If you’re looking to get a boat loan it helps to understand how the application process works and the options available to you. Whether you’re looking to purchase a new or used boat, there are numerous options available.
A boat is usually a relatively large expense for most people, which is why many Australians choose to take out a boat loan when buying a boat. This article will cover all the important considerations when applying for boat finance.
Where To Apply For A Boat Loan
When applying for a boat loan in Australia you have three main options: through a broker, directly through a bank or lender or through a marine dealership.
Boat Finance Brokers
A boat finance broker works for you to find and organise a boat loan on your behalf. Brokers typically have access to multiple lenders and will search this panel of lenders to find the best available loan based on your personal circumstances.
The advantage of applying through a broker is they can save you a lot of time by comparing options for you. They will guide you through the application process making it a lot easier for you.
Bank Or Lender
You can also apply directly through your bank or one of the major banks. There are also other lenders outside the major banks you can apply through. Generally, each bank and lender will have its own conditions and restrictions on boat financing. Some may only offer boat loans for new boats and won’t be able to help you if you’re planning to purchase a used boat.
If you’re purchasing a boat through a dealership, it may be convenient to organise your boat loan through that dealership. Keep in mind that dealerships usually only have access to a limited number of lenders and finance products. This means you could potentially miss out on a better deal available elsewhere.
Work Out What You Can Afford To Borrow
When you take out a boat loan, you will usually make weekly, fortnightly or monthly repayments. This includes the principal amount borrowed and interest.
Before applying, it’s good to have an idea of what your repayments would be. This will depend on the amount borrowed, the interest rate and the length of the loan.
You can get an estimate of your weekly, fortnightly or monthly payments using an online boat loan calculator.
Types Of Loans For Boat Buyers
A secured loan is the most common type of loan used by boat buyers. With a secured loan, the asset being financed is used as security by the lender. This protects the lender in case you fail to make your repayments. Because the lender has this protection, a secured loan will usually have a lower interest rate than an unsecured loan.
Unsecured personal loans
With an unsecured personal loan, the amount borrowed is not secured against the asset. Unsecured boat loans may be an option for buyers looking to purchase an older, second-hand boat which lenders may not accept for a secured loan. An unsecured loan will typically carry a higher interest rate than a secured boat loan.
Getting A Pre-Approval
Just like a car loan or home loan, you can apply for a pre-approval on boat finance. This is where the lender agrees conditionally to lend you a specified amount and at a specified rate when you find the boat you wish to purchase.
The major benefit of having a pre-approval is knowing how much you can spend on your boat when you start shopping. You can set a budget based on the pre-approved loan amount, as well as any cash you wish to contribute to the purchase upfront.
How To Get Started
If you’re ready to begin a boat loan application, you can get started by submitting an enquiry through a reputable broker like Credit One. If applying directly through a bank, you will find application forms on their websites.
After submitting an enquiry, you will need to provide some basic documentation and information about yourself. This often includes identification, payslips and bank statements, or if you are self-employed your tax returns and financial statements. The broker will be able to let you know if you qualify for a loan and if you do, they will guide you through the rest of the process.