During the year of social distancing, many people apparently thought it was the right time to buy a boat. New powerboat sales climbed 12% in 2020, reaching their highest levels in 13 years, according to the National Marine Manufacturers Association. But with the average price of a new aluminum boat package at $ 36,000, many buyers probably needed a loan.

Personal loans – which can be used to buy just about anything – are an option for securing the purchase of a boat. There are other options as well, including obtaining a maritime loan with the boat secured as collateral. Here’s an overview of what it takes to get a loan to buy a boat and how to find the one that’s right for you.

How to get a boat loan?

Financing a boat is similar to to buy a car. You could walk into a showroom, choose what you’d like, qualify for a loan, and in many cases leave with the boat soon after.

A buyer with excellent credit “Could be approved roughly on the spot and leave the dealer with the boat the same day” depending on the size of the loan and other factors, says John Haymond, president of the National Marine Lenders Association.

There are three main ways to get funding:

Loan secured through a concessionaire. A boat dealer can partner with a specific loan company for all purchases or let you choose from a few. One of the main advantages of working with a dealer includes the possibility of a special financing arrangement through the boat builder, such as lower interest rates for an introductory period. You may also be able to include an extended warranty in your financing.

[Read: Best Personal Loans.]

Loan secured directly with a lender. As you would with a car loan, you can approach a lender before finalizing the purchase of the boat and getting pre-approval for a loan depending on the price of the boat you are likely to buy. You can get a fixed rate installment loan for a specified number of years, take out a variable rate loan, or choose a balloon payment it’s time to arrive when you’re ready to sell the boat. Secured boat loans are available from banks, credit unions, and online lenders. Some lenders have teams that specialize in selling boats, and you can also search for boat loan brokers online.

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“Historically, lenders have almost always wanted collateral when making large loans,” said Todd Nelson, senior vice president of online lender LightStream. “That way, if a borrower can’t pay, he can take the asset back and sell it to make up for his losses on the loan.”

You can also get secured financing without the boat as collateral if you take out a home equity loan or use money from a home equity line, or if you get a personal loan backed by valuable items, such as securities.

“Most of them are secured by the boat loan as collateral itself or by some other financial source, such as a home equity loan,” says Haymond.

Unsecured financing. If you have a high credit score and high income, a personal loan could be a perfect way to buy a boat. You would just need approval for a loan that could cover the cost of the boat. With a secured loan, lenders will have limits on the year, make and model of the boats they use as collateral.

“Unsecured lenders underwrite the borrower, not the collateral,” Nelson said. “It makes the application and financing process easier because an unsecured loan can be used to buy any boat from any seller.”

[Read: Best Home Equity Loans.]

Follow these 4 steps when applying for a boat loan

Make sure your credit and finances are strong. You’ll need a decent credit score to get a boat – at least a FICO score of 660 for an unsecured loan, for example, Nelson says. The lender will also check your income, your debt-to-income ratio, and possibly your net worth. You may need to make a down payment if you get a secured loan. Make sure you can afford the extra costs associated with a boat, like insurance, a caravan, gasoline, and upkeep, like winterizing.

Decide on the type of boat you need. There are many types and sizes of boats, from modest fishing boats to million dollar yachts. “Know what you’re using it for,” Haymond says. “Are you going to fish with it, water ski or take a cruise around the lake?” Next, you’ll want to see how much you can afford and whether it’s better to buy a used boat rather than a new one.

Compare loan offers. You should expect to get the best interest rate available if you have a good credit score of at least 700; your rate may be higher if your score is below 700. Rates generally improve as the loan amount increases and the loan term decreases. For a secured loan, you may be asked to provide a down payment of 10% or more, and the payment period can be up to 20 years for larger loans. Interest rates for boat loans are usually single digits.

“Make sure you get the right product you want and shop around for prices,” says Haymond.

Interest rates may also vary depending on the type of boat. For example, sailboats, motorboats, and wood-hulled boats can all have different terms. In addition, lenders may only offer marine loans for new boats, or may also finance those that are only a few years old.

“If you plan to spend less than $ 100,000 on a boat, an unsecured loan will be easier and provide more flexibility, because a borrower can buy any boat from any seller anywhere,” Nelson explains. “Larger loan amounts may require collateral, so a secured loan may be the only option available for larger boats.”

[Read: Best Mortgage Refinance Lenders.]

Finalize the loan. Closing the loan could be quick and hassle-free if you apply for an unsecured loan online and the money is deposited into your account quickly. If you are working with a dealership, it may be more of a traditional fence where you sign the papers with the dealership’s financial representative. Make sure to check if there are any additional closing costs.

“Do your research up front to feel empowered and confident in your choice,” Nelson says. “With good credit, you can shop around and pick the loan that meets your needs with the best rates.”