Consumer interest in boats has grown exponentially in recent years, according to the National Marines Manufacturers Association. This has resulted in record-breaking boat sales, increased price trends, and no real signs of slowing anytime soon. 

When it comes to making a large purchase like a boat, though, taking out a loan might be necessary to give you access to the funds you need. This loan will then be repaid — plus any fees and interest charges — over a defined period of time, called a loan term. 

The length of that boat loan term can affect many things, such as your monthly payment requirement and how long you remain in debt. So, how long can you finance a boat for and what sort of terms should you expect to be offered when taking out a boat loan?

Factors That Affect the Loan Term You’re Offered

If you plan to finance your next vessel, you’ll find that the process of taking out a boat loan is pretty similar to many other installment loans, such as a car or home mortgage. The loan terms you’re offered for your boat purchase can vary quite a bit, though, depending on a handful of key factors. 

The lender

Each lender sets their own financing terms, which may vary from the next lender. These terms limit how much the lender is willing to loan you, how much they will require you to put down on the purchase, and how long they’re willing to let you repay your boat loan.

Not all borrowers will be able to choose from the full spread of these loan term limits, however. For example, at Trident Funding, boat loans can be amortized for anywhere from seven to 20 years. Not all borrowers (or boats!) will qualify for a 20-year loan, though, even though that is the maximum loan term allowed.

Your credit

When it comes to borrowing money for a big purchase, a borrower’s credit plays a notable role in the approval process. A higher credit score and positive credit history will usually earn a borrower better loan terms (and lower interest rates), while a less creditworthy borrower might only be offered a limited set of terms.

The boat’s age

Unlike homes, boats only last so many years before they are in need of serious repairs or even a complete overhaul. For this reason, lenders factor in your new boat’s age when deciding how long you’ll have to repay your loan. 

If you’re buying a brand new boat, you may be able to choose between a wide range of term lengths. If you’re buying a 25-year-old boat, though, a lender may be hesitant to extend you a 20-year loan term. You’ll likely be offered shorter loan lengths that help protect the lender’s interest in the asset. 

The type of boat

Lenders may offer different loan options depending on the type of boat you are buying. Some boats pose more risk to lenders than other types of boats, so you may find that you’re offered a different loan term when buying a walkaround or bass boat than if you’re buying a yacht. 

The boat’s price

The cost of your boat can limit not just your loan repayment terms, but also the lenders willing to offer you a boat loan for that vessel. If you’re purchasing a smaller boat, for instance, you may find that you don’t meet some lenders’ minimum loan amount. (At Trident Funding, loans range from $25,000 to $2 million.)

Depending on your loan size, a lender may require you to accept a shorter loan term, or you may be asked to contribute a larger down payment.

Your location

Many states set limits on installment loan terms, in an effort to protect borrowers. Because of this, you may find that the loan terms available to you vary based on your location alone.

Factors That Can Influence the Term You Choose

Once you have an idea of which boat loan terms will be offered to you by potential lenders, it’s time to choose the loan term that is actually right for you. Depending on your personal situation, there are certain factors you should consider before officially moving forward with a loan. 

The purchase price

The total purchase price of your boat should be one of your bigger considerations when choosing a boat loan term. That’s because your monthly payment will be determined by how much you borrow and how long you choose to repay that debt. 

In the end, your personal budget might only allow you to choose a certain loan term so that you can afford your monthly payments. 

For example, a $150,000 boat loan for 10 years with a 6% interest rate will cost you about $1,665 per month in payments. That same boat for just seven years, however, would run you $2,191 per month in payments.

If you’d like to see how much you can afford and how your loan term will affect your monthly payments, check out our interactive boat loan calculator.

Your down payment

Lenders may require different down payments based on factors like your chosen loan term and creditworthiness. This down payment represents a portion of your boat purchase — usually between 10% and 20% — that you’re expected to put down; the remaining balance is then financed with your new boat loan. 

Depending on how much money you have available to put down on your boat purchase, you may find that a certain repayment term is a better choice for you than others. 

Your interest rate

In exchange for lending you the money for a boat purchase, your lender will charge you interest on the loan, determined by your loan’s interest rate. 

The majority of boat loans are offered with fixed interest rates. This means that the interest rate being applied to that borrowed debt will stay the same for the life of the loan, regardless of factors like market changes. 

Your interest rate is largely determined by your credit score, borrowed amount, and the down payment you’re willing to offer. However, you’ll also usually find that lenders offer different interest rates for different loan terms.

All other factors the same, a lender will usually offer a lower interest rate on a shorter boat loan term than they will on a longer loan term. This means that you’ll pay less in finance charges over the course of your repayment. 

Ready to Apply for a Boat Loan?

At Trident Funding, boat loans have the potential to range anywhere from seven to 20 years in length. 

However, the perfect boat loan term for you depends on many personal factors, including the boat you plan to buy, your credit history, where you live, and even your monthly budget. If you have an idea of the loan you need and are ready to move forward, we make it easy to start an application online in just minutes.