Boat loan values have to be an important consideration for anyone who is considering buying a boat. Even if you are selling your boat, they can be an important factor because they will affect your potential buyers' ability to fund their purchase and buy your boat. For any company to offer a loan to you or your buyer, the loan must be secured to the value of the boat. That means that if the individual borrower defaults on the loan and stops paying the instalments, the boat will be repossessed by the lending company so that they can recover some or all of their money that way. So, if the boat was not correctly valued, the lender might find themselves without sufficient collateral to recover the full value of the loan. For the borrower, securing the loan to the boat value in this way results in lower interest rates compared with unsecured loans.
Boat loan values change over time for many reasons. The value of a boat depends on many factors, and the primary reason for a boat's value to change is age. Other things being equal, the value of a boat will drop as it becomes older. As with a car, there is a sharp drop in the value of a brand new boat when it is first sold, and then if no improvements are made, it will decrease in a more gradual curve.
The condition of the boat is another important factor. If a new boat is not well maintained, its value will go down more quickly. This means that a very well maintained older boat may be worth much more than one that is not in great condition.
In some cases, the style, model or rarity of the boat also plays a role. A vintage boat or a boat that is very much in demand will be worth more and therefore may be a better choice for the lender (and you the buyer) to invest in. Of course this does not apply to short term trends. A boat whose value is temporarily inflated because it is similar to one that just featured in the latest hit movie will not attract higher loan values from lenders!
If you are planning to buy a new boat, the value will generally be what the boat is worth at the time of the sale. With used boats, however, the values can fluctuate considerably. In some cases, the lender may use a formula to determine the value of the boat based on age, model, etc. However, many lenders will require an inspection and appraisal of the boat done to estimate its value for the loan and you as the borrower will probably be asked to pay for this. This could be a factor in your decision to choose one lender above another. Bear in mind though that you could learn a great deal about the boat from having a professional appraisal, and assessment of boat loan values is only one aspect of this.
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