Are you doing some boat shopping? You'll need a plan for financing your purchase before packing your bags and heading off on the open sea. You may wonder, "How long can I finance a boat?" Compared to vehicle loans, boat loans can have periods as long as 20 years, making them almost as lengthy as a mortgage.

A new boat may be purchased for around $5,000. At the same time, luxury yachts can cost upwards of a million dollars, so deciding whether or not to take out a loan for such a long period relies on several considerations. In most cases, shorter loans also have the highest monthly payments because of the lower interest rates.

Finding A Boat Loan: Where To Look

The terms of a boat loan may also vary depending on the lender. Some of the most common places to apply for a boat loan are:

Dealer-Provided Financing

Jim Coburn, principal of Coburn Consulting Services and a Michigan Boating Industries Association member, estimates that around 80% of new boat finance arrangements are made via dealerships. He explained that banks have connections to car lots, and car lots have clients. They'll send you to the banks if you're looking for a boat loan.

Banks, Credit Unions, Internet Lenders

Lenders account for a significant portion of the remaining 20% of U.S. boat loans. As of this writing, the best annual percentage rates (APRs) for boat loans may be found at online lender LightStream, a division of SunTrust Bank, and at Essex Credit, a division of Bank of the West. You may also check with your local credit union or current bank to see if they offer any special rates for returning customers.

Marine Brokers

According to the National Marine Lenders Association, these are familiar players in pre-owned boat financing. Brokers help you select the best boat for your needs, connect with the seller, negotiate the price, and handle the rest of the purchasing process.

Many real estate agents represent the seller, but they often provide services for the buyer, such as helping them get a mortgage or other financing and keeping their down payment in escrow.

If you hire a buyer's broker, they will work on your behalf to locate the most suitable vessel within your price range and specifications rather than the seller's.

Browse Around

Be sure you're paying a fair price for a secondhand boat if you decide to purchase one. Look up local costs and values in an industry publication like NADAGuides. Whether you're looking to buy a new or pre-owned boat, shopping around and comparing interest rates and loan conditions from several lenders to get the best deal is essential.

Utilize A Boat Loan Calculator

The LendingTree boat loan calculator takes your inputs for the loan amount, interest rate, and loan period and returns a monthly payment. The calculator also provides the annualized breakdown of your monthly payments.

If the predicted price is too high or too low, you may modify the loan amount and the boat loan period to discover the optimal scenario for your financial situation. Fill out one application on LendingTree and compare boat loan rates and terms from many lenders to get the best one for your financial situation.

Variety of Boat Loans

Interest rates are based on several variables, including loan amount, customer credit, and whether or not the vessel is new. According to Coburn, the interest rate on a prime loan for persons with excellent credit is between five and seven percent.

The average loan term is between 15 and 20 years; if you borrow $25,000, you may be able to spread your payments out over 15 years.

Loan durations for boats tend to be longer for more significant loan amounts. Remember that many banks and credit unions demand a down payment of at least 15% and often 20%. Some of the most common forms of boat financing are as follows:

Unchanging Interest

Fixing the interest rate is common among boat purchasers since it provides financial security and helps maintain a stable monthly expenditure pattern.

Varying Interest Rate

Suppose you can handle the ups and downs of interest rates during the life of the loan. In that case, you may qualify for a competitive loan with a low introductory rate followed by a rate that increases according to interest rate indexes.

There is also a type of boat loan with a final balloon payment. Be sure you can afford the payment amount after your term if you have a balloon loan or the length of time your rate is set before it adjusts.