Buying a New Boat: What to Factor in When Financing

Consider the full cost of boat ownership

First, you need to calculate the full cost of ownership of your new boat to make a budget. You’ll need to factor in the purchase price, financing cost, insurance, taxes, freight, commissioning, registration, slip or storage fees, upgrades and maintenance costs. 

Next, you'll need to learn how much of the full cost can be financed. The labor associated with equipment installation or commissioning typically doesn't qualify for financing. Be sure to check with your individual lender for details. 

Secure boat owner's insurance

Getting insurance on a new boat is necessary in order to secure a loan. Boat dealers can share lists of names they trust like Boater's Choice Insurance. Dealers are also a great resource as they will walk you through the insurance process quickly and easily. 

Know your boat financing options

Your personal banker may not offer vessel financing but there are other options. An excellent source of available lenders and loan originators is the National Marine Lenders Association. You may also be able to use your boat dealer's own in-house lending program or ask for a list of recommended marine financial solutions. While in the process, ask about rates and payment plans that fit your budget. 

Be an attractive borrower

To receive the best rates from top lenders, you’ll need to present your best borrowing self. Lenders look for a high net worth (2:1 net worth/debt ratio), liquidity, experience with similarly-sized loans, homeownership and stability, and a high credit score (700+). It’s not necessary to rank highly on all of these, but a solid foundation will have you choosing between lenders rather than the other way around. Some lenders will accept a credit score as low as around 620, but, as with other loan purchases, the higher your credit score, the more likely you will be to secure a favorable interest rate. Boat loan interest rates can vary greatly depending on your credit score, and the other factors mentioned above.

More than half of new boat purchases are financed so there are well-established guidelines and lots of resources that help simplify the process. Boat loans typically originate, process and close faster than real estate loans – sometimes all in a week. Once you’re approved, ask your lender about automatic payment plans so you never miss an installment and your credit remains excellent.

Read more tips for first time boat buyers. To get started on your boat buying journey, find a local boat dealership near you.