Buying a powersport vehicle like a boat is a big decision, and how you pay for it matters. Leasing and financing are two common ways to get on the water, each with its own advantages.
Understanding the differences between boat leasing and financing in Canada will help you make the right choice for you.
Boat Leasing vs Boat Financing
| Boat Leasing | Boat Financing | |
| Upfront Costs | Lower initial payment (Little to no down payment required). | Higher upfront costs (10-20% down payment). |
| Monthly Payments | Lower and fixed monthly payments that cover depreciation, financing, and sometimes maintenance. | Typically has higher monthly payments. |
| Term Length | 2 to 5 years. | 3 to 20 years, depending on the loan amount. |
| End-of-Term Options | Option to buy, renew lease, trade for a newer model, or walk away. | You own the boat outright after the loan is paid off. |
| Maintenance & Repairs | Costs may be covered under the lease, depending on the agreement. | You are fully responsible for maintenance and repairs. |
| Usage Restrictions | May have mileage or usage limits and extra charges for excess wear and tear. | No restrictions on usage, and you have full freedom on how and when you use the boat. |
What Is Boat Leasing?
Boat leasing is an alternative to conventional boat ownership, allowing you to enjoy the benefits of having a boat without committing to a full purchase.
When you lease a boat, you make regular payments over a set period, similar to leasing a car. At the end of the lease term, depending on the agreement, you’ll have the option to buy the boat, trade it for a newer model or walk away without any further commitment.
Key Features Of Boat Leasing
| Terms | Lease agreements often have terms ranging from 2 to 5 years. Some leases will also allow for early termination, however, there may be a penalty. |
| End-of-Lease Options | At the end of your lease term, depending on your agreement, you’ll have the option to buy the boat, renew or extend the lease, trade in for a newer model or simply walk away. |
Benefits Of Leasing A Boat
There are many benefits to leasing a boat in Canada, including but not limited to;
Lower Upfront Costs
Unlike purchasing a boat outright or financing one with a loan, leasing usually requires a smaller initial payment. This makes boating more accessible for those who don’t want to tie up a large amount of cash or take out a significant loan.
Predictable Monthly Payments
Lease payments are typically fixed for the duration of the agreement, making it easier to fit them into your budget. These payments generally cover the depreciation of the boat, financing costs and sometimes maintenance, depending on the agreement signed. Plus, leases often offer more flexibility, allowing you to upgrade or switch boats at the end of the lease term.
Maintenance and Warranty Coverage
Some leasing agreements will include maintenance and servicing, which can reduce the cost and hassle of upkeep. Keep in mind that because most lease terms are relatively short, the boat is often covered under its original manufacturer’s warranty for the duration of the lease.
Limited Ownership Responsibilities
Since you don’t own the boat, leasing allows you to avoid certain costs and responsibilities associated with ownership, such as depreciation and potential long-term maintenance issues. That said, you will need to adhere to the leasing agreement’s terms regarding usage, insurance, wear and tear, etc.
Learn more: Your Guide To Boat Insurance In Canada
What Is Boat Financing?
Boat financing involves taking out a loan to purchase a boat, allowing you to spread the cost over time rather than paying the full price upfront.
Similar to auto loans, boat loans are usually secured, meaning the boat itself serves as collateral. You’ll make regular monthly payments that cover both the principal (the initial loan amount) and interest until the loan is fully repaid. Once paid off, you own the boat outright.
Key Features of Boat Financing
| Loan Amount | Loan amounts range widely and typically go up to $200,000, depending on the lender, the boat and your financial health. |
| Term | Boat loan terms can range from 3 to 20 years, depending on the lender, loan amount, and type of boat. |
| Interest Rate | Interest rates for boat loans depend on factors like your credit score, loan amount and lender policies. Many loans have fixed rates, meaning your payments remain predictable, but some lenders offer variable rates that fluctuate with market conditions. |
| Down Payment | Financing a boat often requires a down payment, typically 10% to 20% of the purchase price. Some lenders may allow lower or even zero down payments, but this usually results in higher monthly payments or interest rates. |
Learn more: Financing For Boats In Canada
Benefits Of Financing A Boat
Ownership and Equity
Once the loan is paid off, you’ll have full ownership of the vessel. Moreover, since you are buying the boat, you build equity over time, meaning you could eventually sell the boat and recoup some of your investment.
No Usage Restrictions
Unlike leasing agreements, which may have mileage or usage limits, financing gives you full control over how often and where you use your boat. You also have the freedom to customize the boat as you wish, without any restrictions on its usage.
Additional Costs and Responsibilities
When financing, maintenance, insurance, storage, and repairs are your responsibility. These costs won’t be bundled into your monthly payments, so they should be factored into your overall budget beforehand.
Early Payoff and Refinancing Options
Many boat loans will allow for early repayment without penalties, helping you save on interest if you can pay off the loan ahead of schedule. You can also choose to refinance your boat to lower your interest rate and boat payments.
Learn more: Boat Loan Calculator: Estimate Your Payments
Boat Leasing vs Financing: Drawbacks
Let’s take a quick look at the drawbacks of both leasing and financing to help you get a better idea of the differences between the two.
Leasing Drawbacks
- Leasing does come with some drawbacks, the biggest of which is that you don’t own the boat. This means you won’t build equity or have the ability to resell it.
- There are also restrictions on how much you can use the boat, and excess wear and tear can lead to additional charges.
Financing Drawbacks
- Financing typically involves higher upfront and monthly costs, plus the boat will depreciate over time.
- You’ll also be primarily responsible for all maintenance and repairs, which could add significantly to the overall cost of the loan.
How To Decide Which Option Is Right for You
Whether you’re considering leasing or financing a boat, the right choice depends on your budget, lifestyle, and long-term plans.
Choosing Leasing If:
- You only need it for occasional trips or short-term seasonal use, leasing may be the better option since it offers flexibility and lower upfront costs.
- You want lower payments. Leasing typically has lower monthly payments, making it more affordable upfront.
- Your goal is simply to enjoy the experience of boating without the long-term commitment.
Choose Financing If:
- You’re planning to use the boat regularly and want long-term ownership.
- You can afford higher payments.
- You want full ownership once it’s paid off.
- You want the freedom to customize or upgrade your boat
In the end, your choice will depend on your lifestyle, personal preferences and financial situation.
Boat Financing And Leasing Alternatives
If financing or leasing a boat doesn’t seem like the right fit for you, there are alternative options to explore that can still provide the boating experience without committing to long-term ownership.
Boat Rental
Renting or chartering a boat is one of the most flexible alternatives to buying or leasing.
This option is ideal if you’re not ready for full-time ownership or if you just want to enjoy a boat for a short period. Boat rental services usually offer a variety of models to choose from, whether you’re looking for something simple for a day on the water or a more luxurious yacht for a weekend getaway.
Boat Sharing
With boat sharing, multiple people split the cost of purchasing and maintaining a boat, making it a more affordable option for those who want ownership without the full financial burden.
Depending on the boat-sharing model, you’ll typically have a set amount of time to use the boat each month, with a scheduling system to ensure everyone gets their fair share of usage.
Boat Club
A boat or yacht club is another alternative that can offer access to a vessel without ownership or financing.
Boat or yacht clubs allow you to become a member and pay a monthly or annual fee to use a fleet of boats. These memberships often come with the advantage of well-maintained boats and easy access to a variety of different models.
Boat clubs are a good choice if you enjoy boating but don’t want to worry about maintenance or storage and you’re not in a hurry to own a boat. That said, membership fees can be costly, and access to specific boats may be limited during peak season.
Peer-to-Peer Boat Rentals
If you prefer something more tailored to your needs, peer-to-peer boat rentals are gaining popularity.
Platforms like GetMyBoat or Boatsetter allow boat owners to rent their vessels directly to other individuals, similar to how Airbnb works for vacation rentals.
This allows for a wide variety of boats to choose from, and rates can often be competitive, especially during the off-season.
Boat Subscription Services
Some companies out there offer boat subscription services, where you pay a flat monthly fee to access different types of boats as needed. This option might appeal to those who value both variety and flexibility since you’re not tied to a single boat model.
These services also typically handle all the maintenance and cleaning, offering an experience that’s similar to that of a boat club but with greater flexibility in terms of boat choice.
However, like boat clubs, the monthly fees can be high, so it’s important to weigh the overall value compared to renting or leasing.
Bottom Line
Whether you’re considering leasing or financing a boat, the right choice depends on your budget, lifestyle, and long-term plans. Explore your options today and compare financing solutions here at LoansCanada to find the best fit for your needs.
