At a Glance

Making the decision to purchase a yacht should not be done lightly, as it is major purchase for the majority of people. Considering that yachts can range in price with a low end starting above $100,000, it’s more than likely that the average individual will need to look into loans for yachts if they wish to finance their purchase.

In this article, you’ll learn:

What are yacht loans?

First and foremost, it’s important to establish what exactly yacht loans are. A yacht loan is a high-value loan that provides an individual with the lump sum of money they need to make a yacht purchase. Considering the fact that most yachts start at $100,000 on the extreme low end, a yacht loan will need to be more than a standard personal loan.

Specialty boat loans are the most common method for financing a yacht, which often require a higher credit score due to the larger amount of money. Additionally, a yacht loan will be secured by the yacht itself, which the lender will have a right to claim should you fail to repay the loan.

Explore boat loan options for your yacht purchase

Cover the expense associated with a yacht purchase by using a boat loan

How does a yacht loan work?

Motor yacht loans work in much the same way as a standard boat loan, with the following stages being the common parts of the process:

  1. A borrower determines the exact amount of money they will need to purchase the yacht
  2. The borrower explores different lenders to see who will offer the sum of money at the fairest interest rate
  3. The borrower selects a lender and applies
  4. The borrower receives the funds from the lender and makes the purchase of the yacht
  5. The borrower starts repaying the loan on a monthly basis, with any interest or fees included on top
  6. Once the borrower completes payments at the end of the loan’s life, the yacht is fully theirs.

What are the benefits of using a personal loan to finance a yacht?

Assuming you can get approved for a personal loan with a large enough sum to finance your yacht purchase, the major benefits of a person loan include:

  • No collateral for the majority of personal loans
  • Repayment tenors of two to seven years on average means you have time to repay the loan
  • Interest rates ranging from 6-36% on average

Be aware, however, that personal loan amounts typically only range from $1,000 to $100,000, meaning a larger yacht may need to be financed with another type of loan.

Can I get a yacht loan with bad credit?

Looking for yacht financing options with bad credit can be a challenge. While you technically can get a yacht loan with bad credit, the large sum of money required for the purchased, coupled with your poor credit score, will likely result in a large interest rate. Due to these skewed yacht loan terms, it’s best to wait to apply for the loan when your credit improves, as taking on the loan now will cause you to pay far more in interest.

Other yacht financing options

For some people looking into how to finance a yacht, a standard yacht loan may not be the option they were looking for. Fortunately, there are three other types of financing options that a person can consider:

1. Home equity loans

A home equity loan is a specialty loan type that has a borrower using the value of their equity in their home as collateral for a purchase. Therefore, a home equity loan is a secured loan. Typically, you can borrow as much as 80-85% of the value of your equity, minus what you owe on your mortgage. For example, if you have a $1,000,000 home and $900,000 in equity, you could borrow between $620,000 and $665,000.

Learn more: How Does a Home Equity Loan Work?

2. Dealer financing

Many yacht sellers will offer their own forms of financing that you can consider when making your purchase. Be aware, however, that they will typically require higher credit scores in order to receive a fair interest rate, and the tenors may be either shorter or longer than you are looking for.

3. Credit cards

In some cases, a person may have a high enough credit limit that they can finance the purchase with their credit card. However, credit cards come with a higher APR rate than most yacht loans, which means financing the purchase with your credit card should only be a last resort item.

What is the average cost of a yacht?

The average cost of a yacht that is around 100-feet long sits at $1 million per 3.3 feet. This means that a 100-foot long yacht will cost over $30 million. However, smaller yachts can be as little as $100,000-$1,000,000 which is within the financing range for some loan options.

Is buying a yacht worth it?

When looking at the question of can you finance a yacht, you may also if it’s even worth it to make the purchase. If your purpose is for investment reasons, then buying a yacht is not a worthwhile investment. However, if it’s solely for pleasure and you’re out on the water often, as well as able to afford the purchase, then buying a yacht can certainly be the right choice.


Due to the amount of the loan that will need to be borrowed in order to get a yacht, the requirements for a yacht loan are typically stricter than that of other loan types. This means that a higher credit score will be needed to secure a fairer interest rate.

Most yachts, and boat loans in general, will have a financing term of around 20 years where the loan is being repaid.

In general, to receive the best interest rate, a person will need to have a credit score about 700 when applying to finance a boat purchase. Yacht loans may demand an even higher interest rate for the best offer due to the loan amount being so high on average.

Yes, a yacht loan will impact your credit score due to its size. If you fail to make payments on the outstanding debt, your credit score will be heavily impacted in the negative direction.