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    How Long Can You Finance A Boat?

    By Wasatch Peaks on March 9, 2023

    Topics: RV Loans

    If you are thinking about buying a boat to enjoy sailing, fishing, water skiing, or something else, you may be wondering how long you can finance it. The longer your loan term, after all, the lower your monthly payments. The following overview of boat financing can help you understand how these loans work and how to determine the best loan term for your budget. 

    How Do Boat Loans Work?

    Boat loans are similar to car loans in how they work. They are offered by banks, credit unions, and other private lenders. If you are approved for a boat loan, you will receive a lump sum payment upfront to buy your boat. You will then repay it with fixed monthly payments over a fixed term.

    Like car loans, boat loans also have fixed interest rates. The rate is locked in when the loan is created, and it will remain the same until it is repaid. This means you don’t have to worry about your monthly payments increasing sometime in the future due to a rate increase.

    Finally, similar to car loans, boat loans do not require collateral. The boat itself serves as the collateral for the loan. It’s important to point out that if you default on the loan, your lender will take possession of the boat and sell it to recoup the money they loaned you.

    How Long Can You Finance a Boat?

    How many years you can finance a boat will vary depending on your lender. Many lenders will finance a boat for up to 15 years. A long term is often necessary because many new boats cost significantly more than cars. This helps to keep your monthly payments manageable.

    There is an important negative to consider with a long loan term. The longer it takes you to repay a loan, the more you will pay in interest. Shorter loan terms will save you money on interest.

    Depending on your lender, a shorter loan term may also have a lower interest rate, which will result in additional savings. A shorter term means lenders get their investment back faster. Because this decreases their risk, they are often willing to accept a lower interest payment.

    To illustrate the potential savings, let’s assume you buy a new $60,000 boat at 6% interest with a 15-year term. After repaying the loan, you will have paid $31,136.54 in interest. With the same loan financed for 10 years, however, you will pay $19,934.76 in interest. This is a savings of $11,201.78.

    You can estimate the interest you will have to pay on a loan by entering the loan amount, interest rate, term, and other information in an online loan calculator. This allows you to determine the best term for your needs and budget.

    Factors that Influence Boat Loan Terms

    Several factors will influence the length of the loan term. They will also influence the type of boat you purchase and whether you can qualify for a loan.

    Size of the Loan

    Boats come in all sizes with various features and amenities. A simple inflatable kayak, for example, can be purchased for less than $200. On the other hand, the most expensive yachts in the world are valued at over $1 billion.

    The purchase price of the boat is an important factor that lenders will consider when evaluating you for a boat loan and the term. Your lender will also review your employment history, income, and current debts to make sure you can repay the money you borrow.

    Age of the Boat

    If a boat is used, its age and condition will be a factor in whether you can qualify for a loan and your loan term. Newer boats usually cost more, which means longer repayment terms are needed. 

    The older a boat is, the more problems it may have. An older boat may also have problems that are undetectable with a casual inspection, like structural problems beneath the exterior. Because of this, some lenders put caps on the age of a boat that they are willing to finance.

    Type of Boat

    Many lenders will extend loans for any type of boat. There are some boats, however, that they may treat differently or not finance at all.

    Boats constructed from wood are one example. These boats may be difficult to repair if they hit an object in the water. If a wooden boat hull is damaged, it will require an expert wood boat craftsman to fix it. Damaged fiberglass, in comparison, can be easily repaired with a fiberglass repair kit. 

    High-performance boats may be problematic. These boats have powerful engines and can travel at high speeds. If you accidentally hit something in the water while traveling at high speed, it could destroy the boat and injure the occupants. 

    Additionally, boats that are also residences (houseboats) are treated differently by lenders. These boats can be challenging to finance because the laws on what constitutes a residence differ based on the state and county where you live. One county may deem it to be a boat, while the next county over may consider it to be a residence. 

    Boat Loans with Wasatch Peaks Credit Union

    Are you ready to make some new memories with friends and family on the open waters? Perhaps you like the idea of getting away from it all with your boat and a fishing rod. Regardless, if there’s a boat in your future, you can finance it with a loan from Wasatch Peaks Credit Union.

    Wasatch Peaks' boat loans can be used to finance either a new or used boat, and our interest rates are among the lowest you will find. You may also be able to finance up to 100% of the purchase price.

    You may be closer than you think to starting your boating adventures!

    See our low interest loan rates & additional benefits

    Wasatch Peaks

    Written by Wasatch Peaks