Financing Your

Used Boat

Financing a Used Boat

When it comes to financing, a used boat is treated roughly the same as a new boat, provided it's not too old. When you start looking at boats 15 years old or older, lenders begin to require higher rates coupled with inspections and/or surveys.

Many lenders provide longer terms for boats than they do for cars due to the potentially higher amounts borrowed. A good rule of thumb is that most lenders will lend up to 75% of the "book value" of the boat. The "book" consulted is often the NADA Guide, but there are others. Also, lenders are increasingly resorting to online sources of recent sale prices to help determine a current value.

Floating piggy bank

If you are getting the boat surveyed, lenders will take into consideration the appraised value supplied by the surveyor in his report. Keep in mind that boat values depreciate annually and they can also fluctuate, either seasonally or in response to gas prices and other external factors.

Boats are decidedly more difficult to sell than cars; keep this in mind when applying for your loan. The lower the loan amount, the less chance you'll find yourself underwater when it comes time to sell. It's also worth noting that your personal credit history and proven ability and willingness to fulfill your obligations may be a more important factor on a boat loan application than elsewhere. This is partially due to the fact that boats are difficult and expensive to repossess and store safely.

As with any financing endeavor, shop around for your best deal and consider alternative sources such as home equity loans if permitted by your local laws and lender requirements. The larger the boat, the more likely you'll soon be in contact with a lender specializing in boat loans.