Compared to vehicle loans, boat loans tend to have higher interest rates, according to personal finance website Financial Web. This is due to the latter's relatively higher rate of default. While boat loan interest rates vary depending on your credit standing, boat financing companies do post "ballpark" rates and ranges on their websites.
According to yacht brokerage Marotta Yachts of Sausalito, marine financing companies typically finance a 15-year boat loan for 20 percent down at the 7.5 percent rate.
As of June 2015, the Sea Dream Financing company quotes an annual percentage rate of 4.75 percent for boat loans on its website.
Boat loan financing company eBoatLoans quotes yacht and boat loan rates based on the price of the boat. As of June 2015 the interest rate on a boat that costs $100,000 or more would range between 4.12 and 4.99 percent, while a boat between $25,000 and $49,999 would have rates between 6.25 and 6.74 percent.
These rates are in line with the historically low rates that followed the Great Recession of 2007-2009. According to an article on the Cruising World website, in 2012 "rock bottom rates" were 4.5 to 5 percent on a 20-year boat loan.
Factors Affecting Interest Rates
Boat financing companies such as eBoatLoans emphasize that interest rates are an individual matter, so to get a tailored quote from a boat financing company, you'll need to furnish information such as:
- Your credit score. The higher the score, the lower your rates.
- The make and model of your desired boat.
- The state where you reside.
When getting a rate quote, you may find that to get a firm quote, you must go through an underwriting process to ensure you qualify for a loan. While pre-qualifying can help focus your search for lenders that match your financing needs, you should determine how the company goes through that process. Some brokers send your application to multiple prospective lenders, and each lender could then pull up your credit report -- to the detriment of your credit.
Additional factors that can impact the interest rate are:
- Whether the boat is new or used
- The size of the down payment
- Your debt-to-income ratio
- Employment history
- Length of the loan term
Lowering a Boat Loan Interest Rate
As Financial Web notes, you can take several steps to reduce the interest rate you pay on a boat. Once you have different lender-possibilities lined up, discuss different loan scenarios with them to see how that affects your rate.
You might find that these options help decrease your interest rate:
- Offer the boat and/or other vehicles as collateral
- Put down a large down payment
- Choose a short loan with large monthly payments
If you opt for a used boat because you think the interest rates will be lower, think again, says Financial Web. Because a used boat can depreciate rapidly and be more expensive to insure, even a relatively small loan for a used boat can have higher interest rates than that of a new boat.
- Discover Boating: Calculate Your Monthly Boat Loan Costs Boat Loan Calculator
- Sea Dream Finance and Insurance: Boat Loan Rates
- Financial Web: Getting the Best Boat Loan Interest Rates
- eBoat Loans: Current Yacht and Boat Loan Interest Rates
- Marotta Yachts: FAQs About Buying a Boat
- Cruising World: Marine Finance: Historically Low Rates