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Financing your boat
Written by
Shaun McGowanFind out about all your options when it comes to taking out a boat loan in Australia to finance your next boat, jetski or other water craft purchase.
From fixed to variable interest rates and loan terms from 1-10 years. Boat loans in Australia.
You are able to get boat loans from online lenders specialising in boat finance or from a bank.
Is financing a boat a good idea?
A boat is a big purchase, whether you are buying a yacht, fishing boat, Jet Ski or other watercraft it can set you back tens of thousands of dollars.
A personal loan could be a great way to get on the water faster, and it will mean you will pay less interest than adding the cost to your existing home loan.
And if you don't already have a home loan, a personal loan is a great short term (think loan terms from 3-5 years) finance.
What does a secured boat loan in Australia look like?
A boat loan is essentially a secured personal loan product.
A secured boat loan requires you to have collateral, in this case the boat you are purchasing.
Collateral means that if you fail to repay your loan, the lender can take possession of the boat.
But with this security it means you get:
- Lower, fixed rates
- Flexible terms and repayment options
- No deposit required
- Simple and quick approvals
How do I compare boat loans?
Take the time to compare all your options and make sure you can comfortably afford the repayments over the lifetime of the loan.
Fees
Boat loan fees may include establishment fees, early termination fees, and other charges.
Make sure you know how much you’ll pay by checking the boat loan’s Product Disclosure Statement and comparison rate (a single rate that includes both interest and fees).
Interest rates
Interest rates are the biggest cost of almost any boat loan, so keep an eye out for a low rate if you can find one.
But you should also keep in mind, the loan with the lowest interest rate isn’t always the cheapest - you need to look at fees, loan terms and loan features to accurately compare your options.
Loan term
Specialist boat loan lenders usually offer longer terms, up to a maximum of 10 years.
Try to choose a loan term that balances repayment affordability with interest and fee savings.
Loan features and flexibility
Different boat loan features may offer flexibility, or make your loan easier to repay.
For example, some allow fee-free early repayments, which could make it easier to pay your boat loan off quickly and save on interest.
Others may allow you to borrow more than 100% of the boat’s value to buy boating equipment.
Is a new or used boat easier to get a loan for?
Because a boat loan is a secured personal loan, lenders will be looking at the value of the boat at the start and at the end of the loan term.
The best interest rates can be found on new boats, because they will still hold their value at the end of the loan term, which is typically 5 years.
This doesn't mean you can't get a loan for a older used boat, but you are likely to have a higher interest rate as you either won't be able to use the boat as security or it will be seen as a higher risk loan.
What lenders are looking for when they lend for a boat
Lenders love boring, or should we say, consistency!
They love it if you've had the same job forever and have been at the same house since you first left home.
Here's an example of how your employment history can influence your approval.
How lenders view credit history when you apply for a boat loan
Here is how your credit history can influence your ability to be approved.
Your credit score can also influence how much interest you pay. Grab you free credit check here.
Boat Loan Rate Comparison
| Boat loan amount | 5% interest | 7.5% interest | 10% interest |
|---|---|---|---|
$10,000 | $188.71 | $200.38 | $212.47 |
$20,000 | $377.42 | $400.76 | $424.94 |
$30,000 | $566.14 | $601.14 | $637.41 |
$40,000 | $754.85 | $801.52 | $849.88 |
$50,000 | $943.56 | $1,001.90 | $1,062.35 |
$60,000 | $1,132.27 | $1,202.28 | $1,274.82 |
$70,000 | $1,320.99 | $1,402.66 | $1,487.29 |
$80,000 | $1,509.70 | $1,603.04 | $1,699.76 |
$90,000 | $1,698.41 | $1,803.42 | $1,912.23 |
What is the average term of a boat loan?
Most boat loans are 5 year or 60 month terms.
Boat loans can come with longer terms, up to 10 years, but a shorter term loan, if you can afford the repayments, will mean you pay less interest overall.
Find the best deal on boat loans
FIND YOUR BOAT LOANWhat is the interest rate for a boat loan?
Boat loan interest rates start from around 4.65% p.a and can go up to 25% p.a.
But remember to look at the comparison rate for the true interest rate you will pay over your boat loan term.
Interest rates will depend on your profile as a borrower. Lenders look at a number of different factors to assess your risk and adjust interest rates accordingly.
The lower risk or better borrower profile you have the lower the interest rate.
Secured vs unsecured boat loans
A secured loan uses the boat you purchase as “security”.
In other words, if you default on your payments the lender has the power to repossess the vessel to recoup their losses.
This makes a lender more comfortable with lending you the money.
In return, you’ll usually get longer loan terms, lower interest rates and can borrow more money for your boat.
An unsecured loan means you don’t have to risk your boat as security, but the lender will be more cautious in lending the money.
This usually means higher interest rates and more fees, lower amounts you can borrow and a shorter loan term.
Of course, the main upside to this is that you can use the funds however you want, and borrow more than the price of the boat itself.
If you’re looking for a full package deal, this means you could also use your loan to buy the equipment you need for fishing or water sports.
What sort of boat can I afford to buy?
This will depend on your current obligations such as mortgage, rent, children, car and any other loans you have.
Lenders will want to ensure you can afford to repay any loan, so they will not lend you more than you can afford.
Use our boat loan calculator to help work out what affordable repayments will be and there for how much money you can afford to spend on a boat.
Are you eligible for a boat loan?
You can generally qualify and apply for a boat loan in Australia if you’re:
- 18 years of age or older; and
- An Australian citizen or permanent resident; and
- Employed, with a regular source of income that you can demonstrate
If you meet the basic eligibility for a boat loan, you will then need to compare lenders and assess their individual approval criteria.
What credit score will I need to get a boat loan?
Different lenders have different risk tolerances, but generally the higher your credit score the more likely you will be to be approved for a boat loan.
Credit scores in the good, very good and excellent range are normally what most lenders are looking for.
But there are lenders who specialise in bad credit boat loans, so you can still get a boat loan outside of the high credit scores.
Find out more about how your credit score affects your boat loan interest rate.
Best thing is to know what your credit score and credit history look like BEFORE applying for a boat loan. You can find out for free with Money Matchmaker® in less than a minute.
What documents will I need to supply to get a boat loan?
During the application process you may need to provide the following documents and information:
- Proof of identity — e.g. passport or driver licence
- Proof of income — e.g. payslips, bank statements
- Details of any current debts or other loans
If you’re using a boat as security on the loan, you may also need to provide details about the vessel including its age, where you bought it and the type of vessel it is.
Boat Loan Calculator
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Here are the most popular questions people are asking about boat loans
Do I need to use my boat as security to get a boat loan?
In most cases no. Many lenders offer unsecured boat loans but these may have higher interest rates and lower maximum loan limits than secured boat loans.
How much can I borrow?
Each lender has different credit criteria and lending policies and the amount they lend to you will depend on their assessment of your ability to afford repayments. Maximum loan limits for boat loans can be up to $200,000 or more.
How long can I borrow the money for?
Most lenders offer boat loans with terms from one to seven years, with a few specialist lenders offering 10-year terms. Keep in mind that a longer term may mean lower repayments, but it’ll also mean you pay more interest and fees over the life of the loan.
How much will I need to borrow?
Secured boat loans usually only allow you to borrow the purchase price of the boat, which means you may not be able to borrow extra funds to buy equipment.
Unsecured boat loans can generally be used to fund your boat purchase and anything else you might need - e.g. boating and safety equipment, paint, or vinyl decals. When applying, consider what extra costs you might need help covering:
- Boat maintenance: a rule of thumb is that maintenance costs up to 10% of the boat’s value per year.
- Safety equipment: you’ll need a personal flotation device for each passenger, an anchor, and other safety equipment. This can cost anything from $500 to $5,000.
- Boating equipment: you might want fishing gear, watersports equipment or other boating equipment to use with your boat. This can cost anywhere from $100 to $10,000+. The most important factor to consider when working out how much you need to borrow is your regular repayments.
You should always work out your regular and total repayment amount before borrowing and be absolutely certain that you can afford them easily.
Can I get a boat loan if I have bad credit?
Most lenders will not offer you a boat loan if you have bad credit so it may be better to apply for a bad credit loan instead.
The right boat loan can save you $1,000s
FIND YOUR BOAT LOAN
About the Author
Shaun
McGowan
Shaun McGowan
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
*Information about comparison rates Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $30,000 over 5 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.