Updated: Mar 18, 2024

How to Get a Personal Loan for a Boat

Learn how to buy a boat with a personal loan, which could be unsecured or secured with the boat at collateral in order to qualify for the lowest interest rates.
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If you need a loan to buy a boat, some boat dealers offer in-house financing or have financing partnerships with different banks and credit unions.

There’s also the option of paying cash for a boat or using some of your home’s equity for a boat purchase.

But these aren’t the only financing solutions available to you.

You can also get a personal loan to buy a boat.

A personal loan is useful for just about any purpose. Some people use personal loans to pay for:

So if you don’t have cash to buy a boat outright, and you don’t want to tap your home’s equity, a personal loan might be your ticket to getting on the water.

Know the Loan Terms Before Applying

Before applying for a personal loan to purchase a boat, make sure you’re familiar with different loan terms.

Loan terms vary from financial institution to financial institution.

Keep in mind:

Most banks and credit unions cap personal loan terms at a certain number of years, perhaps 7 or 10 years.

As you research lenders, ask about the bank’s maximum loan term.

You can then choose a term based on the price of the boat and what you’re comfortable paying each month.

To illustrate, you might like the idea of paying off a personal loan over three years. But if you can’t afford the payment on a 60-month term, you might have to stretch the loan term to 72 or 84 months.

You should also inquire about minimum and maximum personal loan amounts.

Make sure you research boats and get pricing information beforehand. This way, you’ll know how much to borrow.

It’s important that you apply for an amount that’s enough to cover the entire cost of the boat.

If not, you might have to pay the difference out-of-pocket.

How Does Your Credit Score Look?

Similar to other types of loans, your credit history is one factor that determines your ability to get a personal loan.

So take steps to either maintain a good credit score or boost a low credit score. This improves the odds of qualifying.

Credit is important when applying for a loan.

In fact:

Credit history is how a lender gauges the likelihood of an applicant actually repaying their debt.

Typically, people with the highest credit scores are the most responsible with regard to debt repayment.

Credit scores range from 300 to 850. With that being said, aim for a score at the top of the range. This not only helps you qualify for a loan, it also helps you get a lower interest rate.

Here are a few tips to help you qualify for a personal loan to buy a boat:

Check your credit report

Errors or mistakes on your credit report may lower your credit score. This can make it harder to qualify for a loan

Order your credit report from AnnualCreditReport.com. Comb through the report carefully and dispute any errors.

File a dispute directly through Annual Credit Report.

Or, contact each of the three credit reporting bureaus: Experian, TransUnion, and Equifax.

Pay your bills on time

Your payment history makes up 35 percent of your credit score. So it’s important to pay all of your bills on time each month. This improves your creditworthiness and adds points to your credit score.

As a general rule of thumb, don’t wait until the last minute to mail a payment. Setup bill payment reminders or have monthly expenses auto drafted from your bank account.

This way, you don’t forget about payments or due dates.

If you experience payment problems, contact your creditors to set up alternate payment arrangements.

Pay down what you owe

The amounts you owe make up 30 percent of your credit score. The less debt you owe—especially with regard to revolving debt— the higher your credit score.

Come up with a plan to pay off credit cards and other debt.

Increase your monthly payments, stop using credit cards, and negotiate lower interest rates.

Paying down debt can also reduce your debt-to-income ratio. This increases purchasing power when you’re ready to apply for a personal loan.

Don’t cosign a loan for anyone

If you’re thinking about getting a personal loan to buy a boat in the near future, don’t apply for other types of credit.

Acquiring additional debt can raise your debt-to-income ratio. And sometimes, a higher ratio makes it difficult to get new financing.

This also applies when cosigning a loan for someone. When cosigning a loan, you become responsible for a debt if the primary applicant doesn’t pay.

And unfortunately, a cosigned debt will appear on your credit report and count toward your debt-to-income ratio.

Shop for the Best Rates

The monthly payment on a personal loan doesn’t only take into account the cost of a boat, but also the loan interest rate.

Interest is the fee you pay a bank for borrowing funds. This fee impacts the overall cost of a purchase. And ideally, you want the lowest interest rate possible.

Just because you took steps to boost your credit score doesn’t guaranteed the best rate, though. Personal loan rates vary from bank to bank.

For this reason, you must shop around and compare rates before officially applying for a loan.

The good news:

You’re able to check rates before submitting an application.

You’ll need to provide basic pre-qualification information. This includes your name, income, and an estimation of your credit history.

This information isn’t verified by an underwriter. So be as truthful as possible to receive the most accurate rate information.

If you’re satisfied with your rate quote, you can proceed with the personal loan and submit an official loan application.

In many instances:

Checking rates doesn’t have an impact on your credit score.

It’s not until you submit an application and the bank conducts a credit check that an inquiry appears on your credit report.

Along with a loan application, you’ll need to submit your income statements.

Provide a W-2, recent paycheck stubs, or previous year’s tax returns. This is how a bank determines your ability to afford the requested amount.

Rules That May Apply to a Boat Purchase

Buying a boat differs from other vehicle purchases. Here’s what you need to know to ensure a smooth transaction.

Registering the boat

The same way you register a new car purchase with the Department of Motor Vehicles, you may be required to title and register your motorized vessel.

Boat titling, however, isn’t required in every state.

If this isn’t required in your state, you have the option of federally registering the vessel with the U.S. Coast Guard.

Registration creates an official record of ownership.

This is for your protection and helps with the recovery effort if your boat is ever stolen. You’re responsible for registration fees.

Restrictions and requirements

If you can’t decide between a personal loan and a marine loan for the purchase, understand that using a personal loan has fewer restrictions.

Banks impose certain rules with marine loans.

For example, some marine loans require a down payment as much as 15 percent.

Or, the bank may only offer these loans when buying a vessel that’s 25 feet or longer.

If you buy a boat with a personal loan, however, you might not encounter these types of restrictions or requirements.

And since you’re not using a marine loan, you probably won’t have to pay a ship mortgage lien recording fee—although rules can vary by lender.

A ship mortgage lien is typical with maritime loans. It’s a type of lien attached to vessels when a lender has an interest in the boat.

Unsecured vs. secured personal loans

You might have to record a lien if you get a secured personal for a boat purchase.

This type of loan uses the boat as collateral. Secured loans typically feature lower interest rates.

But unfortunately, the bank can also take your boat if you don’t repay the loan.

An unsecured personal loan is another option for a boat purchase. You don’t have to pledge collateral or use the boat as actual security for this loan. But not everyone qualifies for an unsecured loan.

In most cases, you’ll need superb credit.

And because these loans are riskier, you’ll also pay a higher interest rate.

Final Word

Purchasing a boat gives you an opportunity to enjoy life on the water.

You can fish, relax, and create new memories with your family. But, of course, boat purchases aren’t cheap.

The good news is that you don’t need your own cash. A boat loan or a home equity loan can make this purchase possible, but you might have a better outcome applying for a personal loan.

Just make sure you understand credit requirements for a personal loan.

And don’t forget to compare interest rates to ensure you receive the best possible financing.