A boat is a commodity that depreciates in value as the time and usage progresses. This means that as a collateral, a boat poses a higher risk than, say, a house. Due to this higher risk, used boat loans have higher interest rates. This can be calculated using a boat loan calculator but the advantage to used boat loans applicants is that there is high competition amongst lenders and the options available are good. Apart from a higher interest rate, used boat loans also need higher down payment percentage on the total value. A 20% down payment maybe acceptable for a new boat but old boats need at least a 30% initial payment.

This also means that the overall term is reduced and the monthly repayment percentage is also higher when compared to a new boat loan. But all is not gloom for used boat loans applicants because of the huge availability of used boats and intense competition amongst vendors to get the business. It is generally estimated that about 60% of boat financing industry runs on used boat loans. So, in spite of tougher terms and conditions, the used boat industry is booming and there is good reason for it.

The very fact that boats depreciate in value, is the actual advantage for a used boat loan applicant. The moment any new boat hits the water, the value depreciates and it becomes a potential buying option to the customers. This is even truer for smaller crafts whose value range between $5000 and $10000. The values of these boats almost halve after two years and buyers can make killer bargains when they hit the market. Simple research on a boat loan calculator can show the benefits of this to any potential buyer.

However, caution needs to be exercised while buying used boats. The general state of the boat needs to be determined before anything. Also, it is extremely difficult to assess and valuate a used boat and there are no set guidelines for it. So, the market values of used boats are highly unregulated and this is also another factor for higher boat loan rates. It is recommended to seek the advice of an expert before agreeing on the value of a used boat. After determining the value, adequate research must be done on the boat loan calculator and only then should a lender be approached. This way the applicant is not only equipped with enough information, he is also able to negotiate on even terms with the lender.