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What can I use a boat loan for?
Like their name suggests, boat loans can be products that are particularly designed to fund boat purchases. In these instances, you may wish to fund a marine investment even though you don’t have all the cash on hand at the moment.
They can also refer to secured loans in which a boat is used as collateral, or an unsecured personal loan. If you’re in the market for a loan with a great interest rate, being able to secure your loan with a boat may open up your options significantly.
What do I need to know about boat loan features?
If you’re thinking about doing a market comparison for boat loans, you’ll find that they can be secured or unsecured. Secured boat loans involve using your boat or another personal asset as collateral or a guarantee that you’ll repay on time. Because of this you may find that apart from a lower interest rate, you’re also likely to be offered larger loan amounts or longer loan terms for repayment. This is because boats tend to be on the expensive side, meaning your personal asset guarantee is a larger sum and you are seen as less of a risk by the lender.
When you’re looking into an unsecured loan on the other hand, you may find that interest rates will typically be higher. This is a because the lender doesn’t have a guarantee that you’ll repay on time. Shorter repayment periods and smaller loan amounts won’t be uncommon either.
If you’re comparing available deals, you’ll also find that boat loans can come with variable or fixed interest rates. You’ll also want to look at additional repayment flexibility when you compare, because these are great when you want to repay your boat loan early without fees. In fact, every time you’re doing a loan comparison, it’s always a smart option to read all the fine print on charges and penalties before you sign anything!
Weighing up boat loans- pros and cons
Boat loans can be a handy way to obtain the funds needed for your boat sooner rather than later, without waiting to save up your money over time. With costlier boats especially, this might take a while!
The cons of a variable interest rate boat loan are the same as with all variable interest rate loans. Your monthly repayment size may fluctuate depending on how the market interest rates are, so you may find one month that your interest fee is higher than the last.
Lastly, it’s important to remember that any secured loan gives your lender the right to seize and sell your boat or personal asset should you default on payments. Secured boat loans are no exception to this rule.
What kinds of boats can I finance with a boat loan?
One might say the list of boats you can finance with a boat loan is as long as the ocean is deep! Investments you can use your marine finance to purchase include, but aren’t limited to:
- Bass boats
- Cabin cruisers
- Cuddy cabins
- Centre consoles
- Motor yachts
- Ski and wakeboard boats
Did you know you can compare 100’s of boat loans? Browse, filter and compare on our main personal loans comparison page.
What’s the difference between secured and unsecured loans?
Secured boat loans use the boat as collateral. If you are unable to repay the loan, the lender can then repossess and sell the boat to recoup some or all of the losses from the unpaid loan.
Unsecured boat loans are loans where you do not put up an asset as collateral. Unsecured loans are higher risk for the lenders, because if you default on the loan, there’s a reduced possibly to recoup the loan. These types of loans come with a higher interest rate, reflecting the greater risk.
What’s the deal with fixed and variable interest rates?
Sometimes, nothing. Though other times, it impacts:
- the maximum term of the loan;
- the maximum amount you can borrow;
- the interest rate; and
- whether the loan includes a redraw facility or allows you to repay early without incurring a penalty fee.
Fixed interest rates will not change over the life of the boat loan, which makes it easier to budget. By agreeing to a fixed interest rate for the life of the loan, there is no risk that you will miss payments if the interest rate increased. On the flipside, if there is an interest rate cut in the future, you will miss out on any possible savings. Some lenders may not include a redraw facility on fixed rate loans or will include an early repayment fee.
Variable interest rates may rise and fall throughout the life of your loan. This could potentially mean that you will save money in the future if interest rates fall, but if interest rates rise in the future, it could become difficult to continue to meet the monthly premiums. Variable interest rate boat loans tend to be more flexible for payment terms than fixed rate loans, which gives you more options to manage your finances and tailor your payments to work for you.
Do you have a boat loans repayment calculator?
Yes. Use the filter to adjust your loan amount and term duration to calculate your approximate monthly repayments. When you apply the filter, you will see a breakdown of your approximate monthly repayments as well as the total amount of interest and fees paid.
How to apply for a boat loan ?
If you’d like to apply online for a boat loan , just scroll up and click on “GO TO SITE” to be taken to a secure online application form. Before you apply, be sure to learn about the lender’s fees and eligibility criteria. The ease of application varies between lenders, so give yourself around 30 minutes to complete the application.
What are the boat loan eligibility criteria?
Before you apply for a boat loan, be sure to understand and meet the lender’s lending criteria. Below is a high-level overview of eligibility criterias that may impact your chances of being approved for a personal loan:
Minimum requirements for a boat loan
- Minimum age: Range is between 18-21 years of age
- Minimum income: Range is between $15,000 and $50,000
- Employment status: This varies between lenders, some lender will lend to those on a pension or on benefits, whilst others require that you’re regularly employed
- Residency: (Most lenders require you to be an Australian citizen, permanent resident or have a valid visa). A handful of lender allow 457 visa holders to apply
- Credit score: Some lenders vary their interest rates based on whether you have an excellent, good, average or below average credit score
- Affordability: Lenders will look at your current income minus your outgoing expenses to determine if you have enough left over to repay the amount you wish to borrow
How much can you borrow?
This will depend greatly on your eligibility criteria. We strongly recommend reading this blog on how much you can borrow and whether or not you will be approved.
Information you’ll need to provide
Whether at the branch or online, make sure to have the following nearby:
- Proof of income: A verifiable and steady employment. You may be required to provide copies of your most recent pay slips and employer’s contact information
- A list of your assets, expenses and liabilities
- Identification Documents: Driver’s licence (if you have one) or other forms of ID
- Recent bank statements, going up to 3 months back
Are you self-employed?
If you’re self-employed, you will also need to provide:
- Financial statements for the last year (no older than 18 months)
- Your most recent personal/business tax return (no older than 18 months)
Other things to keeping mind when applying for a boat loan
- It’s advantageous to have a good credit history. For example, you have no recent defaults and no frequent requests for credit.
- Credit cards with large credit limits are seen as liabilities, even if there’s nothing owing. If you have existing liabilities, be certain you can pay them off in addition to your boat loan.
There are many additional factors to consider when completing your application, but the above are the most important. If you feel like you may not meet the lender’s eligibility criteria, it may be best to save!
Additional product information
Minimum and maximum boat loan amounts and terms
Minimum and maximum loan terms and amounts vary between lenders. We strongly recommend you use the filter to determine the most appropriate lender for you. Most common minimum loan amounts start from $5,000 with maximum terms up to $100,000. However, most lenders will not provide unsecured boat loans beyond $50,000.
Terms range from 6 months to 10 years, with most common terms ranging between 2 and 5 years. You should however check the minimum and maximum term ranges for your preferred lender before applying.
It’s also worth checking to see if there are early repayment fees.
Most lenders allow weekly, fortnightly or monthly repayment. However, some peer-to-peer lenders only allow monthly repayments.
Extra repayment or early penalties
All lenders allow you to repay off your boat loan early, however – you should check each product for any potential early repayment fees.
Not all lenders allow you to redraw on your repayments. Some lenders only allow you to redraw on additional repayments you’ve made, whilst other do not allow redraw at all. Often (but not always) you will find fixed boat loans will not allow redraw, but offer a lower rate, whilst variable rate boat loans may allow you to redraw additional repayments you have made, but may also charge a higher interest rate.