Deciding to be a boat owner is a big step. Finding a way to finance your boat purchase is where you put that decision into action. From boat loans to your local bank or credit union and dealer financing, you have options for financing a boat. Understanding how these and other boat financing options work can improve your buying experience.

Option #1: Bank financing

Don’t look for a sign that says “boat loans” at your local bank since there’s no such thing. Traditional banks and credit unions typically finance a boat by offering you a personal loan for the purchase. Terms could be anywhere from one to five years, and interest rates will be reasonable. It sounds good, but that’s a short-term loan in the boating world.

Personal loans are a decent option if the asking price is $10,000 or less. You can also refinance a personal loan anytime, so you’re not locked in if the interest rate is high. Work on your credit score, wait for interest rates to come down, then renegotiate. If the cost is more than $10,000, you might want to look at one of the options below.

Option #2: Dealer financing

Boat dealers can offer long-term loans of ten to twenty years for qualified buyers. For the best results, you’ll want a credit score over 700, but lower scores won’t disqualify you. The buyer has leverage if you’re willing to make a larger down payment. The loan term is negotiable if you want to pay the boat off faster.

Interest rates might be higher through the dealer, but the longer terms make buying a boat more affordable. The monthly payments are lower, and the dealership typically offers a warranty as part of the deal. That can cut down on maintenance and repair costs for the boat. Consider this when weighing dealer financing as an option.

Option #3: Marine financing

Marine financing comes from organizations that specialize in getting low-cost loans from local banks, financial service firms, and credit unions. One of these groups is the National Marine Lenders Association (NMLA) which focuses on lower down payments, faster credit decisions, and longer financing terms. Each of these expands the purchasing power of the buyer.

Going through an organization like NMLA is often the best option for boat buyers because the organization knows exactly where to go to get the best rates and terms. Dealerships know this too, but they charge high fees and finance charges. The NMLA looks to lower those fees and can help boat owners finance electronics and equipment in addition to the boat itself.

The Bottom Line

Bank financing can help you buy a boat, but boat buyers have other options, including dealer and marine. Dealer financing has less stringent credit score standards if you’re willing to make a larger down payment. Marine organizations can help you search for better rates and terms. One of these options could help you make your boat ownership dream come true.

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