Comparing All Your Options: How to Choose the Best Lender for Boat Loans

When it comes to financing a boat, there is no one-size-fits-all loan or “best” boat loan provider out there. That said, there are a few factors you can consider to narrow down your options.

To find the best boat loan for you, research the details of your financial situation, including your credit score, repayment history, and debt-to-income ratio (DTI). You should also consider the type of ship you need to finance and the loan terms that suit your finances.

5 factors to consider before choosing a boat loan lender

Before applying for a boat loan, consider these five factors so you can find the lender that best suits your financial situation and borrowing needs.

1. Usage requirements

Some lenders or institutions may have restrictions on what loan funds can be used for. Marina-specific companies that focus solely on financing boats and other marine vessels will likely have no restriction on which boat you finance. However, online lenders and banks may have regulations.

For example, some lenders may set a threshold that will prevent certain boat models made after a certain year from being approved. Others may not allow you to use the money for boating expenses, such as port fees, insurance, or maintenance costs. To ensure you can use the loan for exactly what you need, read the lender’s terms and conditions carefully before applying.

2. Used Boat Restrictions

Some institutions or lenders may be hesitant to approve you if you use the money to finance an older, used model. While each lender’s restrictions will vary, this does not apply to all used boats. Lenders are more reluctant to approve those with significantly older models that may require more routine maintenance than newer models.

In some cases, the lenders offering used boat financing may request a full inspection to ensure the vessel is in good condition and will make you an offer based on the results.

3. Member benefits

Before turning directly to an online or marina-specific lender, research your bank or credit union’s options. While rates may not be as competitive as online lenders, it is common for banks to offer member benefits, such as interest discounts, if you sign up for autopay or have another account with them.

Additionally, staying with your bank can alleviate some of the stress associated with the application process, especially if you have borrowed from the bank in the past.

4. Rates and conditions

Knowing what a competitive interest rate looks like is crucial when choosing the best lender for you. Before you apply with the first lender you come across, review the terms to make sure its repayment options meet your needs and compare its interest rate range with similar lenders.

You may be eligible for more favorable terms or a lower rate from another lender or institution. So make sure you know what a competitive rate will look like for your credit situation before you start the application process.

5. Costs

Some lenders may charge an application or origination fee on top of the interest, which can significantly increase the total cost of the loan. Additionally, some may also charge a prepayment penalty if you pay off your loan ahead of schedule.

Before applying for a loan, research these costs and, if possible, choose a lender that charges few fees to reduce the financial burden.

How to compare lenders

Comparing lenders can seem like a daunting task; there are a plethora of lenders all offering similar products and interest rates. However, finding the right lender for you does not have to be a time-consuming and difficult process.

Some websites do all the back-end work for you and list the ‘best’ lenders based on their methodologies and ranking systems. They often list lender and loan details so you don’t have to go through each lender’s terms and conditions document.

Once you find a few lenders that you think will best suit your needs, see if you can pre-qualify (if they offer the option) before applying. Prequalification allows you to view your approval chances and predicted rates before you apply, without impacting your credit score.

This is how you choose the best boat lender for you

After prequalification, compare your predicted terms and make sure you meet all requirements before applying with the lender that offers you the most competitive rate.

Look at the benefits and perks each lender offers. If you pre-qualify for a number of lenders that offer similar rates and terms, the lender that offers the benefit that best suits your needs may make a boat loan provider the best for you.

For example, if you don’t receive a monthly payment or are not a salaried or hourly employee, then a flexible payment plan would be a good perk. If you plan to enroll in an autopay option to make repayment easier, check to see if the lender offers an interest rate discount for signing up for autopay (most offer discounts ranging from 0.25 percent to 0 ,50 percent).

By reviewing boat lenders and comparing terms, you can easily narrow down your options and find the best deal on financing. It’s just as important to consider the additional incentives offered by lenders to make an informed decision.

Financing a boat with a personal loan

While there are some companies that offer specific loans for marine vessels, most boat loans are essentially personal loans that can be used for boating expenses.

That said, if you’re not having the best luck finding a boat loan that works for you, look into personal loan lenders that let you use the money for boat or marine expenses. The only problem is that some lenders may have restrictions based on the type of boat you are financing or how you plan to use the boat.

Before relying on a personal loan to finance your boat, make sure the lender allows the money to be used accordingly and that you meet all usage requirements.