t’s no secret that boating has gained quite a bit in popularity just over the last couple of years, especially since many people have found it to be a great way to social distance. Billy Sullivan of Lewis Boats in St. Peters, Mo., continues to see a definite uptick in boating popularity.

“We saw it early on in 2020 when a lot of people were using it as a way to get out and this trend is continuing into 2022,” observed Sullivan.

If you’re one of these newcomers to boating, then welcome! We’re happy to have you and you’re in for the time of your life. Stepping into the boating world and financing your first boat is both exhilarating and a little nerve-racking. But don’t fret; it’s a fairly easy and straightforward process.

Attractive Rates
The good news is that rates are very low. Joey Gottfried, the regional manager of Newcoast Financial Services in Clearwater, Fla., explained that the best rates in the country are from 3.5 to 4 percent with the average rates being more in the 4 and 5 range.

“In most cases with pontoons and deck boats, you’re going to be looking at rates in the 4’s, worst case maybe in the 5’s, but 4’s are very typical,” described Gottfried.

Loan amounts, credit scores, and the age of the boat being financed are the most important factors that influence your rate. The larger the loan, the better your rate will be. For example, you could have a fantastic credit score of 800 or higher, but if you’re only getting a loan of $25,000, you’re going to have a higher rate just because the loan is so small.

However, the rates are much better once you get north of around $50,000. If you have excellent credit and your loan amount is between $50,000 and $100,000, you could get a rate as low as 4.5 percent. On a $25,000 loan, it’ll probably be around 5 to 6 percent.

Limited Supplies
Something else to keep in mind when shopping around is that with the surge of boating popularity, there are often more buyers than there are boats. “Just like last year where the supply was limited, it’s the same way for 2022,” added Sullivan. “So we’re encouraging people to order their boats as soon as they can so we can have them in time for the spring boating season.”

As a result of the high demand for boats and limited supplies, some people have experienced delayed closings. “It’s not unusual right now to order a boat and have to wait three to four months on the short end of it and up to 18 months on the long end of it,” agreed Gottfried.

Pontoons and deck boats are usually more in the two- to six-month window. Of course, you can always find out what the wait time is on the boat you want. If you find it’s too long, you can even consider buying a used boat or some other brand of boat that you can get sooner.

Relating this back to financing, anytime you get an approval on a boat, the approval is typically only good for 30 days. This means that if you get approved for a certain rate on a loan but there’s a wait longer than a month for your boat, your rate is going to expire, and you’ll then be subject to whatever the rates are when you finally take delivery of your vessel.

“Luckily in marine lending, rates don’t change that much,” explained Gottfried. “It’s very rare for a rate to change more than a quarter to a half percent over a three- to six-month period. In fact, the rates haven’t changed at all more than half a percent in probably 10 to 15 years now.”

Loan Terms
When it comes to financing boats, many people automatically think it’s comparable to financing a car which is usually five- to seven-year financing. However, the standard term for boat loans is actually 20 years. These longer terms remove one of the biggest hurdles for buyers: affordability.

For example, if a pontoon is $80,000, there’s a world of difference when it comes to your monthly payment when your loan term is for five years versus 20. Twenty years is the standard on financing boat loans over $50,000, and minimum down payments are typically 10 percent.

Additionally, if you’re looking into financing a used boat, you don’t have to worry about a difference in financing because it’s exactly the same. “The rates are the same, the terms are the same, the down payments are the same—it’s basically the same,” described Gottfried.

Plan Ahead
If you’re planning on financing a boat, it would be a good idea to take a look at your credit score and do some housekeeping if needed because lenders are hyper-focused on credit for pontoons and deck boats.

Make sure you don’t have something on your credit that maybe isn’t even yours. It’s not unusual for people with similar names to end up with things on their credit that don’t belong to them. For instance, if you’re named after your father, making it so you both have the same first and last names, there could be a mix-up and you could end up with things that belong to the other person on your credit.

Also, sometimes people don’t realize there’s some random bill that a creditor has been trying to send them for the last six months and they don’t know about it because they recently moved. This makes it so the creditor reports it as a late payment or collection account because they haven’t been able to get a hold of you.

While you’re looking into your credit in preparation for financing your boat, this is also a golden opportunity to make sure haven’t been the victim of identity theft.

In short, take a look at your credit before you apply for a loan. Cleaning up your credit isn’t something that happens fast—it’s typically a process that takes weeks or even months, so be sure to do this far enough in advance before you go for that boat loan.

Also make sure you’re getting your credit score from a reliable source. Every credit reporting agency has multiple different models they use to calculate your credit and it’s important to understand that scores are going to vary. Sometimes it can be by a lot, but usually it’s between 10 to 30 points.