When shopping for a new or used boat, you will find that boat loans are an important part of your shopping experience. Before you start looking for that perfect boat, learn all you can about boat loans, including their interest rates, terms of repayment, and the various kinds of lenders. As well you should be familar with your credit history.

Interest rates and loan terms

Like other types of financing, the interest rates for boat loans vary from day to day and from one lender to another, so it pays to shop around for the best rate. Interest rates also depend on the year of the boat. Loans for older models come with higher rates; new boats can be financed at a lower rate. Generally, interest rates for boat loans are a little higher than those for car loans. Lenders will often loan up to 90 percent of the value of the boat, sometimes including taxes. It is even possible to finance 100 percent of the loan, under some circumstances. When researching boat loans, take time to ask questions about maximum loan amounts and interest rates. The money you save will make it worth the extra time.

The loan term on boat loans can be quite high, compared to car loans. While the average car loan may go as long as 60 months, some boat loans have terms of up to 120 months. Keep in mind that a term that long may only be offered for a relatively new boat.

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Tax-deductible interest

In some cases, the interest you pay on boat loans may be tax deductible. This is one reason to finance your purchase instead of paying cash. The deduction can be made for boats of various sizes, not just large yachts, and you don’t even have to live on your boat to qualify. Check with a tax professional to see if your use of your boat meets the necessary criteria to declare it your second home. It may also be possible to deduct state taxes and registration fees for your boat.

Where and how to apply

Although the local bank or credit union may be the first place on your list of potential lenders, other companies should be considered because of their specialization in boat loans. Companies that focus their business on boat loans may be able to offer a better rate, longer term or special customer service that will make all the difference in your purchase. Many companies display information about their financing on their website, making comparison shopping easier than ever.

The process of applying is fairly simple and many lenders have online applications that offer instant approval. Expect to answer basic questions about your income, current debts, and other credit based inquiries, as well as questions about the boat you hope to purchase. It is also possible to receive pre-approval for boat loans, in the same way that you can be pre-approved for car loans or home loans. Learning about boat loans before you go shopping can be helpful and save a lot of time and money.