The 20-Year Boat Loan – Is It Right for You?

June 30, 2022

An image of Monterey boat on the water.

Rising interest rates in the current economic uncertainties are a concern for everyone. And since Sterling Associates is in the business of finding solutions for our clients’ borrowing needs, it’s a primary concern of ours.

Sterling Associates President Shawn Rogan has been watching rising interest rates at the Federal Reserve, but has not yet seen a negative impact on the lending market for pleasure boats, private aircraft, manufactured homes or RVs.

“Customers may prefer to leave their investments in the market until it starts to recover,” Rogan said. “But one of our benchmarks is ‘How do our rates compare to the 30-year home mortgage rates?’ So far, the rates we can offer our customers are still well below the home mortgage rate. So that’s good.”

But Rogan reports that many of Sterling Associates’ clients seeking financing in the pleasure boat market are opting for longer repayment terms. While 15-year loans have long been the standard in the industry, Rogan has noticed that larger loans –$100,000 and up – are often closing with 20-year terms.

“When you think about it, and examine the circumstances of many boat buyers, it makes a lot of sense,” Rogan said. “In our experience, no matter what the term of a new boat loan is, we find that most customers will hold that loan for four to five years. Then they move into a larger boat.”

Given that timeframe, Rogan says, opting for an initial 20-year loan makes sense. The monthly payments on a 20-year loan are less than on a 10- or 15-year loan, so a customer can afford a bigger boat. That is especially beneficial if the boat spends a good part of the year on dry land, as many boats in the northern parts of the country do every winter.

“Some of our customers may seek an adjustable-rate note, knowing that they’re going to move into a new boat in four or five years,” Rogan said. “So they choose to save a bit now, and then finance again when the time comes to move up.”

Sterling Associates, with offices across the country in New England, Maryland, California and Florida, works with a portfolio of 22 different lenders. “We can usually find a lending program to meet the monthly payment needs of our customers,” Rogan said.

If you’re in the market for a new boat, talk to one of the financing experts at Sterling Associates. We’ll help you find the best deal that fits your financial parameters, and get you to closing as efficiently as possible.