What Credit Score Is Needed for a Boat Loan?

Different lenders will have different credit score requirements. If you want to apply for a boat loan, you can expect most lenders to require a minimum score of 680. But there are lenders that will work with borrowers who have lower credit scores.

What Is a Boat Loan?

A boat loan is a type of personal loan that is used to finance the purchase of a marine vessel.

Types of Boat Loans

Boat loans can be secured or unsecured. Unsecured loans do not require any collateral. Secured loans are backed by collateral. In the case of a boat loan, your boat would serve as collateral. If you are unable to make the payments on your loan, the lender can take possession of the boat.

Features

• Terms: Boat loan terms are typically 10 to 15 years. Borrowers may also find loan terms of just a couple of years or longer than 15 years.
• Interest rate: Lenders will charge interest on boat loans. Interest rates will vary based on several factors, including your credit score. If you have excellent credit, you can expect interest rates to start around 7.87%.
• Down payment: A lender may require you to pay a down payment. Down payments tend to range from 10% to 30% of the total purchase amount.
  

How Your Credit Score Affects the Terms on a Boat Loan

Lenders look at your credit score to assess your risk as a borrower. Borrowers with higher credit scores represent less risk, which means they will likely qualify for better loan terms and lower interest rates.

Your credit score is a three-digit number from 300 to 850. Credit scores are broken up into different ranges:

• Poor: 300 to 579
• Fair: 580 to 669
• Good: 670 to 739
• Very good: 740 to 799
• Exceptional: 800 to 850

Lenders will set their own minimum credit scores for borrowers. While a credit score of 680 or higher is a typical minimum for personal loans, that is not the case with all lenders.

Other Requirements for a Boat Loan

In addition to your credit score, lenders will also likely consider your income and your debt-to-income ratio (DTI).

Lenders want to know that you have enough income to repay the loan. Your DTI shows lenders how much of your income does toward paying your existing debt. If you have low income and a high DTI, lenders will consider you a higher-risk borrower. A high income and a low DTI are considered lower-risk, which will translate into more favorable terms and interest rates.

How to Get a Boat Loan

You can apply for a boat loan with various lenders, including:

• Banks: Many banks offer personal loans, which can be used to finance the purchase of a boat.
• Credit unions: Credit unions are another option for borrowers interested in applying for a boat loan. In most cases, you will need to be a credit union member to get a loan.
• Online lenders: Many online lenders specialize in personal loans.
• Marine dealerships: If you are planning to buy through a marine dealership, it may offer dealer financing.

Once you choose a lender, you will need to gather the information required to apply. Lenders will typically ask for personal information on your income, assets, and debt. Some lenders will require you to apply in person, while others will offer online application processes.

Other Considerations Before Getting a Boat Loan

A boat loan can finance the purchase of a boat, but the monthly payments on your loan are not the only expenses to consider. Boat owners also have to pay for registration, maintenance, repairs, gas, taxes, boat insurance, docking fees and storage.

Consider the other costs of a owning a boat along the your loan payments before you get a loan.

The Bottom Line

Borrowers with a credit score of 680 or higher will be more likely to secure a boat loan. Some lenders work with borrowers who have lower credit scores. You can also explore the possibility of a secured loan or working with a cosigner.