Are you vying to own a Seamaster Stacer boat for you to use on your next boating adventure with your family but you’re short on cash? Well, you can still own one now; all you have to do is apply for a boat loan.

While boat loans differ from other forms of debt such as auto loans or mortgages, their basic ground is similar: When financing a boat from a marine financial institution, banks, credit unions, or boat shop dealers, the process typically involves a down payment representing a partial amount of the purchase with the rest of the purchase price being borrowed from the institution. The purchaser (or the loaner), then pays interest over a fixed term as the amount of borrowed money is paid back to the lender.

If you’re planning to loan so you can purchase your dream boat (and we literally mean a boat!), you’ll want to make sure that your loan payments along with maintenance, storage, insurance, and other operating expenses fit within your overall budget.

In this article, we’ll help you better understand boat loans and how to apply for one.

Types of Boat Loans

If you want to finance your boat with a loan, you have a few options.

Secured loans: Secured loans require you to put up collateral to ensure the repayment of the loan. For a boat loan, you would put the boat up as collateral, meaning that the lender could repossess the boat if you fail to make payments or back out on the loan.

One good thing about secured loans is that they typically come with lower interest rates and higher lending limits since there is less risk for the lender.

Unsecured loans: Unsecured loans do not require any collateral, meaning that you do not risk losing possession of your boat when you sign up for these loans. The downside is that they have high-interest rates and lower borrowing limits, especially if you don’t have good credit. If you have good credit, unsecured loans are a great option for you.

Where to Get a Boat Loan

If you decide that taking out a loan to finance your boat is the way to go, you have a few different options. A variety of lenders offer boat loans, including traditional brick-and-mortar banks, credit unions and online lenders, as we mentioned above. However, before choosing an individual lender, it is crucial to compare all boat loan lenders you’ve considered lending to and find the one that will work best to fit your needs.

Traditional banks: A lot of traditional banks offer loans. If your bank offers personal loans for boat financing, it may be a good idea to consider taking out a loan with that institution. It is often easier to qualify for the best rates if you have worked with a bank in the past, and some banks offer loyalty discounts for customers who have other accounts with them. Working with a bank may also be your best option if you prefer in-person service.

Credit unions: Credit unions, not unlike banks, typically include perks for pre-existing customers. Credit unions are typically local institutions that require membership to access their products. If you are a credit union member or plan to join one, you could benefit from lower interest rates and more relaxed credit requirements compared to other lending institutions.

Online lenders: Online lenders allow borrowers to apply for and receive a loan entirely online. These lenders have faster approval and funding processes compared to other traditional institutions. If you prefer a fully online experience or need your funds quickly, looking for an online lender could be your best option.

How to Apply for a Boat Loan

Now that your mind is set on taking out a boat loan, then it’s time to do it. Here are the basic steps on how to apply for a loan.

(Note that some lenders may have different steps for a boat application, so make sure to inquire with them first on the process.)

Figure out how much you need to borrow: Be aware that owning a boat cost more than the price of the boat itself. You need to account for boating insurance, maintenance fees, and other potential costs when you calculate your expenses.

Check your credit score: Knowing your credit score and having a good understanding of your financial picture will help you determine what loan terms you will be eligible for with your lenders.

Research lenders: There are a variety of lenders to choose from. Make sure to look at the terms and rates each one offers, as well as any fees charged or additional benefits such as autopay discounts and 7 days a week of customer service.

Choose your loan type: Boat loans can be either secured or unsecured. Remember that secured loans require collateral. In this case, the collateral would be the boat you are purchasing. If you do not want to run the risk of losing your boat, it may be a good idea to take out an unsecured loan.

Choose a lender and apply: Once you have decided which lender you would like to work with, you can apply online or in person if the institution has branch locations. If you are deciding between lenders and want to see exactly what the terms will be, many lenders allow you to prequalify without affecting your credit score. This allows you to see exactly what you would be eligible for with that lender.

Prepare the necessary documents: During the application process, you will need to provide supporting documents that show your financial situation.