Buying your own boat is so exciting and will provide you with so many wonderful trips and memories with your friends and family. Being able to pack up your boat and just head out on the open water whenever the feeling takes you is the ultimate freedom. Many people believe that owning a boat is just for the super-rich but that is no longer true. There are now various payment options which means that this dream is now achievable for people even with relatively small budgets. The important thing is knowing how to pay for the boat while spending the least amount of money possible.

To help inform everyone about the two most common forms of payments, here we will compare the benefits of paying by cash and by financing.

1. Before You Get Startedโ€ฆ

In order to decide whether cash or financing is better for you, you will first need to choose the correct type of boat for your needs. To do this, you will need to consider how much money you can afford to spend, the number of people you want to take out, and your level of experience with boat maintenance and operation. If you have been sailing since you were in short trousers, then you may want to splash out and buy the boat you have always dreamed of. 

If you are more inexperienced, you may want to consider starting out with a less expensive boat until you have learned the ropes. Another thing to think about is how often you will actually be able to use the boat. If the winter weather is terrible where you live, it may be worth buying a cheaper boat as you will only be able to use it half the year.

Another thing you will need to consider is how much maintenance your boat will need. Older boats may save you money in the initial purchase, but they are likely to require more maintenance which will end up pushing the costs up.

2. How Paying with Cash Works

If you are lucky enough to have the bash to pay for the boat in one go, then this can save you a lot of hassle trying to calculate monthly payments. It will also save you money in terms of interest which you would be charged if you took out a boat loan. If you are considering paying by cash, you must remember that it is not only the boat itself which you need to budget for. There are many extra costs when it comes to boat ownership such as moorage, fuel expenses, general maintenance, and insurance. All of this needs to be taken into account before you make a purchase or you may find yourself without the cash required.

3. How Financing Works

For most people, financing is the best way to purchase a boat, and it works in a similar way to taking out a loan for a car or doing work on your house. As can be seen in the guide at, lenders will first see if you qualify for a loan by looking at your monthly income and how much debt you already owe. This data is used to calculate your โ€œdebt to income ratioโ€, or DTI, and if the final number is below 50%, you will be considered for a boat loan.

4. How Boat Loan Lenders Calculate Your DTI

In order to calculate your DTI, boat loan lenders will take the amount you owe each month and divide it by your gross monthly income.

Here is an easy example of how it works in practice:

The Total Debt You Owe Each Month:

Credit Bureau Debt – $1,000
Mortgage – $1,000
Potential Boat Loan Repayments – $1,000
Total = $3,000
Your Total Income Each Month:
Gross Salary – $6,000 Salary
Income From Rental Property – $2,000
Total = $8,000

To qualify for a boat loan, lenders usually insist on a DTI below 50%. In this example, $3,000/$8,000 is 37.5% so this person would be eligible for financing.

At the end of the day, the right form of payment really depends on each personโ€™s financial position. If you can afford to pay upfront in cash, it simplifies the whole process and you wonโ€™t need to worry about qualifying for a boat loan. On the other hand, the majority of people donโ€™t have that type of money available, so financing is ideal for making boats affordable to more people. Just make sure you have all the information at hand to make the right decision for your circumstances.

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