Boat Buying: Line Up Your Financing

I don’t know where you get your financial information, but most of the things I’m reading lately indicate we’ll soon be seeing interest rates begin to climb. So if you were considering financing the purchase of a used boat, it might be a good time to pull the trigger. It’s likely to get more expensive later.

financing-300pxIf that sounds like a scare tactic, I apologize, but realize I have nothing to gain whether you buy a boat or not. However, the Federal Reserve Board just met recently and not only are they dialing back the bond buying that has buoyed the U.S. economy for the last five years; they’re also talking more seriously about raising interest rates, and that affects all banks and the rates they charge.

Now that summer is over, people are more likely to be selling their boats, too, as they move up to something larger. So, there’s a convergence of market shifts right now that could make this fall and winter a good time to buy.

Finding the right used boat takes focus, and I’ve written extensively on the topic here on, so let’s talk about lining up financing.

First, a boat is a luxury item, so you’ll need good credit to qualify for the lowest interest rate.

You can positively affect your credit score before you go shopping for financing, and yes, finding a good loan takes almost as much focus as finding a boat. You want to begin by paying off major credit cards if you can, and bringing that Macy’s or the Target card down to zero. The fewer outstanding balances you have, the better.

When seeking financing, start with your bank and/or your credit union. (Our family has accounts with both.) Odds are good you’ll get two different rates. Once you have that information, you can search the Internet for financing. Some good sources are:

If you’re a BoatUS member, you can seek financing there, too.

So, if you exhausted all those resources, you should have four or five loan packages from which to choose. Obviously, take the one with the lowest interest rate.

But you’re still not done. If you’re buying a used boat from a dealer, and you arrive with a source for your own financing, you have a valuable bargaining chip. The dealership will want you to finance it through its sources because it gets a cut “on the back end.” That increases the dealership’s profit on the deal.

If the dealer can get you a lower rate, he will make more in profit on the deal. That’s OK as long it doesn’t affect the initial price.

To paraphrase the saying, when banks compete, you come out ahead.


Boat Trader has plenty of  Buying and Selling advice, but also check out the hundreds of articles in the Boating section, with tips on everything from seamanship to maintenance, how-to, where to find replacement parts, and much more.