How to Finance a Commercial Boat

Financing a commercial boat can be a cumbersome task if you are not armed with the proper information. You need to do your homework and obtain many quotes on interest rates, loan repayment time and required credit score needed to get the best interest rate possible. Many banks will finance a commercial boat for as long as 15 to 20 years.

Financing your boat

You will need to decide on the size boat that fits your needs. If you are buying a commercial boat. it is likely you are looking to run a charter business of some type. You can run a charter fishing or boating business in various areas. Usually, the bigger the boat, the longer you have to pay it off. If you are looking to use your commercial boat in waters that are often rough, then you should consider a boat that is 25 feet or longer. This size boat tends to be more sea-worthy. If you plan on buying a used boat, make sure the boat has low engine hours and that it does not need any major repairs.

Shop around at commercial banks or credit unions for loan rates and payment options. Pull a credit report on yourself to see what your credit score is. Your credit score will determine what type of loan rate you will be able to obtain. If your credit score is fairly good, 700 and above, then getting a loan from a bank should not be that difficult. You should also shop around for a loan where you plan to purchase the boat; often they offer financing that is affordable and competitive with commercial banks. If you have bad credit or no credit, then obtaining a loan will be more difficult.

Financing your commercial boat takes some experience dealing with financial institutions. If you have a family member or friend who is experienced with commercial banks, then it might benefit you to seek their assistance. You also could allow the bank to use your commercial boat as collateral against the loan. Even if you have a large down payment for the boat, they can use the vessel as collateral. If you own a home, you can take out a home equity line of credit to finance your boat. Often times, the interest rate on home equity loans is lower than the interest rates on commercial boat loans. In a pinch, you can sell off assets that you have and put that money toward a down payment on the boat. With a low credit score, the more money that you put down, the greater the chance you have of securing a loan. You can create a business plan and give it to family and friends and offer them 10 percent return on their investment into your commercial boat venture.


About the Author

Based in Rochester, N.Y., Heidi Carson is an employee training specialist with over 14 years of experience in the behavioral health field. Carson has been writing for Demand Studios since the summer of 2009. She received her Bachelor of Arts from St. John Fisher college in psychology and her Master of Science from from the University of Rochester in human development.