What Should I Know About Boat Financing?

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  • Written By: Ken Black
  • Edited By: Bronwyn Harris
  • Last Modified Date: 17 August 2019
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Financing a boat may be one of the most confusing parts of boat ownership for a new boat owner. There are literally dozens of options that could be chosen, some of which are designed to fit certain situations. In fact, boat financing may offer more options and more terms than any car loan.

Part of the reason for the myriad of options in boat financing is due to the large range of prices in the boats. It is possible to get a motorboat for $1,000 US Dollars (USD). On the other hand, even a modest yacht can run $100,000 USD or more. Given the wide range of prices, there is little surprise that so many alternatives exist.

While a typical car loan may be for five years or, at the most, six years, boat loans can last anywhere from a few years to more than 20 years. As one may expect, as the cost increase, normally so too does the length of the loan. In boat financing, it is common for a loan to last at least ten years. A ten-year car loan is virtually unheard of.


However, a boat loan for that length of time is possible for a number of reasons. First, while boats do depreciate with age, the percentage of the depreciation is not as fast as it is with cars. Second, boats tend to last and remain functional for decades, making it very likely that a person will choose to won the craft for at least ten years. This longevity also explains why depreciation is slower.

Also, if a boat motor needs to be replaced, this can be done relatively easy without affecting the rest of the boat too much. Used boat motors usually can be bought relatively cheaply. All these things are taken into account when looking at boat financing.

As with any type of long-term financing, there are certain questions that need to be asked with boat financing as well. First, when buying a boat, it is important to consider how much you can afford. Second, look at the different lengths available and choose one that is suitable for you. Nothing may be quite as frustrating as paying ten years for a boat that only lasts five. Third, ask about any other penalties that may be associated with the boat financing, such as early payoffs, late fees and so forth. Fourth, always inquire as to what type of down payment may be required.

In most cases, boat financing will come down to one of two choices, a collateralized loan or another type of loan not tied to the boat, such as a home equity loan. Both may have advantages for the buyer, depending on the situation. For example, yacht financing, which requires larger sums of money, may be a better deal for those who are willing to take out a second mortgage.


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