What is the Normal Boat Loan Length? A Closer Look at Financing Terms

Buying a boat is an exciting milestone. Whether you’re purchasing your first fishing boat or upgrading to a luxury yacht securing financing is often necessary to make boat ownership achievable. When applying for a boat loan one of the key factors to consider is the loan length or term. So what is the normal boat loan length that you can expect from lenders?

The Typical Boat Loan Term is 10-20 Years

Most boat loans range from 10-20 years in length. A 10-15 year term is quite common for boat financing. However, loan terms up to 20 years are available from many lenders for larger boat purchases.

Borrowers often opt for longer terms in order to lower their monthly payments. Stretching out financing over 20 years instead of 10 can make each payment more affordable. However, longer terms also mean paying more interest over the life of the loan.

When evaluating loan term options, it’s important to balance your budget with total interest costs A loan calculator can help you estimate monthly payments and total interest for different loan lengths

Factors That Influence Boat Loan Term Lengths

While 10-20 years is the general range for boat loan terms, your specific situation can shift the term lengths you’re offered. Key factors include:

• Loan amount – The higher the loan amount, the longer the term length lenders will approve. For loans over $100,000, a 20 year term is common.

• New vs. used boat – New boats can typically be financed for longer terms than used boats. Many lenders cap used boat loans at 10-15 years.

• Credit score – Borrowers with higher credit scores can qualify for longer repayment terms. Those with scores below 650 may be limited to shorter terms.

• Down payment – A larger down payment shows the lender you’re financially committed. Borrowers with down payments of 20% or more often get better term options.

• Debt-to-income ratio – Lenders look at your total monthly debts compared to income. The lower your DTI, the more comfortable lenders will be approving longer terms.

• Boat type – Common modern powerboats can easily get 20 year financing. But niche or high-performance boats may be limited to shorter terms.

Considering these criteria, along with the policies of individual lenders, helps give an idea of the boat loan lengths you can expect to be approved for.

Weighing the Pros and Cons of Shorter vs. Longer Terms

Determining the right loan term for your situation involves balancing affordability, flexibility, interest costs and other factors. Let’s look at some of the key pros and cons of shorter and longer boat loan lengths:

Shorter Loan Terms

Pros

• Lower interest costs – You pay off the loan faster, reducing total interest paid.

• Build equity faster – More of each payment goes to principal instead of interest.

• Lower rate – Shorter terms often qualify for a lower interest rate.

• Upgrade sooner – You can pay off the loan quicker and upgrade your boat faster.

Cons

• Higher monthly payment – Since you’re paying the loan off faster, the monthly payment is higher.

• Less flexibility – There’s less room in your budget if finances get tight.

• Harder to qualify – Short terms require better credit and debt ratios.

Longer Loan Terms

Pros

• Lower monthly payments – Spreading out financing reduces each monthly payment.

• Easier to qualify – Lenders are more lenient on credit and income with longer terms.

• More budget flexibility – Smaller payments free up room in your monthly finances.

Cons

• Higher interest costs – You pay more in total interest over the full repayment period.

• Slower equity building – More of your payment goes to interest instead of principal.

• Interest rate fluctuations – Longer terms increase risk of rate changes.

• Lower resale value – The boat loses value faster than you build equity.

How to Choose the Right Boat Loan Term

With the pros and cons in mind, here are some tips for choosing a smart boat loan term length:

• Make a budget – Factor in costs beyond just the monthly payment, like fuel, insurance, maintenance, and more.

• Get pre-qualified – See what terms lenders will likely approve you for before you fall in love with a boat.

• Try out different terms – Use a loan calculator to see monthly payments and interest costs for different loan lengths.

• Think long-term – Make sure you’re comfortable committing to the monthly payment long into the future.

• Consider resale timing – If you plan to resell sooner, a shorter term prevents being underwater on the loan.

• Compare total interest paid – Don’t just look at the monthly payment. Longer terms mean paying more interest overall.

• Leave wiggle room – If opting for a longer term, consider paying extra each month to pay it off faster if possible.

Boat Loan Terms: The Bottom Line

While most boat loans fall in the 10-20 year range, the specific term you qualify for depends on many individual factors. Carefully considering your budget, finances, plans and loan costs can lead to choosing a smart boat loan length. A 10-15 year term offers a nice balance point for many boat buyers. But the right boat loan term is the one that fits your personal situation.