Boat Financing & Leasing

Quick Links:

1. Introduction to Boat Financing
2. Choosing the Right Boat
3. Financing Options
4. Licensing and Regulation
5. Frequently Asked Questions About Boat Loans

Introduction to Boat Financing

With endless coastline and countless lakes, Canada is the perfect place to enjoy the pleasures of boat ownership. And with over 8.6 million boats privately-owned in the country, Canadians are not shy about pursuing their passion for the open water.

If you’re hoping to join the millions of others out on the waves, it’s good to understand all of your options for boat financing, to make your dream a little more affordable. Below we have compiled some of the top boat financing companies in Canada, along with their standard offerings; click on any of the company names to learn more about them. Or if you’d like help choosing the right boat loan for you, talk to our experts at Smarter Loans.

Choosing the Right Boat

Buying a boat starts with the basics: what kind of boat do you need?

Canadians bought nearly 42,000 new boats in 2018, and the average cost is $50,000 – down 6.8% from 2016. Large powerboats, sailboats and speedboats are the most popular, making up 65% of the market. When considering a boat for you, assess the following:

1. What do you want to use it for? Options include fishing, watersports, sailing, day cruising, overnight cruising, and multi-use.
2. How many people does it need to accommodate?
3. How big do you need it to be?
4. What kind of engine do you need? Options include outboard, inboard, sterndrive, jet, sail and human powered vehicles.
5. Do you need to be able to move your boat around on dry land? If so, it must be trailerable.
6. How much do you want to spend?

Financing Options

Once you have an idea of what kind of boat you are interested in, you need to tackle the issue of paying for it. Boat loans are widely available and surprisingly affordable, but they do differ in a few key ways from other types of loan.

Loan Terms

Terms for boat loans tend to be more generous than for, say, auto loans. Loan duration is longer, averaging 12 to 20 years. This translates into lower monthly costs over a longer period of time. As with other loans, you may have access to either fixed or variable rate financing, with interest rates changing provider to provider. Be sure to shop around to find a competitive rate for you. Down payments are sometimes required, usually in the 10-20% range, although some companies offer zero down boat loans to entice new customers.

When comparing loan terms to judge relative affordability, remember to take into account:

• Fixed or variable interest rate
• Loan duration
• Down payment requirements
• Payment schedule
• Penalties or other fees for late payment, early payoff, etc.
• Minimum and maximum loan amount

Use our boat loan calculator to play with payment options for different loan scenarios.

Providers

There are many different providers for boat loans, including the more traditional routes such as banks and credit unions. These lenders have stable offerings, but may not be as competitive in terms of interest rates or flexibility as dedicated boat loan providers. It’s likely that the dealer you are purchasing a boat from will offer you some options for financing, through companies they are associated with. This can be a convenient route, and may mean access to warranty programs for your new vehicle, which can be included in your financing.

There may be financing options through the boat’s manufacturer, which is a smart way to access a competitive loan for a specific brand. Lastly, there are also specific financial services companies that offer boat loans to the public; these companies provide some of the broadest loan options available, and may be the best route if you have low credit or are worried about meeting eligibility requirements for other lenders.

Applying for a Boat Loan

To apply for a boat loan, you must meet a few basic requirements. Exact rules vary by provider (and size of the loan you’re seeking), but generally include:

• Completing an online, phone or written loan application form
• Providing proof of income
• Providing a financial statement that includes details of assets, income and existing debt
• Providing full details of the boat, including price, taxes and registration details
• Agreeing to a credit check; many lenders have a minimum credit threshold of 650

Additional Costs

It’s important to understand all of the costs associated with boat ownership, in addition to the cost of a boat loan, so you can properly assess what you can afford. Costs to buy and operate a boat include:

• Inspection fees
• Insurance
• Fuel
• Maintenance
• Storage
• Docking fees
• Extra equipment
• Extended service plans

All of these add up to about 10% of the overall cost of boat ownership.

Licensing and Regulation

Unfortunately owning a boat is not as simple as buying one and jetting off into adventure. Boats are regulated in Canada and must meet certain requirements, as must you as a boat operator.

Individuals who wish to operate a boat must have a Pleasure Craft License; vehicles that are exempt from this requirement are those with a motor of less than 10 horsepower. Licenses must be kept on you at all times you are operating the vehicle, as with a driver’s license.

Additionally, all pleasure craft in Canada are required to have the following:

• Hull Serial Number. Every boat bought and sold in Canada must have a serial number on it, to indicate it has passed minimum safety standards during construction.

• Canadian Compliance Notice. Motor-powered boats sold in Canada need this notice, and it too denotes certain construction standards. Exempt vehicles include those imported from out-of-country and intended solely for personal use. If buying a boat from another country, you must still prove it meets Transport Canada’s minimum construction standards before you can use it.

• Registration. You can register your new boat with the Canadian Register of Vessels.

• If you plan on towing your boat on a trailer, you may also need permits and licensing for the trailer, as this is considered a separate motor vehicle as well.

Frequently Asked Questions About Boat Loans

Where can I buy a boat?

Boats can be purchased new or used, from dedicated dealerships, certified brokers, or privately through classifieds or online marketplaces. For complete peace of mind, many recommend using a broker or dealer to ensure the quality and safety of the boat you’re buying.

How much does a new boat cost?

The cost of a boat varies depending on its size, age, type, engine, condition, and much more. The average cost of a new boat bought in Canada is $50,000.

What kind of boat should I buy?

Choosing the right boat for you means considering what you want to use it for: fishing, sailing, cruising, water sports, or something else? This factor narrows down the type of boat; you can then decide on a size that suits your family and budget.

How do I get financing for a boat?

Getting financing for a boat is simple, and very similar to obtaining financing of other kinds. You must complete the required loan application paperwork and meet some financial criteria to be eligible for a boat loan; most lenders will do a credit check and require proof of your income.

Do I need a special license to operate a boat?

Yes, most personal watercraft in Canada need a license to operate, known as a Pleasure Craft License. The exception to this rule is boats with motors of less than 10 horsepower.

Is there a minimum credit score needed to buy a boat?

While many boat loan providers will have a minimum credit threshold that borrowers must clear, there are still plenty of providers who are able to offer boat loans to borrowers with low or even no credit. If this is a concern for you, search online, check out the lenders above, or talk to your dealer to find out what your options are. Many poor credit borrowers can still qualify for a loan, they simply might have to pay more in interest.

Should I buy a new or used boat?

Buying a boat is a very personal choice. Consider your budget and your needs; while new boats are more expensive, you may qualify for more competitive loans for them. Used boats are cheaper overall; however it is important to ensure they meet all safety requirements. Consider a marine survey if you are buying a used boat, as this can highlight structural defects or mechanical problems.

What kind of loan can I get to buy a boat?

Boat loans are available to help Canadians purchase the boat of their dreams, and there are many different loan types that can be adapted to different situations. Both fixed rate and variable rate loans are common; balloon payment loans are also common, where the balance of the loan is paid off after a set period of time. Most boat loans are secured against the boat in question. Other loan terms can vary, depending on the borrower’s financial circumstances and the provider.

Written By Smarter Loans Staff