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Boat Loan Basics - Down Payment

August 1, 2015

Many of you have been asking about and searching for the amount of down payment. It's really not a simple answer. Every lender is different. General rules are 10% to 20% down. However, let me give some specifics for the current times. This changes as the industry changes and different types of boats require different down payments.

New boats - as a general rule here, plan on putting 15% to 20% down from a national lender as they want to have some equity in the boat. All of us know that depreciation hits new boats hard and the lenders know that as well. Therefore, they will want a little more skin in the game. That being said, local banks and credit unions still may do 0% down so check there if you are looking for 0% options. Also, it seems a little rarer these days, but manufacturer financing may allow 0% down as well.

Used boats - most lenders here are looking for 10% to 20% down. They may request more based upon the value of the boat in www.nadaguides.com using low retail with options. If you are buying a boat for $45,000 and it's value is listed with options at $40,000, plan on making a larger down payment as the boat is not valuing out in the eyes of the lenders. Bigger boats and yacht financing should be looking at www.bucvalu.com for values.

High performance boats - be prepared to be in the 30% to 50% range here for down payment. Most lenders consider high performance boats to be any boat going over 60 mph and based upon lending history to be a much higher risk. Most lenders won't consider high performance boats at all.

Boats and Yachts seeking financing above $100,000 - generally, you will be in the 15% to 20% arena here. We have a lot of customers asking for 10% down. We will try but honestly it is 1 out of 10. You must be the perfect customer for this to happen. Great scores, income, history, liquidity, ratios, boat value, down payment, ......

Older boats - just be prepared to go to the 15% to 25% range on boats that are older than 20 years. Most of the time this will be based upon the valuation of the boat. One of the hardest things to tell a customer is that an older boat in great or pristine condition doesn't value out. Values are based upon averages and the lenders typically don't use surveys for support of value.

Your down payment may also change your rate because it may allow you to qualify for a different lender. Term can also play a factor. For example, we have boat loans right now starting at 4.49% apr for above $50,000 and with an eight year term with 15% down. We have yacht financing at 3.99% if you are above 800 on score and are willing to put down 30%. Otherwise normal rates are in the 4.99% to 6.25% area for most boats and each lender and rate is based upon your score, boat type and value and down payment.

Please feel free to give me a call at 954-847-1521 with any questions.

Thanks and have a great day!


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