How Long Can I Finance A Boat?

Because boats hold value relative to their original purchase price much better than automobiles, substantially longer finance terms are available on boat loans.  Most boat loans range from 120 to 240 months depending on purchase price.

Consumer Reports says that the average new car will last 8 years or 150,000 miles while most 25 year old boats are still in use.  In terms of average useful life, having a 72 or 84 month auto loan is riskier than a longer term boat loan.

Many customers treat longer term boat loans like an lease.  There is almost no leasing in recreational boating.    Most customers can purchase a new boat with a 240 month term and walk away in 3-5 years without being “backwards”.  This means they can sell or trade the boat and not need to pay additional money to clear the existing loan because the current value of the boat is less than the loan balance.

All boat loans we offer are fixed rate and have no penalties for early payment.  We have many customers that chose a longer loan term so they have a smaller required monthly payment and then they can chose to pay more as they chose.  This allows the buyer more flexibility.

Currently, interest rates are historically low and the market has been performing well.  In these conditions many financially savvy customers that have the capital to pay cash have been financing boat purchases and leaving the money in the market.  If you have a 4.75% interest rate on the boat loan but your are making double that on investments, it makes financial sense to take the loan and if/when the market return falls you can pay the loan off with no fees.  

It is true that the longer you hold a loan the more interest you will pay but also consider things like warranty coverage, the opportunity costs of using your money elsewhere, and the cost/value of having a newer boat when deciding what is the right decision for you and your family.