What is the Typical Length of a Boat Financing Loan?

Boat financing loans are easily available but one should study loans offered by various lenders – the interest rates, the loan amount and the length of the boat financing loan, the loan tenure to be precise.

What is the Typical Length of a Boat Financing Loan?

The tenure of a loan is dependent on various factors:

• Loan Amount

The loan amount is the most important factor for deciding the tenure of the loan. 

• The lender generally fixes the loan term as 20 years if the loan amount is greater than $100,000.
• If the amount to be lent is $25,000 and above, the loan tenure is 15 years.
• The tenure is 12 years for a minimum loan amount of $15,000.

• Credit Score

If a person with a weak credit score applies for a boat financing loan, the lender may grant his request but may insist on a short loan term.  This is because the lender is taking a risk granting a loan to such a person and he wants to get back his money as quickly as possible. 

• Age of the Boat

If the lender has agreed to grant a loan for a boat which is quite old, he may want the loan to be repaid within a short period.  The reason - the boat is the collateral for the loan and the value of the boat would decrease drastically as the boat gets older.  So in case of a loan default, the lender would take possession of the boat but would find it difficult to sell it at a good price.  This would result in him losing a good chunk of the money he lent.

Which is better for a Boat Loan Borrower –Long Tenure or Short Tenure?

For a person who has a good income and who has no problem in paying a large loan installment, a short tenure would be beneficial as this would save him money.  But for someone who is not able to make large loan payments, a long tenure would be convenient.