Boat Loan Calculator

The boat loan calculator will convert the advertised price of a boat into the actual numbers you need. It will show you what your monthly payments are and how much the boat is going to cost in total including interest, sales tax and fees. When you input the price, down payment, interest rate and term, it will give you your monthly payment as well as a detailed breakdown. It can also be used in reverse: You can figure out which boat you can afford with your monthly budget or find out how much of a down payment you need to make to get a certain monthly payment amount.

The three possible uses of this computer are:

Select a mode from the top. The monthly payment mode is the most common one. When you enter the boat price and credit terms, in addition to the monthly rate, it will show you the loan amount, sales tax, cash required at contract time, total interest paid, and total cost. In the purchase options mode, you input your monthly budget instead, and the calculator shows you the most expensive boat that you can afford with that budget. In the down payment needed mode, you enter the price and desired monthly rate, and the calculator will show you how much initial cash you need to come up with in order to meet that goal. All three modes can be further customized by specifying a residual value, enabling tax and fee calculations, or setting an additional monthly payment.

What is included in the loan amount?

The loan amount almost never matches the advertised price. First the down payment and residual value are subtracted from the price, then the remaining balance of the boat you're trading in is added, then any rebates are subtracted. If sales tax and fees aren't paid up front at time of contract but are rolled into the loan, those amounts will also be added. The remaining amount is the principal used to calculate your monthly payments.

Let's take a boat that costs $35,000. The down payment is $7,000, there is no residual value and sales tax and fees are paid at the time of contract as one lump sum. The loan amount would be $28,000. If you apply a 4.15% sales tax to the boat price, the sales tax would be $1,452.50 and the cash required at the time of contract (including fees of $2,800) is $11,252.50. This is the sum of the down payment and all taxes and fees that are not included in the loan.

Calculating monthly repayment amounts

Boat loans are issued on an amortization basis with equal monthly payments. The monthly payment amount is constant, and each payment contains a portion of the interest and principal. At the beginning of the term, the interest component will be higher while the principal component will increase over time. The fixed monthly payment amount is calculated using a decreasing balance loan formula.

P is the principal amount, r is the monthly interest rate (annual rate divided by 12), and n is the number of months. For a loan of $28,000 with an annual interest rate of 7% over 120 months, the monthly interest rate would be .07/12, and the number of payments would be 120.

That means you would pay about $325.10 every month. Over the course of 120 months, you will have paid a total of about $39,012, of which about $11,012 is interest. When sales tax and fees are added in, your total cost for this boat would be about $50,265. The table has all the input parameters with examples.

Sales tax, trade-ins and their application

In most states the sales tax is calculated on the price after trade-in value has been deducted. So using a trade-in can reduce both your loan amount and your tax bill. This tool follows that rule and taxes the amount remaining from the price after deducting the trade-in value. The rules for boats can vary considerably from state to state. Tax rates are usually between 4 and 8 percentage points, with some states capping boat taxation or waiving it altogether. Discounts are treated differently. In many states tax is still charged on the full amount before the discount, so while the discount reduces your loan amount, it doesn't reduce your tax bill. Please check your state's rules before you sign a contract.

Costs when buying a boat

The price listed is just a starting point. A boat inspection is similar to an apartment showing and is usually required before a bank or financial institution will give you a loan for a used or larger boat. The title transfer and registration fees are due when the state registers the boat in your name. Dealers also usually charge processing fees to prepare the documents. Small boat trailers usually need to be purchased separately. Some lenders charge an origination fee, which is about 1-3% of the loan amount. Add these costs up under "fees" and decide if you want to pay them when you sign the contract or roll them into your loan. If you roll them into your loan, you'll have more cash available but will end up paying higher interest over the life of the loan.

Should you go with a finance company or your own bank?

You can either get financing through the dealer or take care of getting a loan yourself from a bank, credit union, or specialized boat finance company before you buy a boat. Financing through the dealer is convenient and sometimes comes with special interest rates. However, if you get pre-approval from an outside institution, you can compare different interest rates and have more negotiating power. Boat loans are usually secured loans, meaning that the boat itself serves as collateral. So your credit score, income, and the age of the boat will determine the interest rate and term length. Enter two offers with the same terms into this tool to compare them. Don't just compare monthly payments, but also total interest paid.

How high does the down payment have to be?

A higher down payment reduces the amount of credit needed, lowers monthly payments and minimizes interest paid over the life of the loan. A typical boat down payment is between 10 and 30 percent with about 10 percent being most common. However, borrowers with good credit may be able to get a loan without any down payment. A larger down payment also helps avoid taking on debt that exceeds the value of the boat since boats depreciate over time. Use the down payment mode to see what down payment is needed to meet a particular monthly payment goal.

Total cost of boat ownership

Your monthly loan payments aren't the only expense you'll need to factor into your budget. During the life of a boat loan, insurance is usually required and annual maintenance costs such as engine tune-ups, hull cleaning or winterization will be necessary. Fuel, mooring or storage on land, and equipment are ongoing operating expenses. Boats generally have higher fuel consumption than cars. For an average-sized boat that costs about $30,000, you should budget around $3,000 to $7,000 a year in addition to the loan to maintain a financially sustainable budget.

Early repayment of credit

Most boat loan contracts do not charge a prepayment penalty. So any extra amounts you pay will go directly to reducing the principal amount of your loan, which reduces the remaining balance on which interest is calculated and allows you to pay off your loan faster. You also avoid paying additional interest on that reduced balance. Turn on the option for extra payments and see how much more per month you can afford to pay and what effect it will have on your payoff date and how much interest you'll save.

This calculator is for educational and planning purposes only and does not constitute financial advice. Actual loan terms will depend on the individual bank, your creditworthiness, and tax and fee regulations in your state. Please verify amounts with a dealer or bank prior to signing any contract.