How Many Years Are Boat Loans Typically For?

Buying a boat is an exciting experience, but it also requires careful financial planning. One of the biggest decisions is how you will pay for the boat – with cash or a loan? If you need financing, an important factor is the loan term or number of years the loan covers. So how long do boat loans usually last?

The Typical Boat Loan Term is 10 to 20 Years

Most lenders offer boat loan terms ranging from 10 to 20 years The most popular term length falls around 10 to 15 years for both new and used boat purchases

While a longer repayment term of 20 years lowers the monthly payment amount, it results in paying more interest over the full loan period. Shorter terms like 10 years have higher monthly payments but save money on interest.

According to LendingTree, the average interest rate on a 10-year boat loan is around 6-7% for borrowers with excellent credit scores above 700. At 20 years, the rate increases to 7-9% on average.

Always use a boat loan calculator to estimate your monthly payment at different loan lengths. Then you can choose the term that fits both your budget and long-term saving goals.

Factors That Determine Boat Loan Lengths

The ideal boat loan term depends on your unique financial situation Here are some key factors lenders consider

• Your credit – Borrowers with higher credit scores generally qualify for lower rates and can take out longer loans more comfortably If your credit is limited, stick to shorter terms to get affordable monthly payments

• Down payment amount – The more money you put down upfront, the lower your financed amount will be. This gives you flexibility to select longer repayment terms.

• Interest rates – When rates are low, longer loans are more feasible since monthly payments will be lower. If rates are high, shorter terms help minimize interest fees.

• Monthly budget – Analyze your budget to see what boat payment fits comfortably without straining your finances each month. Avoid overextending with loan lengths you can’t truly afford.

• Boat type – Less expensive boats like pontoons may only need 5-10 year loans, while pricier yachts often require 15-20 year terms. Match the term length to the boat value.

• Your financial goals – If you want to pay off debt fast, choose shorter terms. For lower monthly payments, longer loans work better.

boat Loan Term Lengths by Boat Type

The range of approved loan term lengths often depends on the type of boat being financed:

• Jon boats – Smaller jon boats under $15,000 are often financed for 5-10 years. Paying them off quicker saves on interest.

• Fishing boats – Mid-range fishing boats from $15,000-$50,000 normally get 10-15 year loan terms.

• Pontoons – Affordable pontoon boats usually get 10 year loans. High-end models may go up to 15 years.

• Runabouts – These versatile boats have loan terms of 10-15 years typically.

• Cruisers – Bigger cruising boats and yachts can get loan lengths of 15-20 years.

• Jet skis – Jet skis and personal watercraft take out shorter 5-10 year loans since they depreciate faster.

Again, use your budget and financial goals to choose the specific years for repaying each boat type. Don’t let a dealer convince you into a 20-year term if a 15-year loan better matches your needs.

What is the Maximum Boat Loan Term Allowed?

Most lenders cap their maximum boat loan lengths at 20 years. In some cases, borrowers with pristine credit scores above 750 may get approval for terms up to 30 years. However, these ultra-long loans should be avoided by most buyers.

Yes, spreading repayment over three decades provides very low monthly payments. But you end up paying the huge cost of 10+ extra years of interest fees. It’s better to find a term under 20 years that aligns with your financial capabilities.

If even 15-year loan payments are currently too high for you, it may be better to save up a larger down payment first. That lets you qualify for more reasonable monthly payments at a 10-year term you can actually afford.

Should I Choose the Longest Term to Get Lower Payments?

It’s tempting to select the longest 20-year term when financing a boat just to lower your monthly payment. But before automatically choosing the maximum loan length, consider these drawbacks:

• You pay much more interest over the loan life – sometimes thousands of dollars extra compared to a 10-year loan.

• You stay “upside-down” on the loan balance longer. If you want to sell the boat before the loan is paid off, you may owe more than the boat is worth.

• Life circumstances can change a lot over 20 years. A shorter term gives you flexibility to sell the boat sooner if needed.

• Long loans can end up costing you more overall if interest rates rise later. Your rate is fixed for 20 years versus just 10 years.

Aim to strike the right balance between getting an affordable payment and minimizing interest paid. Use a boat loan calculator to run the numbers at different terms until you find the “sweet spot”.

For example, going from a 10-year to 15-year term may lower your payment enough while only increasing interest costs by a few hundred dollars. That can be worth it for monthly budget relief. But extending all the way to 20 years primarily benefits the lender, not you.

How Do Boat Loan Lengths Compare to Auto Loans?

It’s useful to compare boat loan terms to auto loan terms, since the process of getting approved is similar:

• New cars – Average 3-5 years with most at 5 years max.

• Used cars – Average 2-6 years with some lenders going up to 8 years.

• New boats – Commonly 10-20 year terms.

• Used boats – Also usually a 10-20 year range.

As you can see, boat loans are structured for significantly longer payback periods compared to both new and used car loans. This allows for lower monthly payments on much higher boat prices.

With auto loans, even 8 years is considered a lengthy term that keeps payments affordable. But for boats, 10-15 year loans are the standard.

Getting a Shorter Boat Loan Term

If you want a boat loan for less than the 10-20 year norm, here are tips for qualifying:

• Have excellent credit above 740 to get the best rates at shorter lengths.

• Put down at least a 20% down payment to reduce the financed amount.

• Consider a smaller, less expensive boat that is realistic to pay off faster.

• Find lenders that offer boat terms under 10 years – they are less common but available.

• Be prepared to budget for the larger monthly payment of a shorter term.

Paying off your boat faster allows you to save on interest and build equity quicker. Evaluate both your budget and long term financial goals to choose the shortest term that works for you.

Final Thoughts on Boat Loan Lengths

The ideal boat loan term is different for every borrower. Make sure you crunch the numbers to find the payback years that make financial sense.

Avoid simply defaulting to the maximum 20-year term just to get a lower monthly payment. But also steer clear of loan terms that cause unaffordable payments each month.

Land on a happy medium length that balances your current budget with saving money on interest in the long run. Most boaters find that sweet spot lies with a 10, 12, or 15-year loan.

Use LendingTree’s boat loan calculator and get prequalified to see personalized term options. Then you can confidently choose a boat loan length that sets you up for affordable payments today and financial freedom faster.