Why compare boat loans with Money
30+ Australian lenders to choose from
Personalised rates
No credit score impact
$200 best match guarantee
Boat financing in Australia
Owning a boat can be a lifestyle game changer. Weekends and holidays on the water. Family time, or (whisper it) fishing with mates time.
Boats are a lot of things. But they are not cheap. Analysis by Money.com.au shows the average amount requested for a boat loan is $48,363. The average increases to $54,996 for brand new boats.
Interest and fees can quickly inflate the cost. But you can minimise this finance 'swell' by getting the cheapest boat loan you qualify for.
Let me show you how.
How does a boat loan work?
A boat loan is a type of personal loan you can use to buy a boat or other vessel. Most lenders in Australia will offer some kind of finance for boats.
There are even lenders who specialise in lending for different kinds of marine vessels.
But the type of boat finance you get matters. See, boat finance can be either secured or unsecured.
Getting secured finance for your boat will usually be cheaper. Here’s why:
Secured vs unsecured boat loans
Secured boat loan
- The boat you buy acts as ‘collateral’ to secure the loan
- This reduces the risk for lenders so they offer lower interest rates
- You can also borrow a higher amount
- And you can sometimes get a loan with a longer term
- If you can’t repay your loan, the lender can repossess the boat
Unsecured boat loan
- With an unsecured loan, your boat can’t be repossessed
- You’ll generally pay a higher interest rate
- You may not be able to borrow as much
- The lender may only lend the money for a relatively short term
- You’re not limited to using the funds to cover the cost of the boat itself
What can you get with a boat loan?
Here’s what you can typically get with a boat loan in Australia:
- Borrow up to $100,000 (some lenders will give higher amounts)
- Boat loan terms from 1-7 years
- Finance a new or used boat
- Weekly, fortnightly or monthly repayment options
- Fixed or variable interest rates available
- No deposit required
- Interest rate tailored to you
What’s the cheapest interest rate for a boat loan?
Boat loan interest rates can start from around 6-7% per year. But for bad credit borrowers, rates can be much higher.
See, your interest rate will depend on your profile as a borrower. Lenders look at factors like your credit score, income, employment situation and whether you own your own home.
The age of the boat could also have an impact on your interest rate.
The common factor is risk: lower risk means a lower interest rate. Securing a low interest can significantly reduce the cost of financing a boat.
How do I compare boat loans?
Finding the best boat loan deal means comparing lots of options. Money will do the heavy lifting for you (particularly to weed out the loans you definitely will not qualify for).
But here’s a summary of the key factors to look at when comparing your boat finance options:
Compare the interest rate
Interest will be the biggest cost of your boat loan. But ultimately the boat loan with the lowest advertised interest rate isn’t always the cheapest. Your actual interest rate could be a lot higher than the rate a lender advertises on its website. This is why getting personalised quotes from multiple lenders.
Compare fees
I always recommend looking at interest rates combined with fees. This is what comparison rates are for. Be wary of loans with a comparison rate that’s much higher than the interest rate. The difference will be fees. Boat loans can come with establishment fees, monthly or annual fees and early termination fees. Make sure you know how much you’ll pay by checking the boat loan documents before you sign up.
Look for a suitable loan term
This is usually up to seven years, but our data shows almost all borrowers choose five years as a term for their boat loan. If a longer term suits, some specialist boat finance providers may offer longer terms, up to 10 years. Just be aware that a longer term will mean you pay more in interest overall. Try to choose a shorter term if you can, bearing in mind that the regular repayments will be higher.
Shop loan features that offer flexibility
Some boat loans offer the flexibility to repay the loan early and save on interest. For example, some allow fee-free early repayment. Others may allow you to borrow more than 100% of the boat’s value so you can also buy boating equipment.
Are you eligible for a boat loan?
Looking at the basics, you can generally qualify for a boat loan in Australia if you’re:
- 18 years of age or older; and
- an Australian citizen or permanent resident; and
- employed, with a regular source of income that you can demonstrate.
Lenders will also take a close look at your credit history and finances.
How to apply for a boat loan
1
Compare as many lenders as possible.
2
Use a boat loan calculator to work out which loan is best based on overall cost.
3
Apply for loan pre-approval with your chosen lender.
4
Supply any supporting documents requested (pay slips, bank statements etc.).
5
Based on your pre-approved finance amount, it's time to go boat shopping!
6
Give the lender details about the vessel you want to buy.
7
After the final assessment, the lender will fund the loan (usually by transferring the funds directly to the boat seller).
What do lenders look for when you apply for a boat loan?
- Do you have a regular income?
- What's your employment history like?
- What are your regular expenses?
- Do you have other loans and debts (e.g. credit cards)
- Do you own other assets?
- Do you have dependents?
- How long have you been living at your current address? (The longer the better)
What documents will I need to supply to get a boat loan?
When applying for a boat loan, you may need to provide the following documents and information:
- Proof of identity e.g. passport or driver licence
- Proof of income e.g. payslips, bank statements
- Statement for any other loans or credit cards you have
There’s a different loan type designed for self-employed borrowers who can’t provide payslips
If you’re using a boat as security, you may also need to provide details about the vessel.
How lenders view credit history when you apply for a boat loan
Lenders are looking for evidence that you've been able to manage credit well in the past. Ideally they want an extensive and blemish-free credit history.
That usually means a better chance of approval and a lower interest rate. Doing a free credit score check can be a good way of seeing how healthy your credit history is before you apply.
Bad credit boat loans: can I get one?
This will depend on the details in your credit report and the lender’s risk appetite. But it is generally possible.
Some lenders even specialise in offering bad credit personal loans, including ones that can be used to finance a boat.
On the other hand, most banks and credit unions will not lend to borrowers with a bad credit score.
If you decide to apply for a bad credit boat loan, be prepared for the higher interest rates that are usually charged.
What sort of boat can I afford to buy?
To work this out, look at all your current expenses. This includes the likes of your mortgage, rent, childcare, car and any other credit repayments you have. Also consider likely future expenses.
And make sure you have a comfortable buffer for unexpected costs.
Whatever you have left over will give you an indication of how much you will be able to afford in boat finance repayments.
Use our boat loan calculator to work out what different loan amounts will mean for your regular repayments.
Can I use a boat loan for equipment and other expenses?
Boat maintenance
A rule of thumb is that maintenance costs up to 10% of the boat’s value per year.
Safety equipment
You’ll need a personal flotation device for each passenger, flares and other safety equipment.
Boating equipment
You might want fishing gear, watersports equipment or other boating equipment to use with your boat.
Other ongoing costs
Including fuel, insurance and mooring costs if you can’t keep the boat parked at your home.
The most important factor when working out how much you need to borrow is your regular repayments.
But don’t get too excited just because you can afford the regular repayment. Look at the total cost of the boat finance too, so you know exactly what you’re committing to.
Ready to compare boat loans?
Get your best offers from multiple lenders. There's no obligation and checking your rates won't impact your credit score.
