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Are you dreaming of sunny weekends on the water, family fishing trips or maybe even the odd romantic cruise?
If you’re planning to buy a boat, you may be wondering how to access the finance you need.
Here’s our guide to everything you need to know about boat loans in New Zealand.
What is boat finance?
Boat finance is a type of secured loan that allows you to buy a boat, yacht or jet ski. The loan is secured against the asset that you’re buying. This gives the lender additional security that if you were to stop meeting your repayment obligations, it could sell the boat and recover what it is owed.
Instead of having to pay for a boat upfront, boat finance can help you stretch the cost over time, which can make it more affordable and smooth the impact on your cashflow.
How boat finance works
A boat loan allows you to buy a marine vessel or boating equipment you might need.
The lender will have an interest registered over the assets as security until the loan is paid off.
You’ll repay the original loan amount plus interest. There are also likely to be fees payable.
Eligibility criteria for boat loans
There are a few things to keep in mind if you’re wondering whether you might qualify for a boat loan.
Age and residency status
You need to be at least 18 and a resident or a citizen of New Zealand to be eligible for boat finance.
You’ll need to think about your financial situation and goals before you apply for your loan – what is a feasible amount to borrow? What kind of repayments will be manageable for you without getting in the way of your future plans?
Income and employment status
Lenders will need to be confident that you can afford to repay any loan that you take out.
This usually means they need proof of your income to ensure you can make regular loan repayments. You will need to provide information such as your bank statements.
Lenders won’t approve a loan that is more than you can afford, but you should also ensure that you check at each stage of the process that the loan is an appropriate fit for your needs and objectives.
Your credit history
Lenders will check your credit score when you apply to determine your creditworthiness.
It can help your application a lot if you have good credit. If you haven’t done so recently, you might like to request a copy of your credit report from a credit bureau and ensure that there is nothing incorrect on the report or no defaults or issues that you were not aware of.
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Boat loan options
There are a number of factors to consider when it comes to how your boat loan will function.
Fixed interest rates
It’s likely that you will be offered an interest rate that will stay the same for the term of your loan.
This can be a benefit because it means you can plan your budget and know what you will have to pay each time a repayment is due. You won’t have to worry about unexpected changes.
You also have some protection against future interest rate increases.
Flexible loan terms
Before you take out your loan, you might like to check what terms you are being offered.
If you are considering a loan with flexible loan terms, it may mean you can choose a longer or shorter term to fit what works best for you and your budget and tailor your loan to your own financial situation and goals.
Flexible loan terms may help you avoid paying as much interest over the life of the loan if you have the ability to shorten the term and pay it off more quickly.
Applying for boat finance
If you’re ready to get going, there are a few steps to take.
Determine your budget
First up, decide what you can afford to pay – both for your boat and in repayments for your loan.
You’ll need to consider what deposit you have to put down for the boat, the total cost you are paying for it, and what other costs might come with ownership.
Loan calculators can give you an idea of what your loan repayments might be. It could help draw up a household budget and see how those fit in.
Consider options
Banks, non-bank lenders, and specialist marine finance providers are among the lenders in New Zealand that offer boat loans. At better finance™, we have access to a range of lenders and lending options and can determine what might work for you.
Our online process is straightforward, and a decision on your loan application could be provided within a day or two.
Consider pre-approval for boat finance
If you can, it may be worth applying for preapproval for your loan.
Getting preapproval not only shows sellers that you’re serious about buying – and potentially in a good position to negotiate the price – but it gives you a clear picture of what your budget is and what sort of price range you can consider options within.
Additional costs to consider
As with many things, it’s not just the initial purchase price of your boat that you need to think about.
There are a few other costs that can come with boat ownership.
Insurance and maintenance
You’ll need to insure your boat – not only is this just generally a good idea, but it is a requirement from lenders if you have finance on it.
The type of boat you have, how much it is worth, and your experience with boat ownership can all affect how much your insurance costs.
You’ll also need to prepare for regular maintenance to keep your boat in good condition.
Just in the same way you look after your car to keep it roadworthy, you’ll need to make sure your boat is cared for.
It’s important to consider your current financial situation, your future goals, and your ability to cope with these expenses when you apply for finance.
Mooring fees
Depending on the size of your boat, you may also need to pay for mooring fees.
These can vary depending on where you are and the type of mooring you have.
This is another important budget item to keep in mind when you’re thinking about what you can afford.
Special considerations
Financing a used boat
You might be wondering whether you can take out a loan to buy a used boat. This is often possible, although it can be a little more complex than buying a new boat.
You’ll need to consider the age and condition of the boat when you apply for finance.
Boat finance with bad credit
Good credit helps when it comes to applying for a loan – but what if you have bad credit?
It maystill be possible to be approved if you have bad credit and there are several lenders who may cater for you.
You may need to provide some additional information with your application about your credit history and income. We can help you negotiate this process.
Conclusion
If you’re ready to get out to sea or on the lake, boat finance can be a big help.
Whatever your plans, if you need a boat loan, the team of financial advisers at better finance™ is here to help. Give us a call to discuss your options.