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Loan Amount: $30,000
Establishment Fee: --
Total Interest Paid: --
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To use the boat loan calculator, you’ll need to enter some details about your loan plus any trade in or deposit that will be part of the boat finance.
Here’s a simple explanation of the details used in the calculation:
This is the value of the boat you wish to buy. If the boat loan is secured by the watercraft you’re purchasing, you generally won’t be able to borrow any more than the boat’s value. If you’re buying a boat with an unsecured personal loan, you may be able to borrow a higher amount (e.g. to cover other boat expenses).
If you're not sure about the boat's purchase price yet, to give you an idea, the average boat loan amount requested in 2023 is $48,363. For a jet ski, the average loan amount is $25,498, according to Money.com.au data.
Will you be contributing a deposit towards the purchase price of the boat? For example, this could be the amount you are offered when trading in your current boat. The final loan amount used in the calculation is arrived at by subtracting the deposit or trade-in amount from the purchase price.
This is the fixed interest rate the lender will apply to your boat loan, and is used to calculate both the total amount of interest you will pay over the loan period and your scheduled repayment amount.
This is simply the length of your boat finance agreement, or how long you’ll be paying the loan off for. For the boat loan calculator, a longer term equals lower repayments and higher interest costs overall. You get the opposite with a shorter term. Five years is by far the most common loan term, Money.com.au data shows.
Upfront fees on a boat loan can be quite high on some loans so it’s important to factor them into the calculation for overall cost. It also demonstrates the value of comparing boat finance options to find the lowest fees you can.
Once you have filled in your boat loan details:
The boat loan calculator uses a clever formula to match how the repayments on boat finance are set by lenders.
The calculation factors in 'amortisation' which is the technical way of describing how your boat loan balance will decrease over time as you pay it off.
At the start of your boat finance term, your balance is at its highest. So too is the amount of interest you’re charged. As a result, a big portion of your repayments at the start are going towards paying the interest.
But as the loan balance goes down over time, so do the interest charges. Which means more of your repayments can go towards paying off the actual loan amount (known as the principal). In this way, the loan balance drops faster over time.
Even though your repayments stay the same (because boat loans are offered for a fixed interest rate over a fixed term).
Boat loan amount | Repayments (7% interest) | Repayments (9% interest) | Repayments (12% interest) |
---|---|---|---|
$10,000 | $45.70 | $47.90 | $51.33 |
$20,000 | $91.39 | $95.81 | $102.67 |
$30,000 | $137.09 | $143.71 | $154.00 |
$40,000 | $182.78 | $191.62 | $205.33 |
$50,000 | $228.48 | $239.52 | $256.67 |
$60,000 | $274.17 | $287.42 | $308.00 |
The interest rate on your boat finance will be set by the lender.
In a similar way to other kinds of personal loans, the rate you get will depend on your financial situation (your credit score is important here) and whether the boat loan is secured or unsecured.
The interest rate on your boat loan will be expressed as an annual percentage rate (APR). E.g 10% p.a. (per annum).
Once you’ve got your boat loan, the interest is calculated daily and charged monthly.
In other words, the lender calculates a daily interest charge by multiplying the current loan balance by the annual interest rate, and then dividing that amount by 365.
The lender then totals up the daily interest charges for the month and adds that amount to your boat loan balance to be repaid along with the loan principal.
The average boat loan in Australia is around $30,000. Most lenders will approve a secured boat loan application for anywhere between $5,000 and $100,000.
But the amount you are able to borrow will depend on your personal borrowing profile as assessed by the lender.
This is calculated based on your income, other expenses and your credit rating.
Secured boat loans will generally use fixed interest rates that range from around 7.00% up to 29.90% p.a. The interest rate you get will depend on your risk profile.
Your credit history is one of the main factors lenders consider when calculating your risk profile. But they may also factor in your income, expenses, other debts and what other assets you own (e.g. your home).
Interest rates are generally higher on bad credit personal loans.
The same is true of other borrowers seen to represent a higher risk, like self-employed people borrowing through what’s called a low doc personal loan.
There are a number of ways to reduce the amount of interest you pay on your boat loan.
These are:
Look for the lowest interest rate you’re eligible for
Contribute a deposit towards the boat purchase so you’re borrowing less
Choose a shorter loan term. This will mean higher regular repayments but less interest to pay in total.
Refinance the loan. Keep an eye out for better boat loan deals that crop up even after you have taken out finance initially as you may be able to refinance to a lower rate.
Make extra repayment if you can afford to and the lender allows it (watch out for any penalty fees that apply)
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