Boat Loan Basics

Credit is personal... just like your boat and how you choose to use it

By Mike Milne

If you need to float a loan to launch your new boat dream, 2011 brings a buoyant credit market and good news on loan rates. With credit opening up, banks involved in boat-related lending are eager to expand their boat loan portfolios. And plenty of finance specialists are working directly with boat dealers to make the boat loan process as fast and painless as possible. Interest rates also remain relatively low – bank prime rates were three per cent near the end of 2010 — bringing good rates for specialized boat loans as well as lines of credit.

Like boating lifestyle options, though, credit is personal. And, as with any loan, individual boaters have to apply and qualify by proving they are credit-worthy and have adequate income to afford the loan.

There’s no hard data, but lenders estimate that half to three-quarters of all boats are bought with borrowed money. Individual boaters’ finances differ, but borrowers these days usually finance their boats through a line of credit (with home equity or investments providing security) or a boat loan (with security or collateral provided by the boat itself).

Boat buyers can use a calculator to help figure out what kind of financing costs the least in the short term. But they also need to look realistically at their own borrowing patterns and long-term ownership plans to find which approach works best. Boaters have to consider whether they plan to trade their boat in a few years or when they want to own it outright.

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