Boat Loans & Boat Financing – Ultimate Financing Guide

Do you wish to escape the monotony of everyday life and go on a fun-filled adventure in the boat of your dreams? If so, you will be happy to know that boat loans and boat financing is a lot easier than it was even just a few years ago.

The Canadian recreational boating industry generates more than $3 billion per year. The industry is thriving right now due to high consumer demand.

But why is boating such a popular recreational activity?

Boating serves as a great way to get closer to nature and bond with your family and friends. It exposes you to fresh air and helps ease your stress. Additionally, the CHMS found that 32% of Canadians have insufficient Vitamin D levels, so boating can provide a fun way to soak up some sun.

To feed their hunger for boating, more and more people are turning to boat financing—and there are many good reasons for it.

That said, how do you know if boat financing is right for you? How do you prepare yourself? Most importantly, what is your best options for financing?

The truth is that the financing can seem confusing, but you do not have to do this alone. We laid out the process to make it easier for you because the best option often differs from person to person.

If you want to learn more about boat financing, keep reading. Here is our guide to boat financing, designed to answer your biggest questions.

Is Boat Financing Right For You?

Financing makes owning a boat a realistic option for more people. Additionally, financing also makes it possible for some buyers to afford newer or more powerful models.

Unlike auto loans, it used to be very difficult to find a marine lender for a boat loan. But the lending world is a lot different today than it was 10-20 years ago. Nowadays, there are even lenders that specialize in boat loans.

Boat ideally, many experts recommend that your monthly boat-related costs (including the payment, maintenance, insurance, etc.) should be less than half of your disposable monthly income.

But you may already have your eyes set on a specific boat. It probably has everything you could want in a beautiful water shredding machine.

Here are a few reasons why financing may be the right option for you:

You can get an excellent interest rate. You may get lucky and snag a low-interest rate. Take advantage of it, because they do not come around often.
Financing gives you the ability to afford a better boat. Maybe you can afford a boat in cash, but financing opens the door for a better model.
You prefer to have cash in the bank. The future is always full of surprises. Getting a boat loan means that you can keep the equivalent of the purchase price secure in your savings account.
You want to raise your credit score with an installment loan. If you need a good rate on a future mortgage, you might as well take out two birds with one stone.

Now, these are just a few reasons why you may consider boat financing. You may also have several of your valid reasons.

But once you decide that financing is right for you, it is time to get prepared.

How to Prepare Yourself for Boat Financing

Start with the basics. This ensures that you will be ready for any option.

You can get your credit history report from either Equifax or TransUnion, Canada’s two major credit bureaus. You have fast online options that require a fee. If you do not want to pay a fee, opt for the mail option, which takes a bit longer.

Alternatively, you can contact your local powerboat dealer, and one of their in house financing professionals can help you and quickly pull the report for you for free.

Research the lending laws in your region. Do not leave yourself in the dark about anything related to financing.

Next, look at your budget and income very carefully. Try to factor in how much your costs are going to be.

Remember that costs include not only the payments, but also insurance, gas, maintenance, and repairs.

Before heading to the dealership, prepare yourself to do some heavy reading. Ensure that you read everything in the fine print. Do not sign on the dotted line otherwise.

Do not leave any of this until the last second, and pay close attention to the details.

Once you are fully prepared, it is time to consider your budget & financing options.

What is Your Trade Worth?

Before you can figure out your budget and financing options, you need to find out what and if you are going to trade in something to get your price down. Do you have a trade? What is your trade worth?

First, you need to decide what you are going to trade in and how much it’s worth, large boat dealers sometimes have great options and avenues for you to go down in terms of trades and to reduce the purchase price of the boat you want. Some take used outboard motors, pontoon boats, snowmobiles, ATVs, side by sides, Argo’s, pickup trucks, and small cars.

You should call your local boat dealer and find out what kind of products they accept on trade. Keep in mind you don’t trade a boat in at a dealership that doesn’t sell marine products as they don’t sell them or know the value and won’t give you top dollar for them. Try to look for large dealer groups that have connections to other dealerships; they usually give you the best trade values because they can find a home for it quicker.

Once you decide what you are trading, you need to do some research.

Use Online Classifieds
Instant Trade in Appraisal
Auction Values
Word of Mouth
Bring it to the Dealership

To truly appreciate how in-depth and detailed this section is, we posted additional information here How to Calculate What My Trade-in Value Is Worth.

Figuring Out Your Budget

The best way to get to figure out what you can afford is to work backwards.

Figure out how much you get every month after taxes then deduct your expenses.

Figure out your Mortgage, rent, utilities, food, entertainment costs you spend every month

Once you find out how much you have left at the end of the month for allocating to some extra fun or relaxation, you figure out a manageable payment you can commit to.

Now that you know what you can afford, you can calculate how much boat or outboard motor you can buy. Unlike a vehicle or ATV, boats have a different set of rules to abide by.

You can finance a boat for up to 20 years in Canada, depending on boat value. It’s like a little boat mortgage.

Some things you need to know before you decide the length of your boat loan is the longer term you finance your boat, the smaller the payment will be, but the higher the amount of interest you pay. All loans are open-ended, so you could pay it off tomorrow if you wanted.

This allows you to get a smaller payment or a fancier boat for less stress on the monthly budget. If you choose this route, you need to be willing to put extra cash down over and above your loan because no one wants to pay that much interest over the full length of the loan!

To help you calculate your budget here, this boat loan calculator will help you find your monthly payment and or total loan amount.

To get the most exact payment or term you qualify for, you should call or email your local boat dealer.

Your Best Options for Boat Financing

Maybe you already decided that boat financing is your next step. But how are you going to approach the situation?

There are several options for you to consider, including the following:

Set up boat financing through your dealer
Opt for a personal loan from your bank
Get a home equity loan
Use your credit card

Keep in mind that the best option depends on the individual. What is best for you may not be best for another person—and it often is not. Sometimes it is also a matter of personal preference.

So, when you make your decision, choose wisely. Consider every aspect of your financial situation, and make sure to read the fine print.

The rest of this article will go through each option in detail so you can make an informed decision.

Take Advantage of In-House Staff

Many people complicate the process of financing. In reality, it can be very simple if you know what you are doing.

Some boat dealerships even offer financing options for their customers. The only problem is that most of them do not go about it the right way.

Instead of prioritizing the privacy of their customers, some dealers send sensitive information over vulnerable channels.

But the very best boat dealerships put their customer’s privacy and convenience above everything else. These dealerships offer in-house financing and fast credit approval and the best rates around.

There is one huge benefit, among several, to financing through a dealership: it speeds up the process tremendously.

Dealerships with in-house financial services often have financial professionals on staff. This ensures the quickest and most secure way to get you in your new boat.

Financing through the dealer can also come with several other advantages:

Dealer or manufacturer incentive programs
Low Initial interest rates or no down payment
Possible extended warranty programs
Low annual percentage rates
Flexible terms and payments options
Ability to take advantage of extra insurances
Exclusive manufacturer-sponsored boat loan rates not available at other marine lenders

If you hate waiting, then financing through a dealer is the perfect option for you.

Also, by securing your loan and figuring out a budget amount through a marine dealership, the only collateral the lenders ask is the new or pre-owned boat your purchasing.

They don’t ask for your vehicle, TV, or firstborn as collateral like some other marine lenders ask for.

This tends to be the most comfortable and most convenient way of accomplishing financing for your brand new boat. Setting it up through your local dealer is smooth and painless as they have all the serial numbers to your outboard motor, boat, and boat trailer and dozens of lenders at their fingertips to get you your ideal payment plan.

Opt for a Personal Loan

When searching for a loan, you want to explore all options and compare all competitive rates.

If you have good or bad credit, you can usually get a loan from either a local, regional, or national bank. Consult with your bank first and go from there.

If you are a member of a credit union, check to see if they offer boat loans. If they do, you may be in luck.

Keep in mind credit unions don’t report to Transunion or Equifax, so if you’re looking at building up your credit approval rating, you’re better off getting a loan at the boat dealership or another lender.

Although there are plenty of lenders that offer boat loans and auto loans, others shy away. Also, keep in mind that boat loans tend to come with higher interest rates than car loans or mortgages.

The reason for this is they classify a boat as a pleasure and not a necessity like a vehicle.

One major downside of getting a loan through your local bank is that they almost always ask for the property your purchasing and additional personal property such as your vehicle as collateral if you even miss a payment they then have the right to seize it and sell to settle the debt.

No one expects to miss a payment, but bad things happen to some really great people.

You can opt for a variable rate loan if interest rates are about to decline. However, remember that you are often taking on more risk when opting for a variable rate loan.

Consider a Home Equity Loan

Many people consider this to be an appealing option because home equity loans usually have lower interest rates.

However, before you even think about taking this path, ask yourself the following question: Can I afford the payment options and payment amount to pay the loan and my mortgage at the same time?

If the answer is a resounding yes, then this may be your ideal option for boat financing. If the answer is a resounding no, then do not even waste a minute thinking about it.

You also want to make sure you have a lot of equity in your house. Otherwise, you will not get much from this option.

Who in their right mind would want to refinance their house after they just spent 10-20 years paying it off?

Business Loans

If you have your own business, you could even qualify to get a business loan for your next used or new boat.

The loan amount and loan term might even qualify for better interest rates depending on your business credit history. Just like marine lender financial services, you can usually also make an online application.

Boat financing is similar to a business loan but also leaves you the ability to lease the new boat. An advantage of new boat leasing is similar to boat financing, but you can write off a larger portion of the purchase for tax purposes.

Credit Cards as a Last Resort

I am sure you knew we would eventually get to our trusty piece of plastic. However, as the header states, credit cards should truly be a last resort in this situation.

Why are credit cards considered bad for boat financing?

The main reason is that credit card interest rates are usually ridiculously high, and the loan term is infinite. They are not ideal for purchases such as boats.

Why do people finance boats on a credit card?

The first answer that comes to mind is for the points! Everyone loves collecting enough points to purchase cool stuff or fly to exotic lands.

What most people don’t realize is that credit card companies make their money by charging high merchant rates to local vendors for accepting them.

This is why most boat dealers limit the amount you can pay on your card without paying additional fees.

Points are great, but remember your financing at a high-interest rate when there are better options available for you.

But it is important to know that credit cards are an option.

Wrapping Up

A hobby like boating could fuel your happiness for the rest of your life. There is no reason to let anything limit you from living your dream. If you have the means, use boat financing to your advantage.

Remember to assess your budget accurately and make sure that you can abide by the length of your loan term and payment structure. Read the fine print, and do not let your impulses control you.

This is an important decision. Use all the resources at your disposal. Once you do your research, the rest of the process should flow smoothly.

If you take the proper steps, boat financing can be an excellent decision for you and your family.

If you are ready to embark on a journey in your new boat or even a used boat, feel free to check out our showroom or apply for boat financing.