Boat Financing

by Captain Bill Rountree

I wanted to share some important tips that I have learned over the years about getting financing for your boat. Some of them may certainly be considered common sense, but we all need reminders occasionally to keep us from getting swayed by the excitement of getting a new boat.

Shop around for your boat loan. It is always wise to get at least three different quotes for your boat loan. Besides the obvious differences there are in the percentage rate you pay for your boat loan you can also pay different amounts for the down payment that is required, the number of years they are willing to finance the boat can vary, there may be a pre-payment penalty, and then there are possibly different points to pay and other various fees that may be charged by the lenders. Typically for a large boat you will have to put down a 20% down payment and they can finance the boat for up to twenty years, but this can all vary from lender to lender and on the boat you are financing and your credit score. You should certainly get a quote from your local bank but also search for boat loans on the internet. Always be careful when you are dealing with a company that you do not know and research them carefully before giving them any of your personal information or any fees that they may require. When I have financed a boat from a lender in another state I had no problems dealing with them and having the paper work sent where it needed to go so this was a good option for me.
Consider the impact on your boat insurance due to a boat loan. If your boat is financed you will most likely have to carry different boat insurance coverage than you will if your boat is not financed or is financed through other sources. If you elect not to get financing on your boat or finance it through other means such as a loan from a relative or by using a line of credit on your house then you may be able to save money on your boat insurance.
The finance charges you pay for your boat loan may be deductible. You will have to ask your accountant but many times based on the way you will use the boat and if it has living quarters (sleeping platform, cooking facilities and toilet) then the finance charges you pay could be deductible as a second home when you file your income taxes.
You may have to have your boat documented by the US Coast guard. This may be required depending on the type of boat loan you get. This process can take some time and will cost you additional fees. The USCG documentation allows the lender to essentially place a mortgage on your boat which gives them a more secure loan. If you are purchasing a boat that already has USCG documentation you will have to pay a fee to transfer the documentation to your name but it allows the lender to perform a search to verify there are no other liens on the boat you are purchasing.

Getting a boat loan can be a difficult and frustrating process but doing the research to choose the best lender for you will be well worth the effort.

About the author: Bill Rountree is a lifelong boater, holds his US Coast Guard Masters license and a US Sailing instructor certification. He has owned motor yachts, sailing yachts, racing sailboats, rowing shells, kayaks, windsurfers and on and on. He spent two years living aboard and cruising on a forty foot sailboat and has over 10,000 blue water miles.