How To Refinance A Boat Loan – A Comprehensive Guide

You are happy that you purchased a boat since it allows you to participate in water skiing, fishing, or just spending time on the wide water with your family and friends.

One thing, though, that you may not be very delighted about is the loan you took out to be able to afford to acquire the boat. The interest rate on your boat loan may be relatively expensive based on your specific situation at the time of purchase. In contrast, it’s possible that the monthly payments won’t currently fit within your financial plan.

If the terms of your current loan are unfavorable to you, you might be able to refinance it into a boat loan to obtain more relevant terms for your current financial situation. Find out more about the process of refinancing a new or old boat and the advantages of doing so.

Key Takeaways

  • How to get a boat loan
  • Boat loan terms you should know
  • The average interest rate on a bat loan
  • A good credit score for a boat loan
  • The best boat loan companies
  • how soon can you refinance a boat loan
  • Is it possible to refinance a boat loan?
How To Refinance A Boat Loan

What Is A Boat Refinance?

When you apply for a new loan and use the loan’s principal to pay off existing debt, this is referred to as refinancing.

When you apply for a new loan and employ the principal of that loan to settle an existing debt, such a transaction is known as a refinancing. Loans of all kinds may be refinanced. For instance, homeowners who want to benefit from lower interest rates or cash out part of their property’s value might refinance their mortgages. People with auto loans may refinance to adjust the loan’s duration or length and get a reduced interest rate.

If you’ve previously obtained a loan for your yacht, refinancing the loan will be relatively familiar to you. You will have to reapply for the loan and provide details like your credit history and proof of income. The lender will select what interest rate to give you, and you may decide whether you want to proceed with the refinancing.

There are several refinancing loan options. Your refinancing objectives and the benefits you anticipate from the loan will determine which option is best for you.

The Best Way To Refinance A Boat Loan

You may take several actions to ensure that the refinancing process goes as smoothly as possible. The ideal way to be ready to refinance your boat loan is as follows:

  • Please do the math: Before looking for new loans, it’s a good idea to determine how much you still have to pay on your loan, its interest rate, and what time is left in the payback period. You may contrast the expenses of the present loan with the cost of the refinancing by knowing what you already pay and how much your current loan will ultimately cost you. Paying more over time could be advantageous in certain circumstances.
  • Understand numbers: Before you refinance, you must know your credit score, how much you still owe, and how much it will cost. Knowing your score allows you to predict whether or not you will get a loan with a cheaper interest rate.
  • Understand your boat: Have the basic information about your boat written down before you begin the procedure since a lender may not allow you to renew a loan on a boat over 10 years old. The market value of your yacht is another factor in refinancing. Generally speaking, you can’t borrow more money than the boat is worth. You may not be eligible to refinance if your boat has decreased in value since you bought it, and you haven’t paid off most of your debt.
  • To be aware of other debts: When you wish to refinance, your debt-to-income (DTI) ratio is important. Your debt-to-income ratio (DTI) may be too high to refinance if you’ve accrued more debt while receiving your first boat loan. If so, you might concentrate on paying off other bills instead of trying to refinance.

How To Get A Boat Loan

You have a few choices if you decide that getting a loan to pay for your boat is the best course. Boat loans are available from many lenders, including conventional brick-and-mortar banks, credit unions, and internet lenders. Evaluating the top boat loan lenders before settling on a specific one and choosing the one that best suits your requirements is crucial.

Standard banks

Numerous conventional banks provide loans. Taking out a loan with that organization could be a good idea if you connect with a bank that provides personal loans for financing boats. If you have already done business with a bank, it is often simpler to qualify for the best rates, and some banks provide loyalty discounts to clients who maintain more accounts with them. Working with a bank can be your best choice if you prefer in-person support.

Credit unions

Similar to banks, credit unions often provide benefits to loyal clients. Local entities that often demand a membership to obtain their goods are credit unions. If you now belong to or want to join a credit union, you may take advantage of cheaper interest rates and laxer credit standards.

Lending websites

Thanks to internet lenders, borrowers may apply and get approved for loans entirely online. These lenders often offer quicker approval and financing times than conventional banks. Finding an internet lender can be your best choice if you want an online experience or need your money immediately.

Boat Loan Terms You Should Know

There are other ways to finance your boat purchase if you’d prefer not to go the conventional path or if your credit is problematic. These consist of the following:

  • Individual loans. Unsecured personal loans are available from many lenders, making it simple to compare them and choose the best one. If your credit is good, you could qualify for a loan with a low-interest rate. Additionally, since the yacht isn’t used as collateral for the loan, the lender cannot seize it if you fail. But remember that if you default, your credit will still suffer. Additionally, if your credit is less-than-perfect, you can face exorbitant interest rates and the high origination costs that specific lenders ask. The typical personal loan period is between two and five years, so if you borrow a significant sum, you could find it difficult to repay it in that time.
  • Those with poor credit may be better suited for secured personal loans. These loans, secured by collateral and may be confiscated if you default on the loan, are not unsecured.
  • Unsecured loans. A few lenders provide personal subprime loans to borrowers who have trouble obtaining finance in other ways. According to Coburn, “they are (for) folks with damaged credit, or scarred credit if you will. This allows individuals to get a loan, often with stricter conditions.
  • Payment in cash. Cash is accepted almost anywhere, even boat dealers, if you have the means. The most significant aspect is that paying cash doesn’t include a credit check, but it can also mean forgoing your ambitions of owning a yacht in favor of a less expensive vessel. You may set a budget by choosing the correct kind of boat for your requirements—a boat for a large group or a boat for two, freshwater or saltwater?

The Average Interest Rate On A Boat Loan

A new boat typically costs between $60,000 and $75,000; therefore, most buyers will need financing. Thankfully, the maritime sector is rife with lenders eager to provide boat loans to needy individuals.

But not every one of these lenders will provide the same conditions. The most significant difference purchasers will notice the vast range of interest rates that rely on several variables.

Applicants with good credit should anticipate receiving a boat loan with a starting APR of between 5% and 6%. Lenders typically set their best rates between 1% and 2% over the prime rate. Therefore, changes in interest rates by the Federal Reserve will immediately affect the cost of boat loans.

A Good Credit Score For A Boat Loan

Most lenders consider a FICO credit score of 680 or more excellent; nevertheless, the minimum credit score criteria might differ from one lender to the next. They will also check to ensure you have not had any severe credit troubles in the prior three to five years, such as missing payments on loans, filing for bankruptcy, or losing your home to foreclosure.

You may get a copy of your credit report by paying any leading credit bureaus if you are uncertain about your credit score. If your credit card comes with a rewards program, this service as a bonus, you may be able to get your credit score without having to pay for it if you qualify. If you sign up for Experian’s email notifications, you may also take advantage of their free credit monitoring service.

The Best Boat Loan Companies

The best boat loans are widely available, have low-interest rates, and have a lenient down payment and term requirements. Additionally, these lenders have low fees and penalties and strong industry financial strength ratings, which point to a reliable, trustworthy business. Finally, the top boat loan providers have a track record of excellent customer service and high customer satisfaction ratings.

  • Best for Quick Funding: LightStream
  • Best for In-House Financing: Mountain America Credit Union
  • Best Overall: Bank of the West

1. LightStream

Because this bank often delivers same-day approvals and same-day money, we selected LightStream as the best option for speedy funding. Once your boat loan has been granted, you can pick the funding date, even if it falls on the same day as your application.

LightStream offers boat loans ranging from 24 to 84 months and amounts ranging from $25,000 to $100,000. The current starting interest rate is 5.99%, with a 0.50% auto-pay discount.

Additionally, they have a Rate Beat program, which guarantees a rate that is 0.10% less than the rate given by a rival lender (for the identical loan parameters) in the previous business day.


  • Deposits of money as soon as the same day
  • Beat program rate
  • There are no fees or deposits needed.
  • Available for financing a boat purchase or refinance
  • Available in all fifty states


  • A short payback period
  • Loans are limited to $100,000.
  • Maximum rates might be pretty high.

2. Mountain America Credit Union

Mountain America Credit Union can offer funding directly through an authorized dealer for buyers looking to buy a new or used boat. Choosing and financing your purchase can be done quickly in one location, and you’ll also have access to banks that offer low-interest rates that you might not otherwise be able to.

With Mountain America, there are no application fees, and 15-year loan repayment terms are possible. Whether the boat is new or used, creditworthy buyers can get interest rates as low as 5.49% APR; the credit union does not publish minimum credit score requirements for this rate. Additionally, they don’t list minimum or maximum loan amounts, so you’ll need to speak with your dealer to find out how much you can borrow.


  • Loans for new, used, and refinance
  • Through dealers, internal financing is offered
  • Financing for vessels up to 19 years old
  • Lowest rates at 5.49% APR


  • There are branches in just six states.
  • Membership is necessary if applying in person.
  • There is little information online.

3. Bank Of The West

This lender achieves our top place because of the boats (and owners) it accepts. Bank of the West finances 2001-and-newer boats. Allowed boats include motor, sail, multi-hull, pontoon, electric, high-performance, houseboats, and wood hull boats. High-speed boats are one of Essex’s rare exclusions.

Bank of the West/Essex provides boat loans to recreational users and full-timers/liveaboards. New, used, and refinancing borrowers may receive 4.29% APR, while liveaboard borrowers can get 3.74% APR.

This lender prefers credit scores of 700 or above, particularly for the lowest rates. In most circumstances, your loan-to-value (LTV) ratio must be 85% or below, and a 10% to 30% down payment is necessary.


  • Up to $5 million in loans
  • Repayment periods range from one to seven years
  • Accessible throughout all 50 states
  • Accepting full-time and liveaboard positions
  • Fees may be added to a loan.
  • Lowest rates at 3.74% apr


  • Favored with good credit
  • Maximum loan-to-value of 85%
  • Charges processing fees on loans.
  • Financial support is delayed
  • No cosigners are accepted.

How Soon Can You Refinance A Boat Loan

Do you have to refinance your boat loan at a particular time? Everything relies on the current state of the globe, your credit and financial status, and both. Interest rates can fall significantly a few months after you take out your first loan. Refinancing may enable you to acquire a lower monthly payment and cut your overall out-of-pocket expenses if the decline is significant enough.

Another possibility is that you must pay off your debt for several years before refinancing makes it reasonable. It might take months or years for your credit score to rise enough to apply for a boat loan with “good credit.”

Monitoring the market, your money, and your present debt is the wisest action. Doing this lets you determine whether interest rates are low enough for refinancing to make sense for you.

Is It Possible To Refinance A Boat Loan?

Refinancing might reduce your monthly payment, decrease your loan term, or cut your interest rate. Five reasons to refinance your boat:

Lower Rates

When refinancing, you frequently want a lower interest rate. After paying a loan for a period, your credit score rises, lowering your interest rate. As the economy changes, so do interest rates.

After two years of paying your boat loan, interest rates may have dropped, making it an excellent opportunity to refinance. You’ll pay more towards the principal and less with a reduced interest rate.

Reduced Payments

Refinancing a boat loan may decrease your interest rate and loan conditions, lowering your monthly payment. Lower monthly payments are easy, and save money. If you’re having difficulties paying your current payments, refinancing might help. Refinancing might help you avoid late penalties and a lower credit score.

Payoff Quicker

Refinancing may speed up debt repayment. You may reduce your loan terms when you refinance to pay off the debt faster with a lower interest rate. With bigger installments, Paying off the loan early will allow you to save money on interest.

Money-Lending Option

You may borrow money with a cash-out refinance by refinancing your yacht. Cash-out refinancing pays off your initial debt and replaces it with a larger personal loan.

Cash is dependent on boat equity. Equity is the difference between your boat’s value and the loan balance. A cash-out refinancing provides accessible cash and cheaper interest rates.

Debt Consolidation

You may refinance and combine other loans with your boat loan for a cheaper interest rate. Refinancing your yacht to consolidate debt combines all your debts into one monthly payment. This approach involves a cash-out refinancing, replacing the previous loan with a new personal loan.


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There are a few ways to pay for a boat if you want one and are ready to make a financial commitment. However, getting a boat loan is probably your best choice if you can’t pay in cash. Before choosing a lender, review the top boat loan providers and request quotes from a few providers. Additionally, it is crucial to understand the actual monthly payment amount.

If you’re financing a yacht, consider alternatives depending on your financial situation. As with any loan, those with good credit and a sizable amount of extra cash will be offered more favorable boat loan terms than those with less-than-ideal credit and a limited spending plan. Generally, borrowing a luxury item like a yacht could be subject to stricter underwriting requirements than financing a vehicle or a house.


You can learn more from the video below:

About Author

How To Refinance A Boat Loan
Lydia Alolade
I am a professional article and e-book writer with 4 years of experience, I write on well research content on cryptocurrency, stocks, loans and finances.

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