Owning a boat is a dream for many people, 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. For borrowers who don’t have enough cash to afford a new boat outright, boat loans can help them cover the cost of this purchase. There are many different loans and lenders to choose from, depending on whether you plan to buy a new or used boat, how much your boat costs, and how you plan to use it.
The best boat loans feature widespread availability, low rates, and flexible down payment requirements and term limits. These lenders also charge few fees and penalties and have high industry financial strength ratings, indicating a stable, reputable company. Finally, the best boat loan lenders have a history of high customer satisfaction ratings and provide excellent customer service.
Best Overall : Bank of the West
Bank of the West is our top overall pick for a boat loan. The lender features low rates, flexible loan amounts, and widespread availability, making it a great choice for borrowers with good credit looking to purchase a boat.
Loans up to $5 million
Repayment terms between One and 7 years
Available in all 50 states
Full-time and liveaboard accepted
Fees can be rolled into loan
Rates as low as 3.74% 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. 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 2001 or newer. Allowed boats include standard and custom power, sailboats, multi-hull boats, pontoon boats, electric boats, high-performance boats, houseboats, and wood hull boats. One of Essex’s few exceptions is boats 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 4.29% APR, while for liveaboard borrowers, rates are as low as 3.74% 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 seven to 14 business days after loan approval; refinance customers should plan for nine to 12 business days from loan approval to funding.
Best for Bad Credit : Southeast Financial
For borrowers with bad credit, Southwest Financial is a good choice for a boat loan. This lender has no minimum credit score requirements, and loans are available even for borrowers with past bankruptcies.
No minimum credit score requirement
Discharged bankruptcies okay
Decisions in as little as three hours
Rates starting at 3.74% 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 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 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 3.74% APR.
Best for Quick Funding : LightStream
- Starting interest rate: 4.29%
- Minimum credit score: None, but good credit recommended
- Loan terms (range): 24 to 84 months
For borrowers looking for fast funding for a boat loan, LightStream is a great option. The lender offers same-day approval and even same-day funding in some cases.
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 same-day approvals and 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
Mountain America Credit Union is our top choice for a boat loan with in-house financing. Mountain America provides funding directly through authorized dealers for both new and used boats.
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 six states
Membership required if applying personally
Online information is limited
Mountain America Credit Union is a membership-based financial institution that operates in six 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.
Mountain America Credit Union can provide funding directly through an authorized dealer for buyers looking to purchase a new or used boat (up to 19 years old). 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 six 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.
There are lots of options when it comes to boat loans. Some lenders work with even borrowers with poor credit, while some feature extremely low rates, and others offer additional perks like same-day funding. Overall, our top pick for a boat loan is Bank of the West.
Bank of the West offers boat loans with low rates, flexible loan amounts, and flexible repayment terms. Rates start at just 3.59% APR, and borrowers can access loan amounts of up to $5 million. Loans from Bank of the West are available in all 50 states, and the lender offers boat loans for a wide range of watercraft, including standard and custom power boats, sailboats, multi-hull boats, pontoon boats, electrical boats, high-performance boats, houseboats, and wood hull boats.
Compare The Best Boat Loans
|Company||Starting Interest Rate||Minimum Credit Score||Loan Terms (range)||Maximum Loan Amount|
|Bank of the West Best Overall||3.74%||700||4 to 20 years||$5,000,000|
|Southeast Financial Best for Bad Credit||3.74%||None||Up to 15 years||$4,000,000|
|LightStream Best for Quick Funding||4.29%||None, but good credit recommended||24 to 84 months||$100,000|
|Mountain America Credit Union Best for In-House Financing||5.49%||None||Up to 15 years||Not stated|
Guide to Choosing a Boat Loan
Understand the Costs of Owning a Boat
Boat loan down payments typically range from 10% to 30%, so make sure you have enough money saved up to cover the cost of the down payment before you apply for a loan. Once you own a boat, you’ll also have to cover maintenance and related costs. Some of the expenses you’ll need to cover as a boat owner include:
- Trailer to transport and store your boat: If you don’t plan on storing your boat near the water, you’ll need a trailer to transport it from your home.
- Boat insurance: Boat insurance can protect you in the case of an accident or if anything happens to your boat.
- Marina fees: If you dock your boat at a marina, you’ll typically have to pay monthly fees for the privilege.
- Registration: Just like a car, many states require boat owners to register their boat. Costs vary widely from state to state.
- Winter storage: If you live in an area where weather conditions aren’t suitable for boating year-round, you’ll need to store your boat in the winter.
- Maintenance: Routine maintenance costs include painting, cleaning, and replacing small parts.
- Gas: If your boat is powered by gas, you’ll need to fill it up regularly.
Compare Boat Loan Lenders
When applying for a boat loan, there are a few factors that you should consider, including rates, loan amounts, and term limits.
- Rates: You should look for lenders with the lowest possible rates that you qualify for. Low rates mean that you’ll pay less in interest over time.
- Loan amounts: Depending on what kind of boat you plan to buy, you should look for a lender with flexible loan amounts. Some lenders offer loans of up to $5 million.
- Term limits: Term limits refer to the amount of time you’ll be paying back the loan. While longer term limits can result in smaller monthly payments, they also mean that you’ll pay more in interest.
- Credit requirements: Some lenders have credit score requirements that restrict what borrowers they will lend to. If your credit score is on the edge, consider taking steps to boost your score before applying.
- Down payment requirements: Most lenders require a down payment of around 10% to 30% of the total loan amount. Make sure you have enough saved up before you apply for a loan.
- Funding time: If you need immediate financing, you should look for a lender with fast funding times. Some lenders offer fast funding as soon as the same day.
- Boats covered: Not all lenders offer boat loans for all types of boats. If you have a specific boat in mind, make sure that the lender covers that particular type before applying.
- Customer satisfaction: You should also look for a lender with a history of high customer satisfaction. Lenders prioritizing customer happiness and offering robust customer support make for a more pleasant borrowing experience.
Applying for a Boat Loan
There are a few steps you’ll need to take in order to apply for a boat loan. These include:
- Decide on a boat: Whether you’re interested in a sailboat, motor boat, or houseboat, what boat you want to purchase will influence what type of loan you need from a lender.
- Compare rates: When shopping for a loan, you should compare rates from multiple different lenders. This can help to ensure that you get the best deal possible.
- Review your credit score: Some lenders have minimum credit score requirements, while others reserve the most competitive rates for borrowers with excellent credit. Make sure your score is in a good place before applying.
- Make sure you have enough for a down payment: Typical down payments range from 10% to 30% of the total loan amount.
- Complete a loan application: To apply for a loan, you’ll need to provide information about yourself and the boat you want to buy, including your name, address, social security number.
Frequently Asked Questions
What Are Typical Boat Loan Terms?
You can often 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 3.74% 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.
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.