Do you know what type of boat financing is right for you? Read on to learn the differences between used boat loans and new boat loans.
Many things impact your boat’s rates and terms. The biggest factors that determine your monthly payments are the size of the loan, the type of boat, and the boat’s age. The initial loan size determines the length of your loan, since larger loans are financed over an extended period. As for the type of boat, modern powerboats have fairly straightforward loan terms while sailboats and high-performance boats have slightly different agreements. Lastly, depending on your vendor, you might have higher minimum loan amounts or altered financing rates depending on your boat’s age.
There are two common types of loans: fixed-rate and adjustable-rate. Fixed-rate loans allow boat owners to lock in their rate, providing predictability when budgeting. New boat loans are often fixed-rate loans. Adjustable-rate loans serve as an option for buyers to adjust the interest rates over time and accommodate for fluctuations.
It’s no secret that used boats cost less than new ones. Because of this, financing a used boat often comes with more forgiving interest rates. The amount of money borrowed to buy a used boat is less than that of a new boat loan, which means shorter loan terms and lower interest rates. Buying a used boat also gives you more wiggle room when negotiating the price, and depending on the boat’s age, it could be a better value.
However, there are some disadvantages to financing a used boat. Some lenders won’t offer loans for older boats, and depending on the age, you could face higher minimum loan amounts. Additionally, used boats won’t come with a warranty and could have existing damages from the previous owner.
Are you looking to finance a boat this summer? Take a look at our complete guide to the boat loan process.
There are several ways to go about getting a new boat loan. You can work directly with a boat dealer, get a loan from a bank, or take out a loan with a lender specializing in nautical financing.
Finding the best new boat loan for you largely depends on who you’re buying from. As far as simplicity goes, working with a boat dealer is an easy option. Boat dealers coordinate loans every day and are well-versed in the process. They often have preexisting relationships with lenders and can work directly with them to set up your loan.
If price is your main concern, you can cut out the middleman and work directly with a lender specialized in nautical financing. Specialized lenders are experts at coordinating these types of loans. From a financial standpoint, these lenders may offer improved new boat loan terms compared to your dealer.
Receiving a loan from the bank is also an option, but the process usually takes longer, and you don’t have as much power to negotiate your loan terms.
The length of your new boat loan can range anywhere from two to 20 years. The biggest factor that determines your term length is the amount of money you initially put down. The more you pay upfront reduces the length of your loan term.
If you purchase an expensive boat, you may be able to qualify for even longer loan terms. 30 year boat loans, while rare, are available for high-priced new boats.
Buying a used boat lets you take out a smaller loan, since boat prices are lower and have pretty consistent depreciation rates. The length of your boat loan will be fairly similar to a new boat loan, but you’ll have better luck qualifying for a shorter term due to the purchase price. Standard used boat loans can last anywhere from two to 15 years. However, not all lenders offer loans for used boats, so you’ll have to make sure your financing provider provides loan options for used boats.
Finance Solution wants you out on the water enjoying your new purchase, so we provide loans for both new and used boats. Our proven track record of long standing relationships with dealerships, lenders, and insurance providers allows us to continually give you the best options available. Try out our boat loan calculator and see how much you could be approved for.