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Boat loans in Australia – Spend more time out on the water
Need a boat at your beck and call, so you can get out on the water more often? Whether it’s on a calm lake, a winding river, or blue ocean waves, charting your own course on Australian waters can be a fantastic experience. There’s also the solo fishing trips and family cruise adventures that make owning a boat well worth the purchase.
But, if your dream boat looks like it’s about to capsize your budget, read our boat loans guide. Here, we break down everything you need to know about getting the extra cash you need.
What’s a boat loan?
Boat loans are simply personal loans where the borrowed funds are working part-time or full-time to cover the purchase of your vessel. Since boats are notorious for being expensive, most Aussies find they need a financial leg up before they can put the wind in their sails.
Therefore, you can enlist the help of a personal loan to buy a new or used boat for either leisure or business purposes. Depending on the lender and your circumstances, you can also:
- Purchase through private or commercial sales
- Borrow up to $100,000 or more
- Repay the debt over long periods of up to 10 years
- Use the funds to cover other expenses (for unsecured loans)
How do boat loans work in Australia?
In keeping with typical personal loan features, boat loans can be divvied into the following types:
- Secured. A secured personal loan for a boat is one where the boat’s value fills in for your repayments if you default. In other words, the lender will sell the vessel to recover any losses should you fail to repay. Since they can always convert the boat into cash, the lender doesn’t consider the arrangement too risky. As a result, you’re likely to get a competitive rate when you opt for a secured loan. However, because secured loan amounts tie in with the boat’s value, you might not be able to borrow extra to cover additional expenses.
- Unsecured. If you settle for an unsecured personal loan, you won’t have to use the vessel as a guarantee. That means there’s no risk of repossession on your side. However, without this token of assurance, the lender’s risk is a bit greater. They’re more likely to charge corresponding higher rates in case you fail to follow through on your repayments. Compared to secured loans, unsecured loans might also be capped low for loan amounts and repayment periods.
- Variable-rate. A variable rate changes every once in a while, which leaves you with an inconsistent budget. The good news is, if the rate drops, your repayments also follow suit. But, keep in mind your potential savings can quickly vanish if the rate starts going up.
- Fixed-rate. A fixed rate generally stays untouched even when the Reserve Bank cash rate fluctuates. The upside is your budget won’t hear of any sudden increases or adjustments. But, if the cash rate drops, the downside happens when you miss out on savings.
What type of costs are associated with buying a boat?
As mentioned earlier, owning a boat doesn’t always come cheap. Before touching base with any lender, it’s best to stockpile the major costs involved, so you know what you’re getting into:
- Buying the boat. The purchase can easily run into hundreds of thousands of dollars, depending on your selection. If you’re looking for something less pricey, some small vessels cost as little as $20,000.
- Registration and license fees. This varies with location, but you might need to cover compliance costs if you plan on mooring or berthing on Australian waters.
- Buying basic equipment. Before you go adrift, make sure you haven’t skimped out on essential safety gear such as life jackets, GPS, and rope. If you’re invested in your hobby, you might also need some non-essential accessories and electronics.
- Fuel. Your operating costs should factor in how much fuel you’ll use. Fuel consumption typically depends on horsepower, the vessel’s size, and how long the motor runs during boating activities.
- Upkeep and repair. You can lower the cost of maintenance by keeping your boat covered and giving it regular freshwater washes. You’ll still have to pay up for services like oil changes and antifouling. Expect to pay more for pre-owned boats, which require a bit more TLC.
- Storage. Again, you can cut costs if you have a driveway, garage, or backyard space available. For larger vessels, you might have no choice but to pay for marina berths and mooring fees.
- Boat insurance. Ideally, you’ll need full coverage for offshore and onshore protection of your vessel. Consider all options, including specialist marine insurance.
What common types of boats can I finance?
Aussies are well known for their love of boating. It’s no surprise you’ll be one of thousands enjoying this fun recreational activity. You can expect to see all sorts of boats on Australian waters, including:
- Bass boats. Built for fishing with anglers, livewells, bow-mounted electric motors, and sufficient horsepower.
- Bowriders. Most suited for lake cruises, skiing, and wakeboarding because of their spacious open-bow areas.
- Cruisers. The vessel comes with full-living quarters and basic amenities such as a toilet, shower, and kitchen.
- Cuddy cabins. These have cabins at the bow for afternoon naps and overnight trips.
- Catamarans. Multi-hull, power and sailing boats with all basic amenities for prolonged cruising and fishing trips.
- Dinghies. Small boats that can fit on larger vessels. Great for fishing and shallow water activities.
- Gameboat. Designed for hunting big fish and equipped with cooking galleys and sleeping berths.
- Houseboats. Floating ‘homes’ with all the creature comforts of modern apartments.
- Ski and waterboard boards. Designed for watersports and tow sports involving a variety of skiing tricks, jumps, and other open-water feats.
- Sailboats. These have sails that harness wind power to move the boat.
- Runabouts. Open boats with limited space, a steering wheel, and a small windscreen. They’re most suitable for fishing and tow sports.
- Trawlers. They have displacement hulls for efficient cruising and basic amenities for those long water trips with family and friends.
- Walkarounds. Provide full walk-in access to any part of the boat, including the central cabin and the stowaway seating area.
- Centre consoles. Open boats designed for deep water fishing.
- Motor yachts. Powerful boats for offshore cruising and long stays that require sleeping berths, cooking galleys, and proper air conditioning and plumbing.
- Canoes and kayaks. Affordable options that make for easy storage and transport.
How do I carry out a boat loan comparison?
A personal loan comparison is handy when you want to avoid paying a boatload of cash to cover finance costs. You’ll also want to ensure the loan comes with as many flexible features as possible. Look out for the following:
- Interest rate and fees. A low rate needs to be combined with low fees for maximum savings. A look at the comparison rate usually tells you the real cost of a lender’s offer. That’s because the comparison rate includes the interest rate plus other fees and charges such as establishment fees, ongoing monthly service fees, and late payment fees.
- Loan terms and amounts. Check to make sure the lender offers you enough funds to buy the boat and sufficient time to pay off the debt.
- Monthly repayments. BestFind’s boat loan calculator lets you estimate your repayment amount, so you can figure out which amounts and terms work for you. Be mindful of super long terms that increase borrowing costs.
- Other convenient features. Ideally, you’ll want an option that makes for smooth sailing. For instance, some lenders allow you to make extra and free repayments, which you can then withdraw any time you need them (redraw facility). Others offer flexible repayment plans where you can make loan repayments per week, fortnight, or month according to your personal timetable. Still, others offer excellent customer service and specialised marine finance. Such options typically have more streamlined features than those for standard secured personal loans.
Pros of boat loans
- It’s a quick way to become a boat owner since you don’t have to build up your savings
- You can negotiate a competitive rate when you choose a secured loan
- Flexible repayment periods that allow you to repay the debt at an affordable pace
Cons of boat loans
- You’ll typically need to borrow large amounts, which can lead you further into debt
- They may work similarly to secured car loans since you risk losing the vessel when you default
Boat loans FAQ
How do I apply?
Start by comparing loans using BestFind’s product table and boat finance calculator. Once you’ve found the perfect option, click the right “Go to Site” button. During your online personal loan application on the lender’s website, you’ll need to supply the following:
- Copies of your ID, payslips, and bank statements
- Basic contact information and details about your employment and finances
What should I avoid when searching for a boat loan?
Give unlicensed finance providers and unaffordable loan amounts a wide berth. Also, don’t rush to sign up for a loan without first lining up your options.
Can I get a boat loan with bad credit?
A low credit score might make getting approved tricky, but if you’re successful, you’ll also meet high interest charges. Most bad credit boat loans are secured, which means you lose the vessel if you default.
Where can I find jet ski loans?
Read our guide to find out about personal loans for jet skis.
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