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The Why and How of Boat Finance – How to Finance a Boat

Dec 12, 2023 | Insights

Getting out on the water is one of the luxuries of living on our island continent, but affording a leisure craft doesn’t need to be. Boat finance may be more accessible than you think!

If you’re looking for information on how to finance a boat, let us cast our knowledge on boat finance and how you can launch your own loan application for a Boat Loan.


How does a Boat Loan work? Boat financing explained

Boats look nothing like cars, but finance for a boat works in pretty much the same way as a car loan when it comes to borrowing money to buy one.

Step 1. Ship around (uh, we meant shop around)

If you have a boat licence and want to get out on the water with your marine mate, or if you’ve previously owned a boat, you’ll probably have a good idea of what type of vessel you’re looking for. The first step is to determine the price point of your desired boat after which you can consider your affordability and the loan amount you’d most likely be applying for.

Step 2. Budget for the overall cost of boat ownership

Similar to car ownership, the total cost of owning a boat is more than simply the purchase price. Depending on the size of your vessel, you’ll need either a boat trailer or a place to moor it. Whether you’re looking for a new or used boat, trailers are frequently sold as a package (especially if the boat is from a private seller), but in some states, such as Queensland, registering the boat and the trailer are two separate registrations and thus two separate fees.

Of course, then you’ll need to buy boating equipment, fuel, safety gear, boat insurance, and if you’re financing through a loan, you’ll have to factor in the loan repayments to your budget.


Step 3. Look at your boat finance options

Although it might be tempting to compare Boat Loans right away, you should first be clear about what kind of financing you are after. You might not find what you are looking for by just searching for ‘low rate boat finance’. Similar to personal loans, you should weigh your options and choose the best Boat Loan option.

Your options when it comes to boat finance

As we mentioned before, the marine finance options that you have are similar to that of a personal loan. The options that are available will vary depending on the credit provider. 

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Here are a couple of options to consider:


Unsecured Boat Loans vs Secured Boat Loans

You may be familiar with the terms, ‘unsecured loans’ and ‘secured loans’, particularly if you’ve looked into car loans. They’re important to think about before you go for any type of personal loan, including a loan for a boat! That’s because a secured Boat Loan will use the boat as collateral in the event you default on the loan and are unable to repay it, which could help get your boat finance approved or even score you a lower interest rate. Lower monthly repayments mean more money in your pocket to spend on weekends at the water! Also, keep in mind whether you’d prefer a fixed interest rate or variable loan, as this could impact the regular minimum repayment amount.

Balloon payments

Balloon payments are one way to make financing a boat more affordable in the beginning. A balloon payment is an agreed-upon amount that you’ll pay back in one lump sum at the end of the loan period. This means that you could reduce your repayment amount, allowing you to save money over the life of your loan, including to be able to cover the balloon payment at the end.

Loan terms & minimum loan amounts

Your loan term for boat finance may be restricted by some lenders, for example, if you really wanted a seven-year loan term, some lenders may only offer their loans for a maximum period of five years. Similarly, the minimum loan amount may be set at say, $10,000, whereas your budget only permits purchasing a $7,000 boat.

To help with budgeting

You might like to use a Loan Repayment Calculator. While we don’t have a specific Boat Loan calculator, our car loan calculator works the same way.

Car Loan Calculator

Ability to pay off your loan early

Paying interest on top of ongoing fees over multiple years adds up, which is why it’s sometimes a good idea to make extra payments where you can to help reduce the interest charges and get your loan paid off faster. Not all lenders who offer Boat Loans can provide flexible repayments, the ability to make extra repayments or even pay off your loan early. Some do, but they charge an early termination or early repayment fee as a result!

The great thing about Finance One is that there are no early termination fees or early repayments fees on any of our consumer loans, meaning you can make extra payments or payout your loan early with no extra fees!

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How your credit score affects your loan application

Finance specialists who offer Boat Loans often have strict lending criteria for their applications. This frequently means that those with a poor credit history are denied or mislead when it comes time to apply the interest rate, resulting in a much higher estimated monthly repayment than they anticipated. If you’ve weathered some rough seas when it comes to your personal finances in the past and it’s left its mark on your credit file, then relying solely on the comparison rate (which shows the true cost of loans) could be deceptive. Often, the advertised competitive interest rates only apply to those with a good credit history.

It’s also important to remember that the loan with the lowest advertised interest rate won’t always be the cheapest or best Boat Loan for your personal circumstances.


Where to go for a Boat Loan with bad credit

Your next boat, jet ski or even dream boat doesn’t have to pass you like a ship in the night, nor do you necessarily require good credit history to get a secured loan for it.

At Finance One, we take a tailored approach to lending and will assess your individual financial situation.

If you’re looking to apply for a Boat Loan for a recreational vessel, why not contact our team to find out the Finance One difference? We can help ensure your boat purchase is smooth sailing! Apply Now


Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

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