You’ve just decided to buy a boat and are wondering what you need to know about boat financing? First things first: you’ve just made an excellent decision. Nothing will bring you and your family more fun and quality time together than a boat. But when you’re making a major monetary move such as financing a boat, there are a few important items you need to bear in mind. Before you sign on any dotted lines, be sure to consider the following five things:

1. Trust Your Dealer to Help with Financing

While there are various ways of setting up boat financing, boat dealers do it each and every day. It’s in their interest to make sure the process goes smoothly and to the buyer’s advantage, and many boat dealers work with a number of lending companies so they can identify the best deal for you with a few keystrokes of the computer. Some people think of boat dealers like car salesmen, which is a shame. The pool of boat buyers is far smaller than that of car buyers, so boat dealers depend much more on establishing long-term relationships and keeping their customers happy. It may seem like surprising advice at first, and of course there are exceptions to the rule, but it’s a fact — as long as you’re dealing with a reputable dealership with a respected history, trusting the boat dealer to set up financing is often your best option.

2. Consider the Loan Term and How it Affects the Payments 

The term of a loan has a huge impact on the amount of the monthly payments, and we have great news: these days, it’s quite common to finance a boat for up to 20 years. That makes for a much lower payment on the same amount you’d get on, say, a six-year car loan. Just how much lower? All other factors being equal, with zero money down on a $40,000 loan at a 4.5-percent interest rate, a six-year term loan would cost you $634.96 a month. But that same loan on a 20-year term would be just $253.06. Note that the larger a loan is, the more likely lenders will be to extend to longer terms; but generally speaking, getting long-term boat loans is no problem in the current lending climate.

3. Make Sure You’re Aware of Common Misconceptions Regarding Boat Loans

Getting a boat loan today is very different from getting one in the past, and the discussion we just had about loan term is a perfect example. A few decades ago, it was very rare for a lender to stretch a loan beyond 10 years because boats devalued quickly and often weren’t serviceable after a decade of use. Today’s boats and engines, however, have much longer lifespans, so lenders have more confidence that they’ll retain value with age. Another common misconception is no-money-down loans. There was a time when a 20- or 30-percent down-payment was necessary to buy a new boat, and many people mistakenly believe that’s still the case. But lenders today often work with much lower down payments or even no money down.

4. Make Sure You Understand How Your Credit Score Will Affect a Boat Loan 

As is true with any form of financing, your credit score will have an impact on all the variables we’ve considered thus far. The option of buying a boat with no money down, for example, is commonly reserved for people with very good credit. Your credit will also affect the interest rate that you’re offered. But don’t think that you can’t buy a boat if your credit is just so-so. Although the terms probably won’t be quite as favorable, there are programs for people with less-than-ideal credit scores.

5. Consider the Ability to Roll in Additional Boat-related Expenses

The cost of the boat itself is usually just one part of a bigger picture. Quite often there will be additional expenses related to it, such as outfitting the boat with marine electronics, safety gear and other amenities. There may be commissioning expenses, such as bottom painting and launching. Or you may want to add a big-ticket option like a trailer to your package. In these situations, you need to know it’s often possible to roll these additional costs into your initial boat loan.

Are there other variables you should keep in mind when financing a boat? Of course, there are — you need to decide how large a down payment you want to make, if any, as it can have an effect on the interest rate being offered; you’ll want to determine insurance requirements that various lenders may have; it’s smart to look at your debt-to-income ratio and understand how your other debt could affect the loan; and so on.

There’s certainly plenty to consider when you’re financing a boat. But keeping these five things in mind is critical to make the best decisions. Well, the best financing decision, anyway — you already made the decision that was truly “best” when you decided to buy a boat!