How to Sell a Boat with a Loan: 3 Common Scenarios

To sell a boat with a loan, you have a few options:

1. You can request a 10-day payoff letter from the bank that financed your boat, and then use the buyer’s funds to pay off the remaining balance.
2. If your bank allows it, you can also have the buyer first write a check directly to the bank to pay off the loan balance, then a check to you for the difference between the selling price and what was owed on the loan.
3. Lastly, you can pay off the remaining loan balance before selling the boat.

In this article, we cover each scenario in more detail to give you a better idea of how to sell a boat with a loan. If you need help selling a boat with a loan, you can sell your boat for free with Yachtlify (free for private sellers).

Scenario 1: You pay the remaining loan balance to the bank using the buyer’s money.

In many cases, you might not want or be able to pay off the remaining boat loan balance without funds from the buyer. In this scenario, you can request a 10-day payoff letter from your bank to find the remaining amount.

Once you have the payoff quote from the bank, you’ll know how much of the buyer’s funds will cover the loan balance. You can then use the buyer’s funds to pay off the loan and obtain the title.

It’s a good idea to be transparent with the buyer and let them know that the boat has a remaining loan balance. You can show them the 10-day payoff letter from your bank, which should give them peace of mind that they will be able to obtain the title once the funds have changed hands. The buyer can also accompany you to the bank or on a phone call to independently verify that the amount quoted to you in the 10-day payoff letter is accurate.

Scenario 2: The buyer pays the remaining loan balance to the bank.

In our second scenario, the buyer makes two payments. The first payment is made to the bank to pay off the remaining loan balance, and the second payment is made to you for the difference between the total selling price and the amount that was paid to the bank. You’ll want to request a 10-day payoff letter from the bank to get the exact amount of the remaining loan balance and provide this to the buyer when the sale is ready to take place.

Most banks will accept payments directly from buyers, but it’s important to confirm this with your bank before making arrangements with your buyer. Your bank can coordinate with you and the buyer on how to go about the transfer of the boat title once the sale has been finalized.

Scenario 3: You pay off the loan before selling the boat.

In our last scenario, you pay off the loan before selling the boat, which enables you to obtain the boat title. After acquiring the title from the bank, the buyer pays you the full purchase price for the boat, and then you transfer the title to the buyer.

You’ll also need to complete a boat bill of sale to file with your state agency, and you may need to update the agency in your state that manages boat registrations that the title has been transfered. Yachtlify can help manage the closing documentation and paperwork. Once this process has been completed, you have sold your boat.

Conclusion: Learning how to sell a boat with a loan does not need to be a difficult or confusing process.

Learning what steps are needed for understanding how to sell a boat with a loan only takes a few minutes of reading time. What you learned in this article is that there are 3 common scenarios of selling a boat with a loan, all of which are easily managed if you know how to go about them.

When it comes to all aspects of boating, knowledge is power, friends. And we applaud you for taking the time to educate yourself and learn more about the boat selling process. If you’re ready to sell your boat, you can list your boat for free with Yachtlify and get access to boat sale closing tools such as eSigning, state documentation, and analytics to see how your listing is doing over time.