Having a boat can really take your leisure time to the next level. But have you been wondering how to finance it?
We’re a nation of water lovers, and a boat can give you access to a wide range of activities, whether you’re fishing, waterskiing, or just looking for a new spot for a swim.
If you’ve been thinking about boat financing or just have questions, here are a few things to know.
Boat financing is the process of borrowing money for a boat.
This can mean either buying a new boat or borrowing money for work that needs to be done on an existing one.
Boat financing is usually secured against the boat you are buying, which can mean you may have access to lower interest rates than you might pay for an unsecured loan.
The short answer is yes – there are a number of lenders who offer loans to help people buy boats.
Usually, you’ll need to be at least 18, a citizen, have a permanent work visa, and have proof of regular income.
It will help if you have a good credit history, but if you have any questions about your ability to access boat finance, we’d be happy to help. Lenders will have other criteria you’ll need to meet, too.
Buying a boat is an exciting time, and boat financing doesn’t need to be a complicated process.
If you’re looking for financing to buy a new boat, you may be able to get preapproval for a set amount. That means when you’re looking at boats to buy, you have a good idea of your budget. Lenders generally set a limit based on what you can afford to repay based on the evidence of income provided in your application. You’ll need to also think about how any lending fits with your own circumstances and goals. You don’t have to borrow the maximum amount offered to you.
When you’re ready to go, you will need to provide some documentation for the lender to assess your application. That will commonly include things like proof of income, proof of your address, and your identification. The lender will also want information about the boat you’re buying. We can help you put together the information you need to support your application, which you’ll usually make online or via phone.
You will usually be able to choose a loan term, often ranging from one year to five years or more, over which you’ll repay your loan. If you have a good credit score, you may be offered lower interest rates.
When it comes to setting the loan term, you may need to think about how the repayments will fit with your budget. A longer loan term can mean lower repayments but a higher interest bill overall.
Once your loan is approved, you’ll be able to go ahead with the purchase of your boat and be a step closer to being on the water. When you’re buying a boat that is being used as security for the loan, the lender will pay the money directly to the seller. The lender will usually register an interest against the boat on the Personal Property Securities Register (PPSR). This keeps a record of the security interests held on the property and provides protection for lenders.
Before you go island-hopping in your new boat, it may be a good idea to make sure you have a good understanding of the terms and conditions of your loan. How long will you be paying the loan back for? Are there any annual fees that apply? It may also be worthwhile to check the flexibility around repayments. If you had some additional income available at some point, would you be able to pay your loan down more quickly – and would there be fees attached?
If you have a deposit to put down on the purchase of your boat, it will either reduce the amount of money you have to borrow for the transaction or increase the amount you can afford to pay for your boat. We can help you look at the deposit you have available and what that could mean for your boat finance decision.
Don’t forget insurance! Your boat is likely to be one of your most prized possessions. Insurance is there to protect you should something happen. It’s vital to protect your assets, and it will be a requirement for your boat finance.
When you’re considering what you can afford to spend on your boat, don’t forget to factor in the cost of keeping it going. You may have to pay for fuel, repairs, mooring fees, general maintenance and upkeep, as well as things like a yearly warrant of fitness on your trailer. That’s before you get to all the costs that can come with kitting your boat out with the best fishing equipment.
Wondering whether boat financing is right for you? Here are some things to weigh up.
Boat financing means that you may be able to get your boat sooner; instead of having to save up the full purchase price, you may be able to borrow money to get you there. There can be flexible repayment options, and if you make your repayments on time, it could improve your credit score.
Almost all loans charge interest, and that can mean your boat costs more over time than the initial purchase price. Also, boats don’t always increase in value. That could mean that you end up owing more than your boat is worth, particularly if you pay the loan off slowly. That makes it extra important that you’re comfortable and that your borrowing is affordable.
Can you finance a used boat?
Yes – but check the PPSR to make sure there is no money owing on it before you purchase. This will give details of any lenders who are holding the boat as security.
What credit score do you need to finance a boat?
Generally, if you have a solid credit score, you should be able to access finance without too much trouble, provided you meet lenders’ other criteria, including affordability. But if you have a lower credit score, you may still have options. We can help you to work through these.
Can I get preapproved for boat financing?
Yes! It can make shopping for a new boat much easier.
What happens if I miss a payment on my boat loan?
If you miss a payment, get in touch with your lender as quickly as possible to talk about what has happened. When you have a direct debit in place for your loan, lenders usually try the payment again a short time later. If it goes through, then it is often not a problem. But if your loan goes into default, you may face additional fees, such as late payment fees or a dishonour charge.
Is boat insurance required when financing a boat?
If your boat is being used as security for your loan, you’ll need insurance. The lender needs to have peace of mind that it is financially protected from theft or significant loss of value due to damage that is covered in the policy for the period it is holding it as security.
Can you finance a boat with bad credit?
Sometimes – we can help you look at your options. Lenders have different criteria and lending appetites, and we could find one that may be appropriate for you. Sometimes, there may be other ways to get a loan, such as having someone else act as a co-borrower.
How long can you finance a boat for?
Often, people will finance a boat for about seven years, although longer and shorter terms are available. Longer terms usually mean lower repayments but higher interest bills.
Can you pay off a boat loan early?
Usually – sometimes there can be a fee associated with an early repayment. This is something that should be made clear in your loan contract.
Lenders aren’t all the same, and we can help you understand the options available to you and which might be a suitable fit for your circumstances.
If your credit score needs a bit of rehab, this is a great time to do it. You can improve your credit score by paying your regular bills, such as your phone bill and broadband, on time every month.
Finding suitable boat financing is about more than just the interest rate you’re paying. Consider the other aspects of what each lender offers. Is there more flexibility with one? Will another allow you to pay off the loan faster? Weigh up what’s important to you.
Boat financing can be an excellent way to get your family on the water faster.
Once you’ve submitted an application for boat finance, you may be able to access a preapproval that allows you to go shopping with a clear budget in mind.
Any boat finance should be an appropriate fit for your individual circumstances and situation.
If you have questions about boat finance or want to look at the options available, get in touch with the financial advisers at better finance™. We’d love to help you get on your way to years of boating fun.