Considering Your Options for Boat Loans? Read This First

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Anytime you see an item with a price tag that ends in a comma and three zeros, think twice about borrowing money to afford it.

That goes for boats too.

Boat loans — and other personal loan options — might get you out onto the water faster. But they also can sink your finances if you’re not careful.

How to spot the best boat loans

If you type the words “boat loans” into your browser, it won’t take long to be inundated with offers from banks, lenders, and associations. Many of them will help you finance the down payment of 10% to 15% on a new or used boat or equip you with enough cash to buy one in full at the dealership.

You’ll notice some trends about these offers. Many require that you borrow a minimum of $5,000 and allow you to borrow as much as six figures, for example.

As with other kinds of online personal loans, you’ll be able to fill out an application and receive a preapproval (or rejection) in as little as 24 hours.

Your credit could make or break your chances of approval. To qualify for boat loans from Boat Owners Association of The United States, for example, you need a credit score of at least 680. Similarly, Bank of the West says its “preferred” range starts at 670.

Your credit score won’t just get you in the door. It also will decide your interest rate.

Some lenders list rate ranges, showing that you can score a better rate by borrowing more money. As of April 20, 2018, SunTrust Bank, for example, offered rates between 5.44% and 9.69% for a $5,000 boat loan with a term of 24 to 36 months.

For a $10,000 loan with the same term, its rate range decreased to 4.04% to 7.59%. Make sure to check with SunTrust Bank for the latest available rates.

Don’t be fooled by lenders that list only their lowest possible rates. You’ll want to compare the rates you can qualify for based on your credit. Also, unlike typical personal loans, which are repaid in five years or less, some lenders might offer repayment terms of a decade or longer.

Still, to secure the best possible boat loan, avoid the following:

  • Variable or “floating” interest rates that can change over time
  • Prepayment penalties for repaying the loan early
  • Repayment terms that don’t fit your financial situation

No matter where you apply for boat loans or top-rated personal loans, you’ll need to provide financial documents to prove you can afford the boat you’d like to captain.

Consider the downsides of boat loans

Using a loan to buy a boat allows you to set sail much faster.

However, purchasing a boat is a lot like driving a new car off the lot — it begins to lose its value almost immediately. Some estimates say your boat’s value could drop by as much as 20% within a year.

That’s the problem with using a form of credit to buy a depreciating asset. You’ll repay more over time than what the boat is worth.

Worst of all, if you can’t make your payments on a boat loan that’s a secured personal loan, the boat will be the first thing you lose. Secured loans require you to put up collateral that can be seized when repayment goes south.

If you take out a boat loan that’s an unsecured personal loan and struggle in repayment, you might be at risk of dealing with a collections agency and having your wages garnished. Neither scenario is something to look forward to.

If you decide to borrow money to pay for a boat, come up with a plan for repayment before signing your name on the dotted line. This way, you’ll fully appreciate how much interest you’ll be responsible for over the long haul.

Say you take out an unsecured personal loan for $10,000 at a fixed rate of 15.00%. Over a five-year repayment term, you’ll fork over a total of $14,274, including $4,274 in interest.

Use our personal loan calculator to consider other scenarios. Even if you have excellent credit and qualify for a low, fixed rate on a boat loan, you’ll want to see how much the loan really will cost you.

Avoid boat loans if you can by budgeting for your purchase

Setting a savings goal isn’t the fastest way to head out to sea, but it’s the most responsible.

You could start by creating a line item on your budget. Put aside a certain amount of each paycheck. Add it to whatever savings you can afford to part with and wait until you have the amount you need.

Say you’re eyeing a $30,000 boat, for example, and have $20,000 in extra savings. You could cover that $10,000 gap by setting aside an extra $500 over the next 20 months. You’ll miss a couple of summer seasons, but you won’t have to worry about paying off debt.

Although your boat will lose value over time, you also could strategize ways to increase its value to you. For example, rent it out instead of letting sit on the dock when you’re not using it. You might consider listing it on a website like GetMyBoat — one of a handful of ways to make money off your property.

Buying a boat isn’t among the best uses of a personal loan. If you decide borrowing is your best option, however, at least ensure you’ll be equipped to pay off the loan before your repayment term expires.

After all, you won’t be able to enjoy the wind blowing through your hair when there’s a big debt weighing on your mind.

Note: Student Loan Hero has independently collected the above information related to boat loan rates, terms, and credit score requirements. Boat Owners Association of The United States, Bank of the West, and SunTrust Bank have neither provided nor reviewed the information shared in this article.

Interested in a personal loan?

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

RATES (APR)loan amount
5.99% – 17.88%1 $5,000 to $100,000
5.69% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 17.88% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 4, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

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Published in Loans, Personal Finance

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