Buying a boat in 2022 is challenging—supply is low, demand is high, and waiting lists continue to grow as manufacturers play catch-up. Once you have your new boat (or your next boat) in your sights, you’ll want to make financing the purchase as painless as possible so there’s no delay in getting out on the water.
We spoke with Shawn Rogan, President of Sterling Associates, a company that specializes in recreational boat financing, about the facts of financing a boat after the pandemic’s disruption.
“Even in the current boat-buying climate, the facts of financing a boat purchase remain the same,” explained Rogan. “Arranging a boat loan at the best possible terms is a challenge that is different from any other type of financing, and there is real value in navigating the process with the help of a boat loan specialist.”
Fact #1: Getting a boat loan is harder than getting an auto loan, but easier than getting a mortgage.
Yes, securing a favorable boat loan can be tricky, and it’s certainly not as easy as financing a car purchase at your local bank or credit union. However, the potential benefits make it worth the effort, and it is definitely less complicated than trying to get approved for a mortgage.
“There are pitfalls, or ‘shoals’ as we like to say, in boat financing, but that’s where we excel, at navigating the ins and outs and uncovering any hidden dangers,” said Rogan. “For example, sometimes there is an issue with transfers between previous owners, or we may have to do a title search with the Coast Guard. We specialize in boat loans, so we know the challenges and that’s where we can add value to the process.”
Fact #2: If you qualify for a car loan, you’ll likely qualify for a boat loan.
Like any loan, lenders may look at your credit rating, debt-to-income ratio, job and homeownership stability, and net worth when considering you for a boat loan.
“There are no tricks when it comes to getting approved for a boat loan, but there are some strategies that we can use to make sure your financial situation is represented correctly,” noted Rogan. “We’ve worked with many of the same lenders for years and know what they are looking for and how to make sure that your information is presented in the best possible light.”
Fact #3: There are better options for your boat loan than a local bank or credit union.
The best option for a boat loan is almost always a marine lender who specializes in boat loans. Being boaters themselves, these lenders recognize that the value of a well-maintained boat holds up over time, so the loan terms generally are more attractive than those offered by local banks and credit unions.
“Lenders who specialize in boat loans naturally have a better understanding of boats and their buyers,” said Rogan. “Therefore, they can often speed up the approval process. In some cases, the buyer can apply for a loan in the morning and be approved for the loan the same day.”
Fact #4: A bigger down payment can pay off.
Boat loans used to be more limited in length and with larger down payments; today, terms of 10 to 20 years are quite common. Interest rates are amazingly low, and the down payments required can range anywhere from 10 to 20 percent. However, paying more upfront can pay off.
“If you can swing a higher down payment, you’re likely to get even more favorable interest rates,” said Rogan. “We coach our customers on why a larger down payment might be right for them if, for example, they want to build equity for their next boat purchase.”
Fact #5: Even if you have the cash, it’s important to consider your loan options.
Perhaps you have the cash on hand to buy a boat outright and don’t need a loan. You should still consider financing your purchase.
“Obviously, a loan can help you maintain liquidity,” explained Rogan. “And many people are beating our rate by leaving their cash invested in the stock market, in real estate, or in their businesses. Plus, a loan can help you get into a more expensive ‘dream boat’ that might otherwise seem out of reach.”
Bonus Fact: There’s always a “next boat.”
It’s rare when a boater owns the same boat for a long time without stepping up to a newer and often larger model. That’s simply the nature of being passionate about boating—most people want more room, more capabilities, and the ability to spend more time on the water. That should influence how you consider every aspect of your boat purchase, including financing.
“Most boat owners upgrade to a new boat about every four years,” said Rogan. “That’s why we focus on keeping our costs low, providing great customer service, and doing what’s right for our customers. We’re most interested in creating a repeat customer who loves owning a boat, enjoys being on the water, and is always looking forward to that next boat.”
Shawn Rogan is President of Sterling Associates, a financial services firm headquartered in Massachusetts that provides financing, insurance and documentation services for many types of boats.