With summer now only a month away, many existing boatowners and those looking to get into boating will be making plans for buying a boat. Whether the purchase is a jet ski, fishing trailer boat, recreational yacht or luxury cruiser, for most buyers the purchase will require finance. So, the big question can be, when you buy a boat, should buying the vessel or arranging the marine finance come first? What should be the buyer’s key priority?
The answer can be either. Most buyers will typically find the boat and then address their finance. Others will apply for pre-approved finance so they can better set their purchasing budget in line with their loan repayments.
There can be pros and cons, and individual preferences, for both approaches. To assist those undecided buyers, we provide several points for consideration to decide their course of action and streamline their boat buying experience.
What Does and Doesn’t Impact the Boat Loan?
To decide on boat first or loan first, it can be helpful to know what features of the vessel or other factors may impact your loan. As far as the type of boat, all watercraft - large and small, power and sail, can be financed with the same types of lending products. The options are a secured loan or an unsecured form of credit.
Secured boat loans are suitable where the boat can be used as collateral. This applies to new watercraft and to many good quality used boats. The lender accepts the vessel as security and registers their interest with the PPSR. Unsecured credit may be required where the vessel is not suitable as collateral or when buying a share in a vessel, such as with friends and family.
The price of the vessel can have an impact on the finance in terms of the amount required for the loan. While adhering to Consumer Credit Laws as regulated through ASIC, lenders assess the borrowing limit for each applicant. Making a downpayment or having a trade-in may be used to reduce the price of the vessel and/or amount required for the loan, within the approved borrowing limit.
The age and condition of the vessel may determine the type of loan required, the amount approved to borrow, and the interest rate. Where not considered suitable collateral, buyers can consider a Personal Unsecured Loan. This type of loan attracts a higher interest rate than a secured product and as such increases the amount of the loan. But prices are usually lower for second-hand vessels.
Factors relating to individual loan applicants including credit history and score, income and financials, will all affect any loan offer made.
Buying a Boat – Choosing the Right Boat
For first timers there will be plenty of decisions to be made, and information to be sourced, on how to select a boat to buy. Keep in mind the considerations noted above and add the following to your decision-making process:
- Power or sail – this can come down to preferred boating activities.
- Size – large or small, this may be decided by the activities, storage or moorage, and price.
- Trailer or moored – consider the costs and practicalities of each option.
- Activities – the watercraft needs to suit the activities planned - sailing, fishing, family fun, jet skiing, water skiing, cruising etc.
- Day or overnighter – if you plan to overnight on the vessel, select a model with sleeping facilities.
- Capacity – the number people planned to be aboard can determine the size. If families are included, look at safety issues, coverage from the weather, and bathroom facilities for convenience.
- Boating proficiency – consider your skill to handle a vessel especially in relation to size and power.
- New or used – there are plenty of good quality second-hand vessels on the market. Be mindful of the loan differences and take due diligence of buying online.
- Allow for the extra costs of safety gear and marine insurance.
Converting Price to Payments when Buying a Boat
Buyers may find a happy medium between vessel or finance first, by using our finance calculator to generate repayment estimates. If the price of the vessel and therefore the loan repayments are a key decider, work up loan repayment estimates on the calculator to use as a buying guide.
Getting the Right Finance when Buying a Boat
Finance to buy boats is available as consumer loans through banks, finance companies, and some marine dealers. But the lending products, application approval criteria, and the interest rates, vary considerably across the market. Securing the rightfinance from the most suitable lender, can make a purchase more affordable and boat ownership more easily attainable.
When buying a boat, buyers can use the services of Jade Boat Loans to secure affordable finance tailored to their specific requirements for the vessel of choice. As specialist brokers in marine finance, we have access to many lenders, and we know the approval criteria used by those lenders. Ensuring we can handpick the lender best suited to individual application profiles and the type of vessel being financed. This individual approach ensures the best rates are achieved by each buyer and the most affordable loan is secured.
Whether finance comes first, or the boat purchase comes first, when buying a boat contact Jade Boat Loans 1300 000 003 for individually sourced and tailored marine finance.
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MISPRESENTED DATA AND DETAILS HEREIN.
