How Boat Loans and Marine Financing Works

As the Sunshine State, Florida boasts exceptional boating weather practically year-round. If you've always dreamt of spending time on the open seas, you're not alone. According to recent data from the National Marine Manufacturers Association (NMMA), Florida leads the nation in boat sales.

While owning a boat or yacht is a common aspiration, these watercrafts often come with a hefty price tag. To help make the dream of sailing off into the sunset more attainable, consumers can seek marine financing with flexible terms and monthly payments that fit within their personal budgets.

What is a Boat Loan?

A boat loan is an installment loan that you can use to pay for a new or used boat purchase. Boat loans may also be used for other purposes, like refinancing an existing watercraft loan, construction of a new boat, refit, offshore registry, and foreign delivery.

If you’re seeking a boat loan or refinancing, the good news is you have several options for marine financing. Many banks, credit unions, online lenders, and boat dealers offer these loans. Depending on your lender, you may be able to apply for a boat loan online or over the phone. Some may also allow you to apply at a local branch if that’s more convenient for you.

How Do Boat Loans Work?

You may be wondering how to get a boat loan. Like auto loans and mortgages, boat loans are typically secured loans, meaning your lender will likely require that you pledge an asset of value as collateral. This collateral is often the boat you're financing. If a borrower defaults on their loan, the lender can place a lien on their boat until the debt is repaid. An unsecured personal loan may be a good option for those without the collateral or credit needed.

In addition to being secured with collateral, boat loans typically come with fixed interest rates, meaning your rate won't change over the life of your loan. Different lenders offer varying repayment terms for boat loans, though terms as long as 180 months may be available.

As with a mortgage loan, a down payment is often required for a boat loan. While down payment amounts for boat loans may vary by lender, many require you to put 20% down to qualify for financing. You'll generally need to meet additional criteria, like having a good credit score or a debt-to-income ratio below a specific percentage.

Unlike an auto loan with a shorter loan period, marine financing typically has longer repayment periods of up to 15 years. A boat loan calculator can help you determine what you can afford by estimating your monthly payment. You'll need to assess your purchase price, how long you'd like to finance your boat, your estimated interest rate, and your initial down payment. This is a great way to determine how much you'd like to put down now versus how long you'd like to make payments.

What Marine Products Can I Finance?

Marine lenders have different rules about what you can finance with a boat loan. But generally, these loans can be used to pay for a new or used boat.

You may also be able to use them for other purposes, such as the following:

• Boat construction: If you're working with a shipbuilder, a boat loan could help you finance the construction of a new boat or yacht.
• Refitting an existing boat: Renovating or repairing a boat can be costly, and you can finance your renovations with a boat loan.
• Refinancing an existing boat loan: Involves replacing an older loan with a new one to access a lower interest rate or monthly payment.
• Offshore registration: Offshore registration fees can add up if you plan to use your boat for frequent travel. A boat loan can help you cover these fees.
• International boat delivery: International boat shipping costs can add up to several thousand dollars, which you can offset with a boat loan.

What Information Will I Need to Apply For a Boat Loan?

Once you've found a boat loan that suits your needs, it's time to apply. In general, you should provide the following information, though requirements vary by lender.

• Information about your collateral, the type of boat you're financing, and it's model year and approximate value.
• A copy of your driver’s license or another valid government-issued ID.
• Pay stubs, W-2s, or another form of income verification.
• Information about your assets and current debts.

In addition to sharing the information above, you will likely undergo a hard credit check when applying for a boat loan. Your lender will use the data in your credit report to help assess your creditworthiness and the likelihood you'll be able to repay your loan. Review your credit before applying, as this will help determine your interest rate and terms available. Learn more about how your credit is calculated.

Is There a Benefit to Going Through a Bank or Credit Union For a Boat Loan?

Whether buying your first boat or refitting a yacht you've enjoyed for years, consider comparing loans from a local bank or credit union. These financial institutions often offer competitive interest rates, flexible repayment terms, and personalized assistance from a loan officer. Plus, you'll be free to compare financing options and find one that suits your needs best.

Explore Seacoast Bank’s boat and yacht loans to learn more about our loan features and borrower requirements.