Most lenders will require a credit score of about 680 or higher
Different lenders will have different credit score requirements. If you want to apply for a boat loan, you can expect most lenders to require a minimum score of 680. However, some lenders will work with borrowers who have lower credit scores.
Key Takeaways
- Boat loans are a type of personal loan to finance the purchase of a new or used marine vessel.
- Lenders offer boat loans to people with levels of credit ranging from fair to excellent and generally require a minimum score requirement of 680.
- Boat loans can be unsecured or require collateral and offer repayment terms of up to 10 to 15 years.
What Is a Boat Loan?
A boat loan is a type of personal loan that is used to finance the purchase of a marine vessel.
Types of Boat Loans
Boat loans can be secured or unsecured. Unsecured loans do not require any collateral, while secured loans are backed by collateral. In the case of a boat loan, your boat would serve as collateral. If you are unable to make the payments on your loan, the lender can take possession of the boat.
Features
- Terms: Boat loan terms are typically 10 to 15 years. Borrowers may also find loan terms of just a couple of years or longer than 15 years.
- Interest rate: Lenders charge interest on boat loans, and the rates vary based on several factors, including your credit score. If you have excellent credit, you can expect interest rates to start around 7.87%.
- Down payment: A lender may require you to pay a down payment. Down payments tend to range from 10% to 30% of the total purchase amount.
Tip
You can use a personal loan calculator to determine how much your monthly payments will be and the total cost of your loan with interest.
How Your Credit Score Affects the Terms on a Boat Loan
Lenders look at your credit score to assess your risk as a borrower. Borrowers with higher credit scores represent less risk, which means they will likely qualify for better loan terms and lower interest rates.
Your credit score is a three-digit number from 300 to 850. Credit scores are broken into different ranges:
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
Lenders set their own minimum credit scores for borrowers. While a credit score of 680 or higher is a typical minimum for personal loans, that is not the case with all lenders.
Other Requirements for a Boat Loan
In addition to your credit score, lenders will consider your income and debt-to-income ratio (DTI).
Lenders want to know that you have enough income to repay the loan. Your DTI shows lenders how much of your income goes toward paying your existing debt. If you have a low income and a high DTI, lenders will consider you a higher-risk borrower. A high income and a low DTI are considered lower risk, which will translate into more favorable terms and interest rates.
How to Get a Boat Loan
You can apply for a boat loan with various lenders, including:
- Banks: Many banks offer personal loans, which can be used to finance the purchase of a boat.
- Credit unions: Credit unions are another option for borrowers interested in applying for a boat loan. In most cases, you must be a credit union member to get a loan.
- Online lenders: Many online lenders specialize in personal loans.
- Marine dealerships: If you plan to buy from a marine dealership, it may offer dealer financing.
Once you choose a lender, gather the information required to apply. Lenders will typically ask for personal information on your income, assets, and debt. Some lenders require you to apply in person, while others offer online application processes.
Other Considerations Before Getting a Boat Loan
A boat loan can finance the purchase of a boat, but the monthly payments on your loan are not the only expenses to consider. Boat owners also have to pay for registration, maintenance, repairs, gas, taxes, boat insurance, docking fees, and storage.
Consider the other costs of owning a boat along with your loan payments before you get a loan.
Can You Get a Boat Loan with Bad Credit?
It is possible to get a boat loan with bad credit, but you may need to make a larger down payment, use a cosigner, or apply for a secured loan.
Will a Boat Loan Drop My Credit Score?
Taking out a boat loan or any kind of personal loan is not inherently harmful to your credit score. The hard credit inquiry a lender conducts when you apply for the loan may cause a temporary drop in your score. Plus, taking on new debt can also lower your score. But, making on-time payments can improve your credit score over time.
What Is a Good Interest Rate for a Boat Loan?
Interest rates for borrowers with excellent credit start around 7.87%; anything under 8% would be a good rate.
What Is the Average Term for a Boat Loan?
Boat loan term lengths vary, but 10- to 15-year terms are typical.
Where Is the Easiest Place to Get a Boat Loan?
You can get a boat loan with a bank, credit union, online lender or marine dealership. Each lender will have different borrower requirements and application processes. You can compare a few options to decide what is easiest for you.
What Is the Oldest Boat a Bank Will Finance?
You may find it more challenging to secure a loan for an older boat, but there are lenders that will finance boats as old as 19 years. You might be able to get a loan for an even older boat if it is valuable.
The Bottom Line
Borrowers with a credit score of 680 or higher will be more likely to secure a boat loan, but some lenders work with borrowers who have lower credit scores. You can also explore the possibility of a secured loan or working with a cosigner to make your dream of boat ownership a reality.