If you live anywhere near the water, the idea of having a boat probably sounds great. Even if you don’t like to swim, dive, or fish, there is something relaxing about cruising the waters and enjoying a nice day on the water. Most of us simply cannot afford the high cost of most vessels. Fortunately, boats can be affordable and accessible to everyone, this is where financing your boat purchase is helpful.

How Does A Boat Loan Work?

Boat loans are available through a number of different channels, but specialty lenders are often the better choice as this is a very specialized type of loan. Banks and traditional lenders are fine for car and home equity loans, but boat financing is a little more purpose-specific.

Obviously, there will be an application/evaluation process, as with any other type of loan, which will include a credit check. Before this begins, you will need to decide what sort of boat you want and how much you want to borrow. Then, you will have to provide all the required information and wait for the lender to review that information.

If you are approved for a boat loan, the lender purchases the boat on your behalf. You will probably have to make a down payment, usually 20% of the purchase price. So let’s say your boat costs $100,000: Your down payment would be $20,000 (20%).

Once you sign the loan documents you are responsible for repaying the loan under the terms of the agreement. This will typically be done by using a set monthly payment for the negotiated term. In most cases, while there are no prepayment penalties, you are required to make 6 monthly payments before you can consider paying off your loan in full.

How Much Will I Have To Pay Per Month?

How Much Will I Have To Pay Per Month?

There are several things that will affect your repayment rate. First of all, the lender will consider the size of your loan. If you’re just borrowing a few hundred to buy a canoe, those monthly payments can be quite small. Of course, if you’re buying something larger like a yacht, those monthly payments are going to be much larger.

Secondly, your financial qualifications will also play a role. People with better credit can generally be expected to make payments more reliably. As such, they are considered to be less of a risk and will likely get a better interest rate.

The term of repayment will also be important. When you get a boat loan, you will need to choose the length of the repayment term, usually from 5 to 20 years. If you go with a shorter repayment term, your monthly payment will be larger since you are paying the loan back sooner. If you choose a longer repayment term, your monthly payment is smaller but over time you are paying more interest.

Understanding Interest Rates

The Federal Reserve sets the Interest Rates that they charge banks to borrow money from them and what they can charge other banks to borrow from each other. The Banks themselves set their own Interest Rates for consumers based on several factors including demand, the economy, and risk. This applies to mortgages, car loans, and boat loans. Loans traditionally have been either a fixed rate or variable rate over the term of the loan. For boat loans, the rates are fixed for the term you choose. This allows you to have a fixed payment every month for the term of your loan, which makes your ability to plan for the future easier.


Boat loans are pretty self-explanatory: You get a loan to purchase a boat. The concept is simple but on occasion, the specifics can be difficult for some people.

To summarize the process:

  1. Choose a boat that fits your needs and your financial situation
  2. Choose a Lender
  3. Negotiate the Terms of the loan
  4. Apply for the loan
  5. Make the down payment, close on the loan and take possession of the boat
  6. Make payments until the boat is paid off or sold

The best way to simplify the process is to choose a high-quality lending organization whose employees are there to guide you through the process and to ensure the process goes smoothly and efficiently. To get started with your boat loan, contact Atlantic Horizon Capital through our website or by calling 609-365-1540 and allow us the privilege of helping you secure the boat of your dreams.

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