Saving for a boat

Thinking of joining the rising tide of boat owners? Chart a sensible course for saving your money, and you'll be on the water in no time. Also, we promise to cool it with the boating analogies.

Do you have time to enjoy a boat?

According to The National Marine Manufacturers Association (NMMA), Americans spent $36.8 billion on boating last year, and sales are expected to show a 5 to 7 percent increase for the next two years. That said, although Americans are taking to the water in record numbers, many boat owners rarely spend as much time as they’d like to on their vessels. In fact, the NMMA cites that the average use per year is merely 26 days. Add in the cost of storage, maintenance, and the truck and trailer to haul it—and you may want to consider renting a boat if you don’t think you’ll use it more than twice a month.

How affordable is a boat?

According to the National Marine Manufacturers Association (NMMA), the average retail price of an outboard motor package (that’s boat, engine, and trailer) is about $32k. However, many excellent outboard packages are available for as little as $15k. Financing works the same way as for a car, often for much longer terms.

How much can you afford to pay out each month for a boat?

As it turns out, you don’t have to be rich to own a boat. In fact, according to the US Coast Guard, 72 percent of boat owners make less than 100k a year, and 95 percent of boats on the water are 26 feet or less. When you’re shopping for a seaworthy craft, consider what you’ll use your boat for. Do you need sleeping quarters and room for parties or just somewhere to sit when you drop a fishing line into the lake? Naturally, the bigger the boat the more expensive it is to operate, store, and maintain.

Tips for Saving

Tip: Open a dedicated savings account

Now that you’ve figured out your ideal monthly payments and have a loose idea of when you want to buy a boat, it’s time to start saving for the down payment. Try to save either a fixed amount or a percentage of each paycheck. To take it a step further, if your employer offers direct deposit, simply tell payroll to send a certain amount to your savings account every paycheck, with the rest sent to checking as usual. In addition, if you have two accounts with Solarity you can set up automatic recurring transfers between accounts. For example, try tucking $25 into your savings from your primary checking every two weeks—it adds up fast!

Tip: Create a budget and slash expenses

If you need to get on the water as soon as possible, create an exacting budget and stick to it. Then start eliminating monthly costs that add up. Cut the cable. Cancel the memberships. Eat out less, and plan meals and grocery shopping trips—all standard items.

Tip: Costs of boat ownership

Keep in mind that the purchase price of a boat is only the tip of the iceberg. Taxes, insurance, registration, trailer, docking fees, maintenance, winter storage, fuel, safety gear, and navigation equipment—all these expenses have the potential to sink your budget.

Tip: Stay focused on your goal

Once you start saving, it’s tempting to splurge and blow your money on something other than your new boat goal. To stay focused on your goal, try making frugal living part of a new lifestyle change. With your entire mindset flipped, it’ll be easier to shrug off luxuries that may inhibit your saving. For an added incentive, try posting a photo of your future boat or inspirational quotes about saving money in places they are certain to catch your eye.

Ready to start saving today?

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Borrowing for a boat

When you're financing a new boat—or a used craft that's new to you—the options are similar to those offered for a car or RV but can still be extremely confusing. Let's review your options so you hit the water prepared.

Do boat loans work like car loans?

Yep, just like an auto loan. The amount you borrow is called the loan principal. The certain percentage of the loan that you agree to pay back in addition to the principal is the interest rate.

What are some common boat loans?

The two most common options for securing a boat loan are a typical collateral loan (similar to an auto loan) and a home equity loan. A home equity loan requires significant built-up equity, and you may need to pay for an appraisal and closing costs. Home equity loans allow you to take advantage of today’s low home loan interest rates, and payments on a home equity loan are usually tax deductible.

How do I get a boat loan?

Similar to securing an auto loan, the first place to start is by checking your credit score. Remember, over the life of a 3.5+ year loan, even a 1 percent APR reduction can have a huge effect. If you score is lower than what lenders require to give you a good rate, take a few months to bring your score up before applying for a boat loan.
The next steps are to know what you can afford and to start shopping around in your price range. Don’t forget that the sticker price isn’t the final operating cost and that you still need to account for fuel, storage, maintenance, taxes, title, registration, and insurance.
Now it’s time to talk with a variety of lenders to begin comparing terms and interest rates before choosing the loan that works best for you. Most boat dealers offer in-house financing as well. Occasionally, dealer-based financing will give you access to manufacturer deals that can save you money, but never assume dealer financing is your best option. Shop around before you decide.

How does my credit affect my loan?

The interest rate lenders charge is primarily based on your credit score. The better your score, the lower the rates. Start checking your credit well before you begin boat shopping to give yourself a chance to improve your score. Lenders prefer borrowers with low balances, a long history of on-time payments, and a mix of credit utilization, (e.g., a loan payment and a couple of revolving accounts, such as credit cards). Keep in mind: your credit score is affected by five factors:

  • Payment History (35% of total score)
  • Amounts Owed (30% of total score)
  • Length of Credit History (15% of total score)
  • New Credit (10% of total score)
  • Types of Credit (10% of total score)

Ready to take the next step?

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All information on this page is intended to be a helpful resource when researching, but does not constitute financial advice and should not be relied upon as such.