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Owning a boat is a dream for many. However, they can be expensive to buy, especially if you choose to get a brand new boat. If you insist on getting one but can’t afford the price of a new one, you might want to consider opting for a used boat instead. There are plenty of options available on where to buy them and how to pay for the used boat (if you need to finance it). But what if your credit score is not so stellar? Can you still qualify for a used boat loan?

This guide will provide you with the information you need to buy a used boat using loans for bad credit.

Why Buy a Used Boat?

Just like buying a car, there is a lot of debate as to whether buying a brand new or used boat is a smarter choice. The decision will ultimately depend on your personal and financial situation, as well as the purpose for having a boat.

The first and most obvious advantage of choosing a used boat is obviously the lower price tag. Compared to a new boat, the cost of owning a pre-owned boat is a fraction of the price. The cost of ownership and insurance for the boat is also relatively lower than the brand new ones.

But there are a few things that you need to take into account before you buy. One of them is the condition of the used boat. You will want to carefully evaluate its condition to ensure that you won't have to pay a lot for its repair and maintenance. Moreover, you need to consider other ownership costs for a used boat such as boating licenses, equipment and accessories, taxes, and storage costs, to name a few.

How to Finance Your Used Boat Purchase

Once you have decided that a used boat is more practical option, it is time to consider how you can pay for the purchase. The obvious choice is to pay for it in cash. But if you cannot afford that, you need to find ways to finance the purchase.

Getting a used boat loan is the first option for financing your purchase. Before you shop around for online lenders, you need to decide how much boat you can afford. Even though used boats are less expensive than the brand new ones, they can still cost a ton of money. You can go online and use a bot loan calculator so you can decide how much payment you can allocate off your budget to pay for the loan.

When using a boat loan calculator, be realistic about the estimated interest rate (based on your credit score and the potential loan amount. Make sure you apply for a loan based on your capacity to pay, especially if you have bad credit. You can use the loan as an opportunity to rebuild your credit. If you fail to make payments, it could end up hurting your credit score even more.

How Do Used Boat Loans Work

A used boat loan is a type of installment loan. You will have fixed monthly payments over the course of several months or years – depending on the agreement on the loan. The interest rate on the loan will also vary according to predetermined set of factors, along with other loan terms. These factors include the amount of the loan, your credit score, source of income, and the lender. In addition, it will also depend on whether you applied for a secured or unsecured boat loan.

A secured boat loan is recommended for those with bad credit. In this loan, you will be required to provide collateral; in most cases, the used boat itself becomes the collateral. If you fail to make payments for the loan, the lender will repossess your boat and take ownership of it. A down payment is also required for a secured boat loan.

On the other hand, unsecured boat loans do not require collateral. But since this type of loan is more risky for the lender (due to the lack of guarantee that they can seize any item of value), they charge you with high interest rates instead. They also require this type of loans to be shorter in terms and that would mean higher monthly payments. Depending on your lender, the annual percentage rate for unsecured boat loans can go up to 36% with terms not exceeding 7 years.

If you want to proceed with using boat loans to pay for your purchase, you can start shopping around for loan providers. Banks are a good place to start. However, they might be difficult to get approved for if you have bad credit. For existing bank customers, however, you can get added perks such as discounts or favorable loan terms.

You can also get used boat loans for bad credit from online lenders. This is the best option for those with bad credit since they offer a wider range of loan products to suit borrowers from a wide range of financial situations. Online loan providers typically offer unsecured loans, though. Thus, you can expect that the interest rate might be steeper than what you would find from credit unions or banks. The upside to that is they are less strict when it comes to screening loan applications. Therefore, this is your best option if you are worried if traditional loan channels won’t approve your application due to a bad credit.

Finally, you can also check with credit unions and marine lending specialists. Credit unions offer mostly secured loans. You need to sign up to become a member of the union first before you can apply for a loan. On average, credit unions offer an annual percentage rate of 10% to borrowers.

As for marine lending specialists, they serve as brokers in order to help you secure a boat loan. They are partnered with various financial services that offer these loans. You can expect the same repayment terms and interest rates as you would from these institutions. The downside is that you can only apply for a secured boat loan. A down payment of up to 20% of the boat’s purchase price might be required.

Tips When Applying for Used Boat Loans

Regardless of where and how you obtain a loan to pay for your used boat purchase, it is important to shop around. You want to choose a loan that has the most favorable terms for you despite your credit situation. Here are a few tips to keep in mind when applying for a used boat loan.

  • Know your credit score – Your credit score will determine your options when it comes to financing your purchase. By knowing your credit score, you know where you stand financially and what your options are. Make sure there are no errors on your report that could hurt your score and your ability to get a loan at a more favorable interest rate.
  • Pay off other debts – If you have other pending debts, it might be a good idea to pay those off first before getting a new loan for used boat purchase. This will help you maintain a healthy debt-to-income ratio that will increase your chances of getting approved for your loan application.
  • Get prequalified – Save yourself the effort and time. Make sure you are prequalified for a used boat loan. This will not necessarily guarantee that you can get approved for the loan; however, you will know what else you need to improve your chances of approval. It will also help you determine the best financing terms for your intended purpose.

Frequently Asked Questions on Used Boat Loans

To help you in your journey of finding the best loans for used boat purchase even with a bad credit, here are a few more questions that borrowers find themselves asking:

What alternatives are available for used boat loans when you have bad credit?

If you cannot get approved for a boat loan with bad credit, you can try securing other types of loans such as personal loans. A personal loan does not require you to provide information about the purpose of the loan. Therefore, you can use that money towards the purchase of your boat.

The only downside to this alternative option is that the amount of money you can borrow might not be enough to pay for the used boat.

How do you get approved for a used boat loan with bad credit?

There are a few steps you can take to increase your chances of being approved for a used boat loan even with bad credit. The first option is to get a co-signer. Make sure that the co-signer has a good credit score.

The next option is to pay a large amount of down payment. You must pay down the highest amount that you can afford. This will also significantly reduce your monthly payments, as well as your interest rate. Make sure to save up for the down payment, if you don’t already have the money to pay for it.

How do you rebuild your credit?

It is possible to repair your credit score while shopping for used boat loans. The first step is to secure a copy of your credit report to make sure there are no errors. If you spot any, report it to any of the credit reporting agencies right away.

At the same time, you must pay off any other existing debts so you can improve your debt-to-income ratio.


Financing a boat purchase – even for a used one – is a painstaking process, especially more so if you have bad credit. This is a large financial commitment that requires a lot of research and patience so you don’t end up paying more than you need to, which could hurt your credit even more.