Financing For Boats In Canada

Having a boat is one of the best ways to enjoy summer. What’s more, there are tons of different sizes, makes, and models of watercraft available in Canada, each of which can be ideal for various activities.  However, marine vehicles can be quite expensive and require continual maintenance, as well as storage throughout the years. Since relying solely on your credit cards and savings may not be the best idea, it’s best to consider financing for boats.

Financing For Boats In Canada

Although boat loans can be borrowed from many select lenders across the country, particularly those located near bodies of water, Loans Canada can match you with the lender of your choosing, no matter where you live.   

A marine or boat loan is a type of financing that’s used to purchase almost any seafaring vessel. From sailboats to ski-dos to fishing boats. A boat loan from a specialty lender, private lender, or big bank allows you to make this large purchase, often by transferring the money directly to the dealer, although some lenders do offer direct deposit to the borrower. Once the funds are received, you would repay the loan through a series of equal installments.

What Types Of Watercraft Are Available To Finance?

Whether you’re looking to start a fishing business or you simply want to do some water-skiing and tubing, rest assured that there is a way to finance the craft of your choosing. That said, the amount of financing you’re approved for must also factor into the size, make, and model that you want. 

If you qualify for the right boat and marine loan, you’ll have the ability to finance almost any vehicle, including but not limited to: 

When it comes to boat and marine vehicle financing, you will typically be able to choose from two different options, known as ‘secured’ and ‘unsecured’ loans. While both of these loan types have their benefits, one can certainly be better for your financial situation than the other, so make sure you understand them correctly before applying.

Types Of Financing For Boats

In Canada, there are many financial companies that can offer you loans for the purposes of financing boats and other marine crafts, including but not limited to:

Secured Financing For Boats

Similar to other vehicle-based financing options, most boat and marine loans will be secured by using the craft’s title as collateral. This means that the lender will retain ownership over the vessel’s title until your repayment plan is complete. If you default on too many payments, they would have the right to seize and resell the asset. In exchange for this collateral, you will often have access to better rates and more credit.  

A secured loan is probably the better choice when you feel comfortable using your marine vehicle as collateral and if you’re having a hard time qualifying due to lesser financial health. Nonetheless, you must keep in mind that defaulting could have a worse outcome than with unsecured financing (which results in regular late penalties).

Unsecured Financing For Boats

While some boat and marine financing do involve collateral, you can also apply for a traditional unsecured loan, which is safer if you’d prefer not to risk losing your boat in the event of default.  

The ultimate drawback here is that your interest rate may be higher and the conditions of the loan less favourable due to the lack of security provided. So, if you are going to apply for a large unsecured boat and marine loan, it’s best to do it when you have a good income, a decent credit score, and otherwise healthy finances.

Marine Brokers

In most parts of Canada, you’ll find a number of brokers that can connect you with sellers for both new or used boats. While a marine broker may be affiliated with the seller and may be making a commission, a good marine broker can help you locate your desired vehicle and represent you through negotiations with sellers. They may also be able to find you affordable financing plans or hold your deposit securely in escrow. 

Marine Dealer Financing

Since our country has so many bodies of water, boat and marine vehicle dealerships aren’t too hard to come by either. So, not only can most marine dealers offer you loan options, you’ll have the opportunity to check out your potential watercraft up close.

Most marine dealers work with one or more lenders to acquire financing for their clients. Although negotiation may also be possible here, always get a proper price quote from your dealer before you buy, as hefty vehicle preparation fees could be applied.

Financing For Boats: Where Can You Apply?

Many of Canada’s largest financial institutions provide boat and marine financing. Some borrowers prefer to apply with their bank or credit union because they offer higher security, lower interest rates and better payment plans than private lenders. Plus, as members, applicants could score the odd in-house benefit. 

The only problem is that banks and credit unions have tougher loan requirements. So, if you have bad credit, a low income or lots of debt, you’ll likely be rejected. That’s when an alternative lender or private lender can help. They typically have more flexible requirements in comparison to traditional lenders. 

However, due to the added risk they take, they may charge higher rates and fees for smaller loans. During your search for marine vehicle financing, it’s important to take your time and shop around to find the best deal possible. 

Financing For Boats From Private Lenders

Money Line Capital 

Because we have so much accessible water, Canada can also be a good place to start a business based around watercraft, like a fishery, retailer, or tour company. In that case, any vehicles you want to buy or lease may qualify as business equipment. Luckily, equipment financing and leasing is exactly what Money Line Capital specializes in.

Money Line Capital is an alternative business lender based in Ontario. They have a 95% approval rate on their commercial equipment loans and leases, which come with: 

• Fast funding times (1 – 2 business days)
• Financing amounts starting at $5,000 
• Flexible payment terms of 18 – 84 months
• Interest rates of 4.99% – 24.99% APR

Sparta Finance

Headquartered in Victoria (BC), Sparta Finance is an alternative lender that specializes in financing for used recreational and marine vehicles. Their entire inventory is listed on Kijiji and they work with many different charities to collect donations for less privileged Canadians, such as the BC Cancer Foundation and Edmonton’s Foodbank.

Sparta Finance is also partnered with a number of popular sports vehicle retailers and financial institutions, like CanAm, Capital One, Yamaha, and Kawasaki. Through their partnerships Sparta Finance is able to offer:

• Interest rates between 0% – 29.9% 
• Terms between 3 months to 240 months
• Open-ended loans 
• No prepayment penalty after 180 days have passed on the loan
• Home delivery service
• Easy approval standards, even for applicants who are new to Canada or have recently had a consumer proposal, bankruptcy or repossession
• Fees can range between $50 – $1500

Financing For Boats From Banks

RBC Boat And Marine Loans

As mentioned, plenty of big financial institutions sell marine vehicle loans in Canada, For example, the Royal Bank of Canada offers financing for boats and RVs with:

• Flexible Payment Options – Choose from several payment plans (weekly, monthly, bi-weekly, etc.), with no penalties for prepayments.
• Competitive Interest Rates – RBC offers competitive interest rates when you finance your boat through one of their affiliated marine dealerships. 
• Adjustable Terms & Conditions – If you’re a qualified applicant, you could be eligible for financing terms as long as 20 years on boats and RVs that are no more than 10 years old.         

TD Boat And Marine Loans

TD Canada Trust is another popular bank with its own flexible marine vehicle financing program. They have an expansive network of dealers and offer many benefits, like:

• Long Terms & Extensions – Payment terms can last up to 240 months (20 years) on newer vehicles and you’ll have the option of extending (if you qualify).
• Additional Financing Available – If necessary, TD can also offer you financing for other marine vehicle costs, like warranties, gap insurance, and storage fees.
• Competitive Interest Rates – You could qualify for a competitive fixed or variable financing rate for most marine crafts. 
• Payment Options – Loans can be paid early with a lump sum, penalty-free. 

Scotiabank

Scotiabank offers marine craft loans of up to $200,000. Similar to TD and RBC, qualified clients can get 20-year adjustable payment plans and no prepayment fees. Moreover, when you ask for Scotiabank financing at one of Scotiabank’s marine dealerships, you know you’ll get better rates and promotions. 

• Payment Breaks – If you follow your financing plan responsibly, you’re allowed to postpone one payment each year that your marine craft loan is active.

• Self Management Options – By logging into your Scotiabank account, you can monitor and adjust the amount, frequency and day of your payments as needed. 
• Interest Rate Options – When you ask for Scotiabank financing with one of Scotiabank’s affiliated dealerships, you’ll have the option to choose between a fixed and variable rate.  

How To Apply For Financing For Boats

Every lender has different approval standards. For instance, banks and credit unions typically require you to have a decent income and credit score before they’ll approve you for a loan with favourable conditions, while alternative lenders can be more lenient. 

However, there are several documents and elements that you’ll need to apply for boat or marine financing with almost any lender, such as:

• Government photo identification (driver’s license, passport, etc.) 
• Special licenses are required for piloting certain marine vehicles
• Proof of income (recent pay stubs, etc.)
• Proof of bank account, debts and assets (latest bank statements, etc.)
• Information about the vehicle (price, taxes, registration details, etc.)
• A completed application form and credit check agreement 
• A ‘good’ credit score of 650 or higher (some lenders accept lower) 
• A reasonable down payment (not necessary with every lender or vehicle) 

Factors To Consider When Financing A Boat

As fun as it can be to own a boat or other watercraft, it’s also important to understand that a loan is a significant financial obligation and must be handled responsibly in order to avoid any debt-related problems. 

So, prior to applying for any form of boat or marine vehicle financing, there are several factors that you should consider, such as: 

The Down Payment

One way of receiving good loan conditions and paying down your debt faster is to offer a respectable down payment of 10% – 20% of the vehicle’s total cost. Depending on the asking price, that down payment can be beyond your budget, especially when coupled with your future payments. 

The Interest Rate

Your interest rate can make your payments more pricey than you were expecting. Remember, the best way to receive an affordable rate is to apply with healthy finances or some collateral. You may also be able to choose a fixed rate (that doesn’t change over your loan term) or a variable rate (which fluctuates with Canada’s prime rate).  

The Length of Your Loan/Term

Larger boat and marine loans are often separated into several terms, so you may be in debt for a number of years. Being unable to afford your installments during that time, for whatever reason, could lead to financial damage, so if the loan terms your lender offers seem too long, you may have to look elsewhere.

Your Monthly Payments

The amount you’re paying each month for your watercraft will greatly affect your finances. If you lose your job or your monthly payments are too large in general, you may want to renegotiate their size or frequency with your lender.

Additional Fees

When applying for any credit product, particularly one as large as a boat and marine loan, it’s essential to ask your lender about their additional fees, then factor them into your budget. This can include fees for loan origination, administrative purposes, and other services that your lender provides. 

Upkeep & Maintenance

Once again, most watercraft, especially large ones require lots of general care throughout their life. You may have to pay to dock and store it at a marina or regularly invest in repairs. You must also budget for insurance and fuel, as well as buying and renewing your boating license.

Boat And Marine Vehicle Licensing Rules 

Before you try to finance a boat, it’s essential to understand that some marine vehicles with motors require special licenses to operate. For example, you need a valid Pleasure Craft License to legally pilot any boat with an engine of 10 or more horsepower. You must have the license on you whenever you’re driving the vehicle to avoid penalties.

There are certain elements that the boat itself needs as well, including:

• Hull Serial Number – The boat must have a serial number on its hull, which proves that it meets Canada’s minimum safety standards for construction.
• Registration – Any qualifying boat also needs to be registered with the Canadian Register of Vehicles to confirm that it’s not been stolen or manufactured poorly.
• Trailer Registration – According to government regulations, most boat trailers are deemed as motor vehicles, so they have to be registered and licensed too.
• Canadian Compliance Notice – This is another way to identify a boat’s build quality. While boats bought from other countries may not require this notice, they must still comply with Canada’s minimum construction standards before being used.

How Much Does It Cost To Own A Boat In Canada?

Watercraft come in all shapes, models, and prices, so it can be tough to calculate how much your own vehicle would cost you in the long run. You’ll also have to decide whether you’d like to purchase a used or new model. Obviously, a full-sized houseboat will end up costing much more than a dinghy with an outboard motor. 

For the sake of argument, let’s say you’re trying to purchase a regular leisure-style motorboat for fishing, water skiing, and other activities. In that case, you would have to consider these kinds of basic costs:

Purchase Price

A standard 6-passenger motorboat can cost $20,000 – $30,000, maybe more for a brand new model with all the features and accessories (not including interest and fees). 

Don’t forget to include the costs of boating gear. Life jackets, oars, and other emergency supplies can be expensive but necessary. That equipment, coupled with any toys (wakeboards, inflatables, etc.) can wrack up a bill of $500 – $2,000. 

Licensing & Insurance

In Canada, you must obtain a Pleasure Craft Operator Card to drive any boat with an engine over 10 horsepower. The test costs around $50, plus $20 – $30 annually for the ID card. If you are caught without a valid license, you’ll be subject to a $250 fine. A basic motorboat may also cost $300 – $500 per year to insure (more if it’s a larger model).   

Storage

Marina storage fees will vary greatly based on location, servicing, and how large your boat is. It generally costs $2 – $5 per foot, per month, plus $300 – $700 to shrink-wrap it for outdoor storage during the winter. Indoor storage will be pricier at around $100 – $500 per month for a 20 – 30 ft. craft (more if it’s stored in a stacking facility). A popular marina or yacht club might also charge you an introductory membership fee of $5,000 – $10,000 (plus renewals), as well as a monthly cost to rent a slip throughout the summer. 

Fueling & Maintenance

While these costs will also vary based on what type of boat you have and where you store it, most boat owners pay 10% – 20% of their craft’s purchase price annually for repairs, cleaning, and maintenance. Hopefully, you can save money by storing the boat on your property and performing these tasks by yourself.  

Additional Reading

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No Down Payment Car Loans

Financing For Boats FAQs

Finance Your Boat Today

If you’re looking to purchase a boat or other marine vehicle this summer, be sure to speak with the experts at Loans Canada. We can help you find the right loans, financing solutions, and lenders in your area. Just call us today or check out our website for more information!