Boat loans can help you finance new or used watercraft without needing to pay outright. To avoid sinking into too much debt before you even set sail, look out for low-interest rates, flexible repayment terms, and trustworthy lenders.

Good Customer Satisfaction Ratings

Nothing speaks louder about the good, bad, and ugly than what a lender's past customers say about them. Another quick win to narrow down that ever-growing loan list is to check customer satisfaction ratings and reviews. If reviews mention how professional, friendly and helpful the service was, it's a good indicator the lender is trustworthy.

Low Interest Rates

Interest rates will vary from lender to lender, depending on many factors.

Collateral value

Collateral is an asset that the borrower pledges to give the lender if the loan cannot be paid back. Secured loans always use collateral, and in the case of many boat loans, that collateral is the boat itself. In most cases, the boat will lose value as it gets older, so you could expect higher interest rates for older boats, and in some cases, higher interest rates as your boat gets older.

Credit score

Credit score is metric used to tell financial institutions how likely someone will be able to pay off any debt they take on. Credit score, along with annual income, is the primary factor that lenders use to determine interest rates on a unsecured loan, which doesn't require collateral. You may get charged a higher interest if you have a lower credit rating. But if you find the right lender, you can still qualify for a loan even with a low credit score.

It covers what you need

The costs of boat ownership go beyond the boat itself-think about insurance, maintenance, fuel, taxes, fees, and all the ways you may want to customize or upgrade your boat.

In many cases, secured loans will be limited in what they cover. Unsecured loans, namely personal loans, can be used to finance anything. Keep in mind that some lenders use "boat loans" and "personal loans" interchangeably for marketing purposes, while others offer specialty "boat loans" that limit you to using the funds for the boat and other purchases that the lender approves. With a personal loan, all purchases are subject to your personal approval.

The Right Repayment Terms

Repayment is the period of time where the borrower pays back the loan in installments. In most cases with boat loans, these installments and the length of time that the boat will be paid off are all predetermined. This makes it straightforward for borrowers to be able to calculate how much the boat loan will cost overall and weigh their options.

The key thing to consider in addition to interest rates is time. The longer it takes to pay off a loan, the smaller your monthly payments usually are, but the more you pay overall.

It's also important to ensure that you expect to have reliable income for the duration of your loan so that you will be able to easily make the monthly payments. Fixed monthly payments can typically spread over 2-20 years.

The Bottom Line

When considering your boat loan options, be sure to compare overall costs among trustworthy lenders that will allow you to finance everything you need. Be sure to read the terms carefully so that you'll enjoy smooth sailing into making an informed decision.

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