“You’re going to need a bigger boat.” Maybe for you, this is more than an iconic line from a classic movie. It’s an instance of life following the suggestion of art (the needing a boat part, not the shark part).
Whatever your motivation is for getting a boat, you’re probably going to need financing. With a sea of possibilities to choose from, you might be harboring questions about which is best for you. Let’s cruise through the alternatives so you can find your smooth-sailing financing option.
How to Buy a Boat
Once you’ve shopped around and done your due diligence (to make sure you’re not acquiring a maritime clunker), you need to figure out how you’re actually going to pay for your watercraft. Unless you have a wealthy and generous benefactor that’s gifting you the boat, you pretty much have three payment options:
- Buying your boat outright with cash. If you’ve amassed a treasure chest that’d make a pirate jealous and want to use it to get that dream boat — it’s a solid option.
- Financing all or part of the boat’s cost. Depending upon the lender, boat loans can start at as little as $5,000. They go up from there — even into the millions of dollars. Different kinds of vessels — new vs. used, power vs. sail, recreational vs. live-on — can have specific loan types or terms as well.
- Trading in an old boat for a new one, and paying for or financing the difference in value. This could be a great way to offset some of the price of that gleaming yacht that really floats your boat.
The key is to evaluate your specific needs and economic situation to determine what payment strategy makes the most sense for you. Buying your boat needn’t capsize your personal finance!
And remember — sometimes, even if you have the cash to buy that boat outright, it could be more financially advantageous to finance it.
Pro Tip: Wondering “How much boat can I afford?” Use a loan calculator to help figure this out based on different interest rates, durations, and monthly payments.
Buying a Boat — Financing Options
Financing a boat is a bit like financing a car or taking out a mortgage. You’ll go through a similar application and approval process. Like an auto loan, your boat loan will be based on the market value of the vehicle.
Common Boat Loan Terms
Unlike a car loan, you probably won’t find 0% boat loans. However, you might find offers for $0 down and no payment for X number of months.
Some other typical terms for new boat financing include:
- Out-of-pocket down payments of 10%-30% (though you may be able to do up to 100% boat financing)
- Loans ranging from $5,000 to $4 million dollars, with $25,000 seeming to be a sweet spot for lenders
- 15-20 years to repay the loan
Used boats’ financing is less straightforward, as is refinancing an existing boat loan. There are lenders who are willing to deal, though.
Where to Get a Boat Loan
If you're buying from a dealership, it likely has a boatload of financing arrangements available. However, its loans may come with above-average interest rates, tons of expensive fees, and that unpleasant “hard sell” feeling.
A second option is to get a loan from a conventional financial institution, like a bank. But — like dealerships — banks are profit-driven entities. As such, you may get beached by suboptimal rates and a swell of high origination, warranty, and processing fees.
Another possible source of financing is a credit union. Securing a boat loan through a credit union could be a means of avoiding those sinking drawbacks to loans from commercial lenders.
Why Credit Unions Have the Best Boat Financing Rates
Credit unions — like VCU — can be amazing places to take care of all kinds of banking and financial needs. They have so much more going for them than just boat financing.
Credit unions are nonprofit, community-minded organizations that’re run by members. Because of this, they have the bandwidth and incentive to offer loans with:
Still need some convincing? Here are our top 11 reasons why taking your boat loan from a credit union versus a traditional for-profit lender is a smart idea. You’ll get:
- Lower interest rates
- Lower fees
- Easier to qualify
- Quicker loan application processing
- More flexibility with terms
- Personalized service from dedicated and knowledgeable staff
- Financial safety nets like Skip a Payment and debt protection
- Extra perks like exclusive deals on property insurance and member dividends
- Helpful planning tools and resources
- Convenient banking options
- Community focus
Now, this should be enough to buoy your spirits and get you to sail on over to the credit union!
Valley Credit Union, More Than Just the Best Place to Finance a Boat
In your mind, you’ve already christened your racing sloop or motorboat in a foaming shower of champagne. You’re imagining yourself bobbing or speeding around in your boat…
You want to make that vision become a reality you can voyage about in. We want that for you, too.
At Valley Credit Union, it’s our mission to serve you so that you can achieve all of your personal wealth and financial wellness goals. This is why we offer excellent and diverse banking and loan products, ample services and resources, and talented and caring support.
So, contact us today to see how we can help get you and your crew aboard that boat in the near term — and assist with additional money matters in the longer term.