Boat Loans

What is a boat loan?

A boat loan is similar to a car loan in that it is a sum of money borrowed in order to purchase a boat.

As it is with any personal loan, the amount is borrowed over a set period of time (the term of the loan) and paid back in instalments with interest. These are usually monthly payments, but many loans will allow you to adjust repayments to a weekly or fortnightly schedule.

There are a few other factors to consider, so let’s take a closer look.

What types of boat loans are there?

As mentioned, a boat loan is basically a personal loan and so your options are similar. 

They include the following:

Unsecured: Not held against any collateral, but dependent on your credit score and a risk assessment by the lender. These loans can have higher interest rates, but also don’t put your property at risk. Borrowing limits for unsecured loans tend to be lower.

Secured: Lower interest rates generally, but require an asset as collateral to secure the loan. Typically you would secure against the boat being purchased, meaning that if you default on repayments it can be repossessed.

Fixed interest rate: Your rate will stay the same for the life of your loan. An attractive option if you're worried about an upcoming rate hike, though conversely you won’t receive the benefit of a rate cut.

Variable interest rate loan: Subject to change over the course of the loan. Variable rate loans can have more flexible features (like early repayments and redraws), but can also see rate rises over time in line with official cash rate movements. 

Can I use my boat loan for other marine vessels?

Don’t feel out at sea - your options are fairly open with a boat loan. 

Some options include:

• Fishing boats

• Dinghies

• Jet skis

• Yachts

• Sailboats

• Jet boats

• House boats

• Catamarans

Keep in mind that some providers may have their own specific requirements for the boat you choose, especially if it’s being used as collateral to secure your loan.

What features should I look for in a boat loan?

As with any loan, there are features you can look for that could make one boat loan stand out to you over another. Some of these features you may want to keep an eye out for include:

• Extra repayments: The flexibility to be able to make extra repayments can allow you to pay off a loan earlier, which will in turn allow you to pay less interest. Sometimes these may not be allowed, they might be limited or they might have a fee attached.

• Redraw facility: If you have been making extra repayments but find yourself in need of the money for unforeseen reasons, some loans will give you access to a redraw facility. This allows you to dip into any extra repayments made and take it back out.

• Flexible repayment frequency: A loan with a flexible repayment frequency can be extremely convenient if you get paid on a different schedule or breakdown your budget in a particular fashion. These loans may allow you to make repayments monthly, weekly or fortnightly. 

Other loans may allow you to waive fees in other areas of your banking, or give you access to an offset account, where others may have fees in unexpected places (like late fees and monthly service fees). Be sure to have a close look before you commit!

Are there other costs when buying a boat?

Beyond your boat, there are many costs to consider. So as you weigh up your loan, consider that every aquatic adventure should also include:

Safety equipment: it’s worth equipping with flares, life vests, fire extinguishers, radio equipment and ropes.

Upkeep: it’s important to keep any vessel in good working order, or the more expenses you might incur with upkeep. 

Mooring: you can save on mooring if you have your own storage. Factors to take into account include location and coverage.

Fuel: impacting the cost of fuel will be the size of your boat (and the resulting size of your fuel tank), how often you use it and how far you go.

Insurance: a boat is an expensive investment to risk damage or loss from on and offshore incidents. 

Registration and licence: Similar to owning and operating a car, boats over a certain size require registration and a valid licence to be operated.

With these costs in mind, it’s best to do your research ahead of any boat purchase.

How do I compare different boat loans?

Start by comparing interest rates and features of a few different loans. There’s no individual product that is the best for everyone, so you’ll want to weigh up a number of options to make a more informed decision. Also consider your borrowing capacity and how your finances may change over time. If the loan is for several years, you’ll want to budget for that period of time. 

We’re here to help. Start comparing some of the top personal loans in our database as picked by Mozo’s experts.

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