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How To Finance A Boat In 10 Easy Steps

Living in Southern California means taking advantage of the weather as often as possible. Whether you're headed to the beach or the lake, buying your own boat is a great way to go exploring!

If you're wondering how to get a boat loan or how does boat financing work, you're in luck. In this guide, we'll tell you everything you need to know about financing a new or used boat.

At Credit Union of Southern California (CU SoCal), we’ve provided low-interest recreational vehicle loans and boat loans to Southern Californians for over sixty years.

Even if your credit history isn’t perfect, don’t worry, because unlike a traditional bank, we don’t think that your credit score tells the whole the story. Come in and talk to us and let’s see what we can do!

Call us today at 866-287-6225 today for a free, no-obligation consultation.

Get Started on Your Boat Loan!

What Is A Boat / Marine Loan?

Similar to other vehicle loans,  boat loans allow a person to borrow money from a lender to purchase a new or used boat or marine vehicle. Though the process of borrowing money and paying it back in monthly installments for a boat is similar to taking out an auto loan, boat financing is generally a much larger investment.

There are various options for getting a boat loan, so research is key when you're getting ready to start financing. In this guide, we've gathered all the information you need to make the best choice for your boat loan.

Types Of Boat Loans

When you start looking at how to finance a boat, you'll quickly see different types of boat loans. Choosing the right one will entirely depend on your personal situation. The terms of the loan will vary based on your credit score, income, and more.

We'll talk about these factors in length in just a moment. For now, here are the three most common types of loans generally used for financing a boat.

Secured Loans

Secured loans are used in lots of different lending situations but are especially useful for boat loans. A loan becomes secured when it is attached to something used as collateral.

In the case of boat financing, the boat itself will serve as collateral. This means that if you are unable to make payments, the lending institution can repossess the boat. Secured loans are somewhat easier to get than other types of loans since the lender has an assurance that their loan will be met.

Unsecured Loans

An unsecured loan does not use anything as collateral to ensure that the lender gets their money back. Because there is less security for the lender, an unsecured loan can be harder to get and could have stricter terms. Generally, you'll see a higher interest rate than with a secured loan since the bank considers them to be somewhat risky.

Second Mortgage

Borrowing money on a personal loan isn't for everyone. Instead, a home equity loan can provide you with the cash you need to purchase your boat. This loan is also considered a second mortgage. In essence, instead of your boat being used as collateral for the purchase, your home will be used as collateral. Because the risk is lower for the lender, interest rates can be much lower compared to personal loans. Beware: if you can't make payments, the lender could be entitled to put a lien on your home.

Boat Loan Terms

Chances are you've already got some experience with taking out a loan. The good news is that financing a boat happens in pretty much the same way. Of course, since boats tend to be a larger purchase, the terms of the loan will differ from what you may be used to. Here is what you can expect to see with typical boat loan terms.


With a higher price tag comes a generally longer loan term for financed boats and marine vehicles. Depending on the lender, you might be able to get a secured loan with a 20-year term. However, if you'd prefer not to put up the boat as collateral, an unsecured boat loan generally has a shorter term of five to seven years.

Down Payment

As with other large purchases, you'll often need to pay a down payment of 10-20%. Putting down some cash before borrowing will not only reduce the overall amount you'll need to borrow, but it will reduce your monthly payment as well. We'll talk more in detail later on about saving for a down payment.

Interest Rates

Interest rates are one of the loan factors that you need to pay particular attention to when you take out a loan for your boat. Offered rates will depend on the lender and your credit score. Having a great score will help keep interest rates lower, so if you want to know more about how to improve your credit score, we have you covered.

Additionally, the boat itself can affect the loan’s interest rate. The type of boat/marine vehicle and its age can raise or lower your interest rate. In general, expect to pay around 5-7% on a secured boat loan.

CU SoCal's Boat Financing Guide

If you're ready to buy the boat of your dreams, it can be frustrating to have to wait. However, as with financing a car, you should wait to make sure you're fully prepared. The more you get your finances in order before getting preapproved, the better your loan terms are likely to be. For best results with your loan, follow these ten simple steps.

1. Check Your Credit Score

A credit score serves as a financial report card that lets potential lenders know your creditworthiness. The lower your score, the higher your interest rate is likely to be, which means you pay more in the long run. If you have excellent credit, you'll most likely be approved for a higher loan amount and receive lower interest rates.

If your credit score isn't where you want it to be, check out our advice on how to improve your credit score.

Need a fast and easy way to bump up your score? Have a look at the CU SoCal Credit Builder Loan to see if it's right for you.

2. Create A Budget

Creating a budget is something many people are familiar with, but when you're budgeting for a loan, there are a few more things to consider. First, take a look at your annual salary and any other income.

Then, you'll need to consider your current monthly expenditures – mortgage, utilities, auto insurance, etc. Here, you'll be able to see how much more you can spend each month on loan payments.

Everything sounds pretty familiar, right? But for getting a loan, you'll also need to look at your current debt. If you owe a substantial amount of money to other lenders, you may only get approved for a small loan, which will affect the type of boat you are able to purchase.

3. Save For A Down Payment

As we mentioned above, you'll likely have to pay a down payment before you take out a loan. This is the cash payment that you must make upfront before receiving your loan.

The average down payment for a boat is 15% but can range anywhere from 10-30%, depending on the specific boat and the lender's offers.

4. Comparison Shop Different Boats

Once you have a good idea of what you can expect from a potential loan offer, it's time to comparison shop for your boat. You may have a model in mind, but now that you've got a clearer picture of what you can afford, you'll be able to take a closer look at the details.

When comparison shopping, keep a list or spreadsheet of the boats you're considering and input the model, year, price, and any other specs that are important to you. We'll discuss later on how to choose the right boat for your needs.

5. Used Vs. New

When buying a boat – or any recreational vehicle – we tend to think that brand new is always best. In reality, though, whether used or new is better is up to the individual consumer. Make sure you keep your budget close at hand because this will help you decide either way. For instance, you may have your eye on a particular boat model but can only afford it used. In that case, you'll have to decide how to prioritize your wants and needs.

6. Shop Different Lenders

Along with shopping around for your perfect boat, you should also shop around for your perfect loan. Again, you'll have to consider your priorities. For example, is a larger loan amount more important than a low interest rate? What loan term are you looking for?

Be sure to ask lots of questions about recreational vehicle loans and the terms the lender offers so you can make the most informed choice.

7. Get Preapproved

Preapproval is a crucial part of getting a loan. When you've chosen a lender, you'll need to present them with your financial documentation so they can let you know how much you qualify for.

They'll most likely want to know about your credit score, income, and debt. Luckily, you've already compiled this information in step 2 when you created your budget, so there shouldn't be too many surprises here!

8. Calculate Your Payments

The preapproval from the bank will include details like the interest rate, loan amount, and loan term. When you have all of that information, you can simply plug it into CU SoCal's loan calculator and calculate your monthly payments.

Alternatively, if you have a set number that you are able to pay each month based on your budget, you can put in that information and calculate your monthly payments based on the purchase price of your desired boat.

9. Get The Right Boat For Your Needs

Armed with your preapproval and estimated monthly payments, you can now choose the right boat for your needs. First, consider your main use of the boat. Whether you're strictly looking for a great fishing boat or a cuddy cabin boat for a weekend at the lake, there are so many different types of boats that it can be hard to choose.

Some boat activities you might be looking to do include saltwater fishing, sailing, and multi-day cruising. Make sure your boat is suited to the types of activities you plan to do.

10. Make The Purchase!

All that's left to do now is buy your boat! Whether you've chosen new or used, bowrider or cabin cruiser, you've found the perfect lender, the ideal terms, and the right boat for your needs.

Don't forget to pick up any extras you'll need to get your boat on the water: insurance, licensing, safety equipment, and more.  

Where To Get A Boat Loan

Similar to auto loans, boat loans can be taken out from a variety of different lenders. Below are the lenders you should investigate when seeking boat financing, along with their pros and cons.


Banks are generally the first place loan-seekers turn to and for several good reasons. Banks are nearly a necessity in our world today, so it's pretty likely you already have an account with one. Borrowing money from your regular financial institution is very convenient. And when it comes to online presence, banks usually have very good websites and apps, making it incredibly easy for you to check your bank account and loan in the same place.

Because banks are for-profit institutions, they often have very high standards and policies for their loans. You are often required to have a great credit score before they will lend you money, and there are generally higher fees applied as well.

Credit Unions

Credit unions function similarly to banks; however, credit unions are not-for-profit organizations that are owned by their Members.

Because of this, Members can enjoy lower interest rates and more personalized service. However, to take advantage of these great benefits, you might be required to have a Membership with the credit union.

Fortunately, joining CU SoCal is simple, so you can get straight to enjoying our loans and other banking products quickly. Plus, while credit unions aren't usually known for their great web presence, CU SoCal has a user-friendly website and mobile app, so you can check your finances all in one place.

Online Lenders

With more and more sectors moving to the worldwide web, it makes sense that lending institutions can be online-only. For users who are even a little internet-savvy, online lending can be a great option. You can compare lenders online and get all the necessary information right away. Interest rates and loan terms will differ from lender to lender, so using these comparison sites can be very helpful.

On the other hand, online lenders rely on online communication, so if you prefer the brick and mortar experience, online lenders may not be the best choice.

H3 - Boat Dealerships

It's not uncommon to finance a vehicle through the dealership that sold it to you. This holds true for boat dealerships as well. When checking out where to get a boat loan, ask a few dealers you are considering what type of financing they offer.

Knowing this will also help you decide which boat to get based on where it's available.

Getting a loan from the dealership is incredibly convenient since they can process your sale and loan in the same location. Dealerships are also more likely to offer loans even with bad credit. Add in the fact that you could also receive special discounts, and boat dealerships could be the right option for your boat financing.

Financing Alternatives

Taking out a loan isn't the only way to buy a boat. There are other options for getting the boat of your dreams, including paying for it in cash or renting a boat. Here are a few things to think about if you're considering a financing alternative.


If you can afford it, paying cash for a boat may be your best move. You'll avoid taking on debt and possibly lowering your credit score. Plus, it's the fastest way to achieve boat ownership.

Of course, depending on the boat you're looking at, this could be very costly. The higher the price, the longer you'll have to save before you can purchase, so if waiting isn't your thing, cash may not be right for you.


Renting a boat is another great alternative. Instead of the huge financial commitment that comes with financing or purchasing your boat with cash, you're only responsible for the boat for a few hours.

Other than returning the boat to the owner at the end of the rental period, there aren't too many downsides. Granted, renting a boat may not be as fun or as exciting as owning a boat of your own, it’s definitely cheaper!

CU SoCal Boat Loans

At CU SoCal, we have loans for whatever moves you, even on the water. With up to 100% financing and a fixed interest rate, our boat loans feature flexible terms to suit our Members' needs. Our boat and marine loans are applicable to new and used options, and we don't require any application fees.

Apply For A CU SoCal Boat Loan Today!

As a full-service financial institution, CU SoCal prides itself on offering incredible rates on loans to our Members.

Ready to head to the water? Apply online for your boat loan today!

Get Started on Your Boat Loan!

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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