# Boat Loan Calculator

Everyone knows that boats can be expensive, and thus usually require financing. What they don’t realize is how much the financing can add to the total cost of their boat. This guide will help watercraft enthusiasts understand how much they’ll actually be paying for a new boat.

## Loan Basics

Any loan consists of a few basic parts: the principal, the interest rate, and a payment schedule. The principal is the amount of the loan that you are taking out, and will usually be the cost of the boat minus any down payment you make. The interest rate is how the lender earns a profit on your loan. Think of it as the fee you are charged for the loan. The payment schedule determines how many payments will be made to pay back the loan, and usually assumes monthly payments.

To make this easier, let’s look at an example. If you take out a $10,000 loan at an interest rate of 3% with a 5 year (60 month) term, you will wind up paying $10,781.40 for the loan. 3% is a very good interest rate for boat loans, so most customers should expect higher rates than that.

## Boat Loan Specifics

There are a number of factors that can influence how much your boat loan will cost by influencing the interest rate you receive. The biggest influence is your credit history. Boaters with high credit scores can expect better rates than those with a more troubled credit history. Age and condition of the boat is the other big factor. Lenders view older boats as a greater risk, and so charge higher interest rates. The result is that you will wind up paying more for your boat loan than you might suspect. In fact, many consumers are surprised to find that the total cost of a loan for a newer boat will be cheaper than an older one.

As you can see, boat loans can seem confusing, but become easier to break down once you know how loans operate. For help figuring out how much your dream boat will cost, try this handy boat loan calculator.