Financial Planning 101: Budgeting for Your New Boat Loan

3 MIN. READ

Picture this: the morning air is brisk, and the wind pushes you toward the open water, inviting you to set sail on a new adventure. Will you do some saltwater fishing and catch a record-breaking tarpon? Will you make it all the way to the other side of Biscayne Bay? The possibilities are endless. 

Your boat dream can become a reality. Owning a boat is a lot more accessible than you think, especially if you take out a loan through a credit union.

We’re here to discuss the best boat loan for your needs and how to budget to make your maritime dreams come true.
 

The Best Boat Loans for Your Budget

Boating is huge in South Florida. In fact, Florida is by far the state with the most registered boats. Let's look at how boating enthusiasts finance this exciting hobby.

Types of Boat Loans

There are two main options:
 

• Secured boat loans use the vessel as collateral. This arrangement may lower your APR, but there are usually restrictions on the type and age of boat you can finance.
• Unsecured boat loans are more flexible. They’re ideal for short-term financing, used boats, and smaller purchases.

Boating and Your Finances

Experts recommend spending around 10% of your income on leisure, but finding your "magic number" depends on many factors. Before shopping around for the best boat loans, we recommend calculating your disposable income to determine how much boat you can afford based on your other financial obligations.

Understanding Interest Rates and Repayment Terms

When financing a brand-new vessel, you’ll find recreational loans with 10 to 20-year terms. However, lenders commonly offer shorter terms for used vessels that will devalue faster.

Consider how interest rates and repayment terms will impact the total cost of financing your boat:
 

• A higher APR isn’t necessarily bad if you plan to pay your boat off within a year or two.
• For longer loan terms, look for the lowest APR possible.

Use our loan payment calculator tool to see how loan terms and interest rates will impact your monthly payments. It’s a good starting point for determining what kind of vessel you can afford.

Additional Costs

Boat ownership entails additional costs that you should factor into your budget. You’ll need to cover insurance premiums, storage or marina fees, fuel, and registration fees.

Our Tips for Securing Better Financing Terms

We recommend getting your finances in shape before shopping around for the best boat loans:
 

• Reduce your debt-to-income ratio.
• Boost your credit score. We recommend getting as close to 700 as possible.
• Save for a down payment.

A Credit Union Can Help You Get the Boat of Your Dreams

Why choose a credit union to finance your boat purchase? We can think of several reasons:
 

• Credit unions consider multiple aspects of your finances instead of focusing on your credit score. You can qualify for an affordable boat loan even if you don’t have a perfect score!
• You can save on boat financing with the credit union model. Because credit unions operate as not-for-profit institutions, they can pass on lower fees to members.
• Credit unions can offer flexible terms and personalized lending options for your unique budget.
• Get more out of your financing experience with credit unions' exceptional customer service and personalized advice.
• Start shopping for a loan today with our convenient pre-approval process available online.

At Power Financial Credit Union, our mission is to offer accessible banking products to support all your financial goals. You can get the boat of your dreams with our affordable rates and flexible terms. Plus, membership gives you access to a wide range of additional benefits, such as personalized financial planning, competitive savings products, or checking accounts with overdraft protection. 

Learn more about our personalized boat lending options and extra discounts to get started.