Do you have your heart set on a new jet ski this summer? With prices stretching to nearly $15,000 apiece â€” and you may want more than one for families â€” you may be busy researching jet ski financing options to turn your daydreams into reality.
Getting jet ski financing isnâ€™t difficult. In fact, itâ€™s similar to financing most other recreational vehicles. But some methods are better than others, depending on your particular situation. Weâ€™ll walk you through some affordable ways to finance your purchase and some options you would probably be wise to avoid. Keep reading to compare your choices using our side-by-side chart.
How to finance your jet ski
As with any type of financing, the better your credit rating, the more attractive the options you may have available to you.
Manufacturer financing Vehicle manufacturers are known for offering attractive interest rates for well-qualified borrowers as an incentive to purchase certain products or models. Whether youâ€™re buying a jet ski or another type of vehicle, financing through the manufacturer will often be the most affordable way to go â€” if you have good credit. In fact, with good credit scores you might even be able to score 0% APR financing through a manufacturer, albeit likely for a shorter loan term (e.g. 12 months) or introductory period. Keep in mind, that low initial APR could jump to a much higher rate if you need more time to pay off your loan.
Powersport loans Banks, credit unions and online lenders will offer loans for jet skis under different names including specialty vehicles, sport or leisure vehicles. These loans may have higher rates than manufacturer financing incentives but typically come with lower interest rates than personal loans, which weâ€™ll talk about next. If youâ€™re comparing rates on powersport loans with manufacturer loans, remember that your rate on a manufacturer loan may change over time. Calculate your total interest over the life of the loan to see which option may give you the lowest cost for financing. We recently found powersport loan rates as low as 4.29% APR with more offers around 5% and 6% APR though again, the best rates tend to go to those with the best credit and for the shortest terms.
Personal loans Many banks and online lenders offer personal loans which can be used to finance a jet ski purchase. If your credit scores are in less-than-perfect condition, you might have an easier time qualifying for a personal loan (depending upon each lenderâ€™s requirements) when compared with other borrowing alternatives. However, if your credit scores are in great shape, thereâ€™s a chance you might be able to find a more affordable way to finance your jet ski purchase.A personal loan also might be your best bet if youâ€™re looking to buy a used jet ski that you canâ€™t â€” or donâ€™t want to â€” pay for with cash. Some banks may have minimum amounts for powersport loans but lower requirements for personal loans.
Credit cards Although it may technically be possible to use a credit card to finance your jet ski purchase, itâ€™s usually not a good idea. Unless you have an attractive introductory rate offer, credit cards are a notoriously expensive way to finance big purchases. Also, if your debt-to-limit ratio climbs higher because of an expensive purchase, your credit scores could suffer until youâ€™re able to pay down your card balance. â€śPutting a big, fun purchase on a credit card is tempting, but it may be a costly mistake,â€ť said Eric Rosenberg, founder and editor at Personal Profitability. â€śUnlike a mortgage or a car loan, where you get a lower interest rate because the loan is secured by the vehicle, that isnâ€™t true with a credit card. You could easily find yourself paying 20% or more to pay off that jet ski. No amount of fun is worth that cost.â€ť
Which type of jet ski financing is right for you?
The best way to finance a jet ski is going to be different for different people. Hereâ€™s a side by side comparison to help you compare the features of the four jet ski financing options above.
Average Interest Rates
Changing Interest Rates
Risk of Credit Score Damage from High Utilization
Interest rates may start as low as 0% for qualified borrowers
Rates sometimes start out low and increase over time
Good or better to qualify for the best offers
APRs usually lower than personal loans
Rates are typically fixed over the life of the loan
Varies â€” the higher your score, the better your interest rate
APRs usually higher than powersport loans
Rates are typically fixed over the life of the loan
Some lenders have options beginning at a minimum credit score of 525 (though you probably wonâ€™t get the best interest rates).
Average APR is 16.86%
Rates may change over time
N/A if your account is already open
*Note: The chart above is a helpful guide, but you should always check with individual lenders to compare the specific rates and terms available when shopping for any type of financing.
What to look out for when financing a jet ski
Itâ€™s true that owning a jet ski can be a lot of fun. However, you shouldnâ€™t finance any recreational vehicle unless thereâ€™s room in your budget to afford it.
Rosenberg recommends that you â€śnever let this type of purchase put you under financial pressure. It isnâ€™t worth the cost if youâ€™ll miss other bills.â€ť
Not sure how much jet ski you can afford? This helpful payment calculator from LendingTree can help you to figure out the answer. LendingTree is MagnifyMoneyâ€™s parent company.
The bottom line
Can you afford to purchase your jet ski in cash? If so, you might want to think twice about taking out a loan and paying interest to a lender. (Of course, if you qualify for a 0% or low introductory offer through a manufacturer, you could always take advantage of the low-intro rate and then pay the remaining balance in full when it expires.)
Thereâ€™s also something to be said for saving your money in order to avoid high interest on a major purchase through your credit card. It might mean putting your purchase off until next year, but the money you could save on interest could be a great trade-off for your wait.
If you prefer to take out a loan so you can enjoy your jet ski now, focus on the interest rates and fees charged by different lenders. We found some of the lowest rates at credit unions and online lenders. Shop around and donâ€™t forget to check with your own bank â€” many offer discounted rates to existing customers who use autopay. Also, donâ€™t forget that you may be able to make extra payments to wipe out the debt more quickly and potentially lower the amount of interest youâ€™ll have to pay in the long run.
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