If you’re in the market for a boat but need a little financial assistance, you’re in luck. There are a variety of boat financing options available to help you cover the costs.
In this guide, we’ll walk you through the process of finding the best boat loan for your unique financial situation. So, whether you’re a seasoned boater or just starting out, keep reading to learn more.
Main Highlights
- Various financing options are available for Canadian boat buyers, including dealerships, banks, credit unions, and online lenders.
- Top boat loan providers include the likes of Loans Canada, FatCatLoans, Fairstone, and big banks like RBC, TD, and Scotiabank.
- Boat loans can be secured or unsecured, offering flexibility in borrowing amounts and repayment terms.
- Down payment of 10% to 20% or more is recommended, preventing over-borrowing and managing depreciation as boats lose value over time.
What is a Boat Loan?
A marine or boat loan is a type of financing that helps people buy almost any kind of boat, like sailboats, ski-dos, or fishing boats. You can get a boat loan from a specialty lender, a private lender, or a big bank.
Some lenders will transfer the money directly to the dealer, while others will give you the money directly. Once you receive the funds, you’ll need to repay the loan in equal installments over time.
Where to Get a Boat Loan in Canada
There are many different ways to get a boat loan in Canada. You can choose from the following:
Secured Loans
A secured loan is a type of loan that uses the boat as collateral. This means that if you default on the loan, the lender can repossess the boat to recover the amount you owe.
Secured loans are typically offered by banks and credit unions, and they usually have lower interest rates than unsecured loans.
Unsecured Loans
You can also apply for an unsecured loan for your boat, which means you don’t have to put your boat up as collateral. However, this comes with higher interest rates and less favorable loan conditions.
If you’re going to apply for a large unsecured loan, it’s best to do it when you have a good income, a good credit score, and healthy finances.
Marine Broker
Across Canada, there are brokers ready to link you with new or used boat sellers. Although they might earn a commission from the seller, a reliable broker is your ally.
They’ll track down the boat you want, negotiate on your behalf, and might even secure affordable financing or safeguard your deposit. A good broker makes your boat-buying experience smooth and secure.
Marine Dealer Financing
Finding a boat dealer is simple in Canada, thanks to its many bodies of water. These dealers not only display boats but also help with financing.
They work with lenders and might let you negotiate, but always ask for a clear price before buying. Watch out for extra fees to keep your purchase straightforward.
Best Boat Loan Lenders in Canada
Loans Canada
Loans Canada is an online platform that connects borrowers with various lenders across the country. You can get a loan from $500 to $35,000 with payment terms ranging from 3 to 60 months. They specialize in bad-credit boat financing, making them a popular choice among buyers with diverse credit histories.
FatCatLoans
FatCatLoans is a commercial finance company that specializes in the transportation and construction industries. They provide boat loans for new and used boats, whether you buy from a dealer or a private seller. FastCatLoans has low interest rates and customized financing solutions for all credit types.
Fairstone
Fairstone is a lender that offers both secured and unsecured personal loans for boat financing. You can borrow from $500 to $50,000. You can also choose from various payment frequencies, such as monthly, semi-monthly, or bi-weekly, and repay your loan over 6 to 120 months.
LoanConnect
LoanConnect is another online platform that helps you find the best boat loan for your needs. You can access multiple offers from different lenders in minutes and compare rates, terms, and conditions. You can borrow up to $50,000 for a boat loan and choose from various repayment options, from 72 to 84 months.
Coast Capital
Coast Capital is a credit union that offers personal loans for various purposes, including boat financing. You can apply online, by phone, or in person at one of their branches. They offer competitive rates, flexible terms, and no prepayment penalties for their boat loans.
Money Line Capital
Money Line Capital is a commercial finance company that specializes in the transportation and construction industries. They provide boat loans for new and used boats, whether you buy from a dealer or a private seller. They have a 95% approval rate, low interest rates, and customized financing solutions for all credit types.
Canada Power Sports Financing
Canada Power Sports Financing is a lending service focusing on the power sports and recreational vehicle industries. They offer boat financing for all kinds of boats, from fishing boats to yachts.
They work with more than a dozen financial institutions to find the best rates and terms for your boat loan. They also accept bad credit and no credit applicants.
Best Bank Boat Loan Lenders in Canada
Big financial institutions like RBC, TD, and Scotiabank offer a range of marine vehicle loans in Canada, including flexible payment options, competitive interest rates, and adjustable terms and conditions.
RBC Boat And Marine Loans
Royal Bank of Canada (RBC) provides boat and RV financing. They offer:
- Flexible Payments: Choose weekly, monthly, or bi-weekly plans with no penalties for early payments.
- Competitive Rates: RBC provides competitive interest rates when you finance your boat through their partner dealerships.
- Adjustable Terms: Qualified applicants can get financing terms up to 20 years for boats and RVs less than 10 years old.
TD Boat And Marine Loans
TD Canada Trust offers flexible marine vehicle financing with:
- Longer Terms: Payment plans up to 240 months (20 years) for newer vehicles, extendable if you qualify.
- Additional Financing: TD can finance other costs like warranties, insurance, and storage fees.
- Competitive Rates: Fixed or variable rates for most marine crafts.
- Flexible Payments: No penalty for early payments; lump sum payments allowed.
Scotiabank
Scotiabank offers marine craft loans up to $200,000, featuring:
- Payment Breaks: Responsible borrowers can postpone one payment a year.
- Self-Management: Easily monitor and adjust payment amounts, frequency, and dates through your Scotiabank account.
- Interest Rate Options: Choose between fixed and variable rates when financing through Scotiabank’s affiliated dealerships.
How Boat Loans Work
Boat loans function similarly to other types of loans, but with specific considerations for marine vessels. The loan is typically provided by a bank, credit union, or other financial institution.
When you apply for a boat loan, you will typically need to provide the lender with information about your income, credit history, and the boat you wish to purchase. The lender will then use this information to determine the amount of the loan you are eligible for and the interest rate you will be charged.
You will then need to sign a loan agreement that outlines the terms and conditions of the loan upon approval. Once the loan is funded, you can use the proceeds to purchase the boat. You will then need to make regular payments on the loan, typically monthly, until the loan is paid off in full.
How Much You Can Borrow With a Boat Loan
The amount you can borrow for your boat mostly depends on its price. Typically, lenders offer between 90% and 100% of the boat’s cost. The loan can start at $500 and go up to $50,000 or more, depending on the lender you choose.
It’s also good to save up and pay at least 20% of the boat’s price upfront. This way, you won’t have to borrow as much money, and lenders prefer it too. Saving before borrowing is a smart move
Additionally, boats lose value over time, losing their value as soon as you buy them. So, if the loan term is long, there might come a time when you owe more than the boat is actually worth. That’s why it’s crucial not to over-borrow and to be mindful of the loan term.
How Much Does a Boat Loan Cost?
Before diving into boat or marine vehicle financing, consider these factors:
- Down Payment: Offering a down payment of 10% – 20% of the vehicle’s total cost can secure better loan terms and help you pay off your debt faster. However, if the down payment, when combined with future payments, stretches your budget too thin, reconsider the amount.
- Interest Rate: Your interest rate significantly impacts your payments. Apply with stable finances or collateral to secure an affordable rate. You can choose between a fixed rate (stays constant throughout the loan term) or a variable rate (fluctuates with Canada’s prime rate).
- Loan Term: Large boat loans often have extended terms. While longer terms reduce monthly payments, it might mean being in debt for years. Be cautious; if the terms seem too lengthy, explore other options to avoid financial strain.
- Monthly Payments: Your monthly payments impact your financial stability. If they are too large, renegotiate their size or frequency with your lender, especially if your circumstances change, like losing your job.
- Additional Fees: Ask your lender about additional fees associated with the loan. These could include origination fees, administrative costs, and other services. Incorporate these fees into your budget to avoid surprises.
- Upkeep and Maintenance: Boats require regular care. Budget for docking fees, marina storage, repairs, insurance, fuel, and boating license expenses. These ongoing costs are essential to consider alongside your loan payments.
Pros and Cons of a Boat Loan
Pros
- Specialized Loans: Specialized marine loans are designed exclusively for boat purchases, offering ideal amounts and terms, making them a perfect fit for buyers.
- Fast Loan Approval: Online boat loan applications result in fast approvals, often within one to ten business days, providing quick access to the necessary funds for your boat.
- Competitive Interest Rates: Comparing lenders helps secure competitive interest rates. Banks often offer low rates, and securing the loan with the boat can further reduce interest rates.
Cons
- Large Loan Amounts: Boats tend to be expensive, resulting in larger loan amounts. Borrowing more means higher repayment amounts and increased interest charges.
- Limited Use of Secured Loan: Secured boat loans are meant exclusively for the boat’s cost. You cannot include other expenses like maintenance, boat insurance, marine equipment, or storage fees in the loan amount.
How to Apply For a Boat Loan in Canada
Applying for a boat loan involves the following steps:
- Research lenders and compare their offerings to find the most suitable option.
- Gather necessary documents, including proof of income, credit history, and details about the boat.
- Fill out the loan application form accurately and completely.
- Await loan approval, which may involve a credit check and evaluation of your financial status.
- Review the loan agreement carefully before signing and understand all terms and conditions.
- Make timely monthly payments to avoid penalties and maintain a positive credit history.
How To Choose the Best Boat Loan Lender in Canada
When choosing boat loan options, keep these things in mind:
- Interest Rate: Rates vary by provider, but secured loans generally have lower rates. Choose a loan with a competitive interest rate to save money in the long term.
- Repayment Structure: Consider whether you want fixed repayments or a variable rate loan to benefit from market changes.
- Loan Limit: Know the maximum amount you’re approved for and borrow only what you need to avoid paying unnecessary interest.
- Loan Term: Calculate affordable monthly payments. Use a boat loan calculator to determine the loan term based on the amount you want to borrow and the annual percentage interest rate (APR) you qualify for.
- Secured or Unsecured? Decide between secured (lower interest rate, risk of losing collateral) or unsecured (higher interest rate, no collateral risk) loans based on your financial situation.
FAQs
How long can you finance a boat in Canada?
In Canada, boat loan terms vary from 3 to 20 years. Shorter terms mean higher monthly payments but lower overall interest. Longer terms offer lower monthly payments but may accumulate more interest in the long run.
Do you get a mortgage for a boat?
Some people opt for marine mortgages, using their boat as collateral. This method, though less common, can finance high-value vessels. Seek advice from financial experts or specialized lenders to consider this option.
What’s the oldest year boat you can finance?
The eligibility for financing older boats in Canada varies among lenders. Some may finance boats up to 20-25 years old, while others limit it to 10-15 years.
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