&T—provides a variety of banking products and services to customers across the country. This bank operates in all 50 states, offering loans on new, used, and refinanced boats to qualified applicants ages 18 and over.
We chose LightStream as best for quick funding because this bank offers not only same-day approvals but same-day funding in many cases. You can choose your own funding date once approved for your boat loan, even if it’s the same day you applied.
Boat loans through LightStream are offered from $5,000 to $100,000 with repayment terms ranging from 24 to 84 months. Current interest rates range from 4.29% to 11.89% APR with a 0.50% auto-pay discount. They also offer a Rate Beat program, which promises to offer a rate that’s 0.10% lower than the rate offered by a competing lender (for the same loan terms) within the last business day.
LightStream boat loans are unsecured and require no collateral or home equity minimums. There are no application or loan fees, nor will you be penalized for paying off your loan early.
Best for In-House Financing: Mountain America Credit Union
Our choice as best for in-house boat financing is Mountain America Credit Union. This lender offers loans on new and used watercraft purchased through a dealer with competitive rates and loan terms.
New, used, and refinance loans
In-house lending available through dealers
Financing for boats as old as 19 years
Rates as low as 5.49% APR
Branch locations in only five states
Membership required if applying personally
Online information is limited
Mountain America Credit Union is a membership-based financial institution that operates in five U.S. states. While existing members can apply for new, used, or refinanced boat loans directly through the credit union’s website or app, Mountain America offers competitive loans to a broader audience through its dealership financing options.
For buyers looking to purchase a new or used boat (up to 19 years-old), Mountain America Credit Union can provide funding directly through an authorized dealer. This makes it simple to choose and finance your purchase all in one place while also getting access to low interest rates through a bank for which you might not otherwise be eligible.
There are no application fees with Mountain America, and loan repayment terms can be as long as 15 years. Current interest rates are as low as 5.49% APR for creditworthy buyers, whether the boat is new or used; the credit union does not publish minimum credit score requirements for this rate. They also don’t publish down payment requirements or loan minimums/maximums, so you’ll need to check with your dealer to learn exactly what you’re eligible to borrow.
Mountain America Credit Union has only 95 branches in a mere five states, and there are some strict membership eligibility requirements. For many boat buyers, this competitive lender may only make sense if you’re financing on-site through your watercraft dealer.
What Are Typical Boat Loan Terms?
Most often, you can expect boat loan terms to include a repayment period of 15 to 20 years. Down payments may range from 10% to 30%, depending on the amount borrowed, and typically the boat is considered collateral for the loan. Boat loans often start out as low as $5,000 with some lenders offering financing up to $4 million.
Keep in mind that the terms involved with the average boat loan will vary based on a number of factors. These include whether the boat is new, used, or being refinanced; how old the boat is; how much you plan to borrow; and whether the boat is for full- or part-time use.
Can You Get a Boat Loan on an Old Boat?
Getting approved for a boat loan on an older watercraft can be tricky, but it is certainly possible. Some lenders (including one from our list above) will offer used and refi loans on boats as old as 19 years. If the boat is of high value, you may even find lenders willing to finance a watercraft as old as 25 or 30 years.
Expect that interest rates for old boat loans may be higher than those for newer boats, and you may even encounter higher down payment requirements.
If you’re unable to find a lender willing to finance your old boat purchase, consider taking out a personal loan instead.
What Is a Good Interest Rate on a Used Boat Loan?
While used boat loans can occasionally have rates higher than those offered for new boats, this isn’t always the case. In fact, many lenders offer the same competitive rates whether you’re buying used, new, or even refinancing. Because of this, creditworthy applicants can expect to find used boat loans with rates in the 4% to 5% APR range.
For instance, Bank of the West (Essex Credit)—our overall top pick—offers interest rates starting at 3.99% APR for watercraft over $50,000, whether the boat is new or used.
Is Financing a Boat a Bad Idea?
As a general rule of thumb, you should ensure that any purchase you finance will be paid down faster than it depreciates. If the purchase’s value decreases at a faster rate than your loan balance, you run the risk of going "upside down" on the loan, or dealing with negative equity.
While this is most often talked about in terms of new cars, it’s also a concern with watercraft, especially since boats are quickly depreciating assets.
Negative equity can be a serious concern with a high-value investment such as a boat. If the boat were to be stolen, totaled, etc., you would be on the hook for the difference between the remaining loan balance and the insurance company’s valuation/payout. Negative equity can also come back to bite you if you ever want to trade in the boat or sell it, as you’ll wind up owing your lender out-of-pocket in order to finalize the transaction.
Lastly, it’s important to recognize that financing a purchase will cost you more than the sticker price, no matter how competitive the interest rate you obtain. Between loan processing fees and finance charges, the added expense can be significant.
While financing a boat is not a bad idea in and of itself, it’s important to strike a balance between your purchase price, down payment amount, and loan repayment terms. This will help maintain a healthy loan-to-value (LTV) ratio and ensure that you don’t pay significantly more for your purchase over time than if you’d paid in cash.
How We Chose the Best Boat Loans
In order to determine the best boat loan providers, we compared a number of key factors. We wanted lenders that could provide a loan in the majority of states. Other factors considered included looking at the kinds of boats these lenders are willing to finance and what size loans are available. We also considered each lender's availability and interest rates, how quickly loans are financed, and whether or not collateral is required. Lastly, we looked at what is required from borrowers, such as a credit score threshold and a minimum down payment.
Better Business Bureau. "Truist Bank." Accessed October 12, 2020.