Contributor, Benzinga
October 11, 2022

Quick Look: Best Personal Loans for Boats

A personal loan like a boat loan can let your dream of owning a boat take sail. If you are thinking about a boat loan, evaluate interest rates and terms offered by the lenders covered here. Your credit score is a meaningful indicator of your possible loan. Before taking out a boat loan, research options and keep additional costs in mind. Your boat loans options will depend on your budget, credit score, the size of the boat and if the boat was previously owned. Before taking out a boat loan, research terms and understand the amount you need to borrow to achieve your dream. 

5 Best Personal Loans for Boats

Research the personal boat loans that are available to you for financing a boat. Certain boat loans are available for higher credit levels and offer different terms with improved interest rates. However, boat loans are available for people with lower credit limits. Determine the boat that you are interested in purchasing as well as the additional fees such as insurance before agreeing to a specific loan.

Best Overall: Bank of the West 

Bank of the West is an FDIC-insured bank headquartered in San Francisco. One feature that makes Bank of the West so special is its 120-year history. 

Bank of the West is ideal for power and sail boat loans. It offers secured and unsecured loans. A secured boat loan means that the loan uses collateral to bolster the loan. Collateral refers to when a borrower offers a certain item such as a house up that can be seized if the borrower fails to pay. Unsecured loans are less risky for a borrower and have the possibility of being more attractive because they do not require collateral. 

Loans from Bank of the West tend to require higher credit scores that begin around 700 and higher. The loans vary from one to seven years depending on additional factors such as the amount borrowed and your credit score. Loans vary between $10,000 and $5,000,000. The company charges no prepayment penalties and offers various terms. Rates begin at an APR rate of 5.24% and increase from there. An APR stands for an annual percentage rate and describes the amount you need to pay each year on a loan. 

To apply for the loan, you need two years of income history and debt information. 

Bank of the West charges processing fees and does not allow co-signers. 

Best for Excellent Credit: LightStream

  • Best For:
    $0 Origination Fee
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    *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.

LightStream is owned by Truist bank, an American bank that has a history stretching back over 150 years. The company offers initial and refinanced loans specific to boats. An additional benefit is that LightStream is available within the 50 states. Terms of repayment are limited, and the maximum rates are high. 

Best for Fair Credit: Southeast Financial

Southeast Financial has 18 years of financing experience and partners with over 700 dealers. The company is headquartered in Tennessee and uses strong partnerships with other banks to attract borrowers. 

The company’s boat loans focus on various customer concerns to include financing, refinancing and warranties. Southeast Financial offers a wide range of options to better serve the needs that come with owning and managing a boat. In addition, the company offers customized boat and yacht financing. 

Loans from Southeast Financial do not require a firm minimum credit score. Starting APRs begin around 6.34% and go higher. The loan terms span 15 years, which provides a larger window for repayment when compared to other financial companies. In addition, the company accepts loan applications from people that have been discharged from bankruptcy. Decisions on loans sometimes happen faster than three hours. 

Southeast Financial offers a higher minimum loan that starts around $15,000. The company only offers boat loans for recreational use, and these loans are not available in all states. 

Best for Bad Credit: Upstart

Upstart focuses on alternative data when deciding on how to approve loans. What makes an Upstart loan unique is how it decides to offer loans based on an artificial-intelligence (AI)-centered approach. Unsecured loans refer to the lack of collateral or guarantee tied to the loan. Collateral in secured loans reduces the amount of risk taken on by a lender but offers a much higher amount of risk for a borrower. Upstart doesn't offer a mobile app to manage the loan. Borrowers have only two types of repayment options. In addition, Upstart does charge additional fees such as origination fees. 

Best for Comparing Lenders: LendingClub

The company LendingClub is an online marketplace that empowers customers with information before they decide on a specific loan.  

LendingClub provides a way to compare different lenders. In addition, the company lets you check your credit score so that you have a better idea about possible loans. Loans are closely tied to your credit score, so knowing your credit score helps you have an idea if now is the right time to take out a boat loan or if it would be better for you to wait. LendingClub examines the difference between new and used boat loans. They answer frequently asked questions about boat loans to better point you in the right direction. 

Personal Loan Requirements and Criteria

When looking at options for financing a boat, you can choose from designated boat loans or personal loans. For a personal loan intended for purchasing a boat, stronger credit and a strong understanding of your boat budget and your future expenses are necessary. Unlike some other purchases, boats require additional fees such as maintenance and insurance that add up over time. 

In some situations, it is also possible to refinance your boat loan. Refinancing allows you the ability to obtain a lower interest rate. Lower interest rates help you pay less on the loan over time. 

Before agreeing to a loan, compare different loan offers to give you more options and provide you with a better idea of the loan that’s right for you. Boat loans tend to take several years to pay off so there is no point in rushing into anything without fully understanding the terms and conditions. 

A personal loan is one way to make your dreams of owning a boat a reality, but there are also other alternatives. With a boat loan, it’s not uncommon for boat dealers to work with specific lenders. These dealers provide terms and offers that are more appealing because of their ability to go through the actual boat manufacturer. 

Personal Loan Considerations for Boats

Personal loans are beneficial because they help you with funding that otherwise might take an extended amount of time to acquire. Before obtaining a personal loan, research loan options and terms to decide which loan works best for you. You might want to talk to a financial advisor to understand your loan options. Examine how each personal loan is designed for interest rates and terms. Inquire about additional fees such as origination fees and late fees. Late fees have the potential to hinder your payment ability by charging substantial amounts in addition to the original fees. Additional fees have the potential to lower your credit score, which could make your ability to gain access to future loans more difficult. 

Before taking out a loan, keep in mind your ability to repay your loan on time if something unforeseen happens in the future. It is a good idea when taking out loans to decide on a boat that doesn’t stretch your finances too thin. Preventing future complications means trying to leave some wiggle room for the future by avoiding stretching your current financial means. 

If you feel that your current credit score is low, you might want to wait to finance a boat until you have more effectively built up your credit score. Building a better credit score allows you to receive better interest rates and gives you access to more flexible terms. You could try to save up additional funds for a boat to make the amount that you need to take out with a personal loan less substantial.

Focus on building a credit score that can open the door to stronger loan opportunities. However, boat loans accommodate a wide range of credit scores. 

Personal Loans vs. Credit Cards

Before financing a boat, evaluate your options. Boats can be financed using personal loans or credit cards, but key differences separate the two funding options. 

Credit cards help fund the purchase of a boat but might not be a financially viable option. Credit cards offer a line of credit that is not to be exceeded, and boats tend to be higher in price. If you buy a boat using a credit card, it can be risky if the balance is not quickly paid off. Interest rates on credit cards increase the total amount owed on a boat purchase and cause you to pay significantly more than the original price. 

In contrast, personal loans offer a lump sum that is repaid over a set amount of time with a potentially lower interest rate depending on your credit score. Personal loans may prove beneficial if you do not have a lot of funds. 

Overall, personal loans that provide one lump sum may be beneficial when looking to finance a boat, but it depends on your situation. Review your finances and decide if you can handle a major purchase on your credit card or would benefit from a loan. In general, boat loans are a better option for financing a boat if you cannot immediately pay off a credit card. Boat loans help you avoid accumulating and paying high interest on a credit card over a long period of time, which can happen if the boat is not promptly paid off. 


What is a good starting credit score for a boat loan?


Boat loans require higher credit scores. Boat loans tend to be a more substantial loan that begins on average with scores that start around 700 or higher. However, it is possible to obtain a boat loan with credit scores around the 600s. For a boat, higher credit scores gain better loan offers.

There are loans available for lower credit scores, but interest rates and terms will likely be less flexible and more expensive. When purchasing a boat and planning to use a loan, achieve as strong a credit score as possible beforehand. Stronger credit scores help open the doors to a wider range of possibilities and potentially make it easier to obtain the boat of your dreams.

In addition to having a strong credit score, you want to have decided the type of specific boat you want. The size of a boat as well as additional factors such as the age of the boat impact the overall price.


What are typical terms for financing a boat?


Typical terms for boat loans tend to follow certain factors such as your credit score as well as the total amount of the loan. For example, boat loans vary between 4 and 20 years on average but depend on multiple factors. For boats, loans that are less than 5 years are classed as short-term loans.

Higher credit scores usually receive more flexible terms from lenders because higher scores are seen as less risky. It pays to have a high credit score because it helps to gain you beneficial terms with lower interest rates. Boat loan terms tend to vary depending on your credit score because credit scores help tell lenders about the level of risk they are taking when deciding to lend you funds.

Like most loans, remain timely with payments. Failing to make prompt payments on boat loans lowers your credit score and causes serious additional repercussions depending on the specific terms of your loan. Before getting a loan, be honest with yourself about your ability to continue making payments in the future if something unpredictable happens. If your finances are already stretched thin, you might want to wait to purchase a boat or downsize into something more obtainable. Because of the length of boat loans, be sure you understand your level of risk and ability to consistently pay back the loan.

Luckily, boat loans are designed to work with different needs and budgets. Research the available loans and consult with a financial professional before locking in a loan.


Is it difficult to get a loan for a boat?


You do need good credit to get a boat loan. It is more difficult to get a boat loan than it is to get a loan to purchase a new car. But it is easier to get a boat loan than it is to be approved for a mortgage to buy a home.