Getting A Used Boat? Loans and Other Financing Options

Finding used boat loans at financial institutions is now quite common and easy to accomplish. In addition to the used boats loans, there are other financing options available to you.

Used Boat Loans

In general, used boat loans work much the same as new boat loans; you fill out an application and submit it to the lender, and if you are approved and receive the loan, you gradually repay it over time.  The specific terms for a used boat loan may be slightly different. For example, you may have a slightly shorter time to pay off your loan than you would for a new boat. 

You will also have to include a marine survey with your application.  A marine survey is a detailed professional examination of the boat to determine its overall condition.  Most marine surveyors charge by the size of the boat -- between $12 and $20 per foot.  Fortunately, some lenders will allow you to finance the cost of the marine survey as part of your used boat loan.

Using Your 401k

If you have a 401k plan with your employer, you may be able to borrow some of the money from it to finance your used boat.  You cannot borrow the full amount of what is in your 401k - most employers will only let you borrow half.  However, the interest rates for repaying loans against your 401K are lower than the rates for a used boat loan, so you could save money.  You also wouldn't have to go through a credit check since you would be borrowing your own money.  Since you can automatically add 401k loan repayments to your payroll deductions rather than having to write a separate check, paying back your loan couldn't be easier.

One drawback to using your 401K is that you would be withdrawing money from your retirements savings.  But a bigger danger is that if you leave your current employer before the loan is repaid, you would need to pay off the total balance within only 60 days or else you could face tax penalties.

A Home Equity Loan

If your home equity has increased over the past few years, you could get a home equity loan or a home equity line of credit.  This is a loan which uses the increased value of your home as collateral.  One advantage to using a home equity loan is that interest on used boat loans is not tax-deductible -- but interest on home equity loans is, so you could save money on the interest.  Also, if you get a home equity line of credit, you could continue to use the credit to pay for regular boat-related expenses like docking fees, fuel, or maintenance.  If you plan to move in a few years, however, this option would not be wise, as you would have to pay off the balance of your loan in full when you moved. 

Improve Your Credit Score - Free Consultation